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ELRCPartially AllowedCause 229 of 2012· [2013] KEELRC 470 (KLR)

BENSON ODHIAMBO ONYANGO V INSTARECT COMPANY LIMITED [2013] KEELRC 470 (KLR)

Industrial Court of Kenya
6 March 2013
MOMaureen Onyango
838 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court ruled that an employee kept working after his contract expired was protected by employment law, and his employer's shortcut termination was unfair.

What this practically means

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Executive summary

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The Claimant, employed by the Respondent as a general labourer from June 2004 on one-year renewable contracts, last held a fixed term contract that expired on 9th October 2007 but continued working without a contract until 18th April 2011, when the Respondent issued a letter purporting to terminate the lapsed 2006/2007 contract and offering 26 days' leave pay and one month's notice pay. The Claimant was paid Shs.3,780 as leave/notice. He claimed notice pay, pending leave, house allowance, unremitted NSSF contributions and maximum compensation of 12 months' salary. The court framed two issues: whether the termination was unfair and whether he was entitled to the prayers sought. It held that a fixed term contract that expires and continues without renewal becomes a month-to-month contract governed by the Employment Act, so termination had to comply with Sections 35 and 41; the Respondent complied with neither, and the letter purported to terminate a long-lapsed contract. The termination was therefore unfair. The court awarded notice pay of Shs.7,754.45 and 26 days' leave pay of Shs.6,720.50 at the consolidated minimum wage; it refused house allowance because the wage was consolidated, but awarded underpayment of Shs.2,333.40 for 12 months. The NSSF claim was dismissed for lack of evidence. Six months' compensation of Shs.46,526.70 was awarded instead of the maximum. Judgment of Shs.55,580, less Shs.3,780 paid, plus Shs.10,000 for filing expenses and disbursements, totalled Shs.61,800.10, payable within 30 days failing which the decree could be executed.

Key legal issues

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01

Whether termination of the claimant's employment was unfair

Holding

The termination was unfair because the Respondent did not comply with Sections 35 and 41 of the Employment Act, and the letter purported to terminate a contract that had long lapsed and been replaced by an unwritten month-to-month contract.

Reasoning

The claimant's last fixed term contract expired on 9th October 2007, after which he continued working without a contract until April 2011. By operation of law such continued employment becomes a month-to-month contract governed by the Employment Act. Termination therefore required compliance with Section 35 (notice) and Section 41 (procedure). The Respondent's letter of 18th April 2011 referenced only the lapsed 2006/2007 contract, did not comply with either section, and made no reference to the subsisting contract.

p. 2
02

Entitlement to notice pay, leave pay and underpayment

Holding

The Claimant was awarded one month's salary in lieu of notice (Shs.7,754.45) and pay in lieu of 26 days' leave (Shs.6,720.50) at the applicable consolidated minimum wage; house allowance was refused as the wage was consolidated, but underpayment of Shs.194.45 per month for 12 months (Shs.2,333.40) was awarded.

Reasoning

The Claimant was never given notice nor paid in lieu, so notice pay was due at the consolidated minimum wage rate. The termination letter itself fixed outstanding leave at 26 days, which was quantified proportionately. Since the minimum wage was consolidated and inclusive of house allowance, the house allowance claim failed, but the underpayment between the statutory minimum wage and actual pay was recoverable for the 12 months to which the statutory wage applied.

p. 3
03

Quantum of compensation for unfair termination

Holding

Six months' compensation (Shs.46,526.70) was awarded instead of the maximum twelve months claimed.

Reasoning

Although the Claimant prayed for maximum compensation, the court considered the maximum excessive given his length of service of seven years. Discretion was exercised to award six months' compensation as reasonable in the circumstances, quantified at the consolidated minimum wage.

p. 3

Legal principles established

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  • A fixed term contract which expires and continues without renewal becomes a month to month contract governed by the Employment Act, and its termination must comply with Sections 35 and 41 of the Employment Act.

Court orders

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  1. 1.Judgment for the Claimant against the Respondent in the sum of Shs.55,580
  2. 2.Deduction from that sum of Shs.3,780 paid to the Claimant as leave/notice pay, leaving a net sum of Shs.51,800.10
  3. 3.Award of Shs.10,000 to cover filing expenses and disbursements, making a total sum of Shs.61,800.10
  4. 4.Payment to be made within 30 days failing which the Claimant may execute the decree

Authorities

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Legislation

  • Employment ActSection 35
  • Employment ActSection 41
Jurisdiction invoked
Employment Act (as the governing statute for the employment dispute before the Industrial Court)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (3)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "BENSON ODHIAMBO ONYANGO V INSTARECT COMPANY LIMITED [2013] KEELRC 470 (KLR)", Case Analysis (2013). Cause 229 of 2012. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2013/470/eng@2013-03-06

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