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ELRCPartially AllowedMemorandum of Claim dated 13th October, 2010· [2013] KEELRC 218 (KLR)

Kizito Savali v Marshalls East Africa Limited [2013] KEELRC 218 (KLR)

Industrial Court of Kenya (Employment and Labour Relations Court)
14 August 2013
2,101 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan employer who fires staff without stating reasons or holding a disciplinary hearing can be ordered to pay up to twelve months' salary.

What this practically means

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Executive summary

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The Claimant, employed in 2005 and rising to Financial Controller on a gross monthly salary of Kshs.200,000/=, was summarily dismissed on 5th May, 2010 by letter that gave no reasons, without notice or payment in lieu, and without a disciplinary hearing. He claimed terminal dues totalling Kshs.726,133/= as special damages plus twelve months' compensation for unlawful dismissal. The Respondent alleged serious negligence in financial management discovered on audit, and asserted that the Human Resource Manual relied on by the Claimant had ceased to apply under new management. Its Human Resource Manager admitted the leave days, five days' salary and notice pay claims (totalling Kshs.520,000/=) and admitted no disciplinary hearing took place. The court held that under Section 43(1) of the Employment Act the employer must prove reasons for termination, and that failure to state reasons in the termination letter is prima facie evidence of lack of such reasons, aggravated by the absence of a disciplinary hearing required both by Section 41(2) and by the HR Manual, which, being incorporated into the contract, could not be unilaterally repudiated. The dismissal was therefore unfair both substantively and procedurally under Section 45(2). Judgment was entered for the admitted Kshs.520,000/=, and maximum compensation of twelve months' salary (Kshs.2,400,000/=) was awarded under Section 49(1)(c), totalling Kshs.2,920,000/=, with a certificate of service to issue immediately and costs following the outcome.

Key legal issues

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01

Whether the Respondent proved valid reasons and a fair procedure for the summary dismissal

Holding

The dismissal was unfair: no reasons were stated in the termination letter, no disciplinary hearing was conducted, and the HR Manual procedure incorporated into the contract was breached.

Reasoning

Section 43(1) of the Employment Act places the burden on the employer to prove reasons for termination. The termination letters gave no reasons and no disciplinary hearing was held, which the court held was prima facie evidence of lack of reasons. The HR Manual, incorporated into the appointment letter, required a disciplinary hearing and could not be verbally discarded by new management. Section 41(2) entitled the Claimant to be heard. The dismissal therefore failed both the substantive reason test under Section 45(2)(a) and the fair procedure test under Section 45(2)(c).

p. 5
02

Whether maximum compensation under Section 49(1)(c) was warranted

Holding

Twelve months' gross salary compensation awarded because the dismissal was cruel and the Claimant contributed nothing to it.

Reasoning

The court found the Claimant, a Financial Controller, was removed by new management without notice, dignity, disciplinary hearing or certificate of service, and remained unemployed. He had no record of warnings and had performed well. Given these aggravating factors and the absence of any contribution by the Claimant, the court held this a suitable case for the maximum compensation of twelve months' gross salary under Section 49(1)(c).

p. 5

Legal principles established

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  • Reasons for termination must be stated in the letter of termination; failure to do so is prima facie evidence that no valid reasons existed.
  • Terms in a Human Resource Manual incorporated into the contract of employment cannot be unilaterally repudiated by the employer.
  • Where the employer fails to prove reasons for termination under Section 43(1), the termination is unfair under Section 45.

Court orders

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  1. 1.Judgment entered for the admitted terminal dues of Kshs.520,000/=
  2. 2.Respondent to pay the Claimant twelve (12) months compensation for unlawful and unfair dismissal in the sum of Kshs.2,400,000/=
  3. 3.Respondent to provide the Claimant with a certificate of service immediately
  4. 4.Total award of Kshs.2,920,000/= to the Claimant
  5. 5.Costs to follow the outcome of the suit

Authorities

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Legislation

  • Employment ActSection 43(1) and (2)
  • Employment ActSection 41(2)
  • Employment ActSection 45(2)(a) and (c)
  • Employment ActSection 47(5)
  • Employment ActSection 49(1)(c)
Jurisdiction invoked
Employment and labour relations jurisdiction under the Employment Act, 2007

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Kizito Savali v Marshalls East Africa Limited [2013] KEELRC 218 (KLR)", Case Analysis (2013). Memorandum of Claim dated 13th October, 2010. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2013/218/eng@2013-08-14

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.