Cecilia Muthoni Njoroge v Nairobi Stock Exchange [2014] KEELRC 158 (KLR)
The bottom line
#A Kenyan court ruled an employer cannot discipline an employee for a position it had already abolished, awarding her over Kshs. 7.6 million.
What this practically means
#Executive summary
#Key legal issues
#Whether the termination was for a valid and just reason
The termination was not for a valid reason; the position had been abolished on 8th March 2010 before the letter of termination of 29th April 2010, so the purported termination was in substance a redundancy
The Board abolished the position of Head of Trading and Surveillance before the disciplinary process concluded and before the termination letter. As at the date of termination the position did not exist in fact or in law, so the contract had been fundamentally breached by operational reasons. The employer could not lawfully terminate for disciplinary grounds a position that had ceased to exist; the proper route was declaration of redundancy with the attendant Section 40 benefits.
Whether the termination followed a fair procedure
The procedure was unfair and contrary to Sections 45(2)(c) and 43(1) and (2) of the Employment Act: eleven months' suspension on half pay in breach of the HR Manual, and double jeopardy from pursuing discipline over an abolished position
The Claimant was suspended for eleven months on half pay contrary to regulation 11.7 requiring full pay for a manager pending Board determination, causing limbo and anxiety. Before the disciplinary process concluded the position was abolished, depriving her of the voluntary exit package while charges hung over her. The purported reinstatement after a court order was pretentious and immediately followed by an instruction to take leave. The double measure was irregular and unfair.
Remedies available to the Claimant
Terminal benefits under Section 40 of the Employment Act, half salary for the suspension period, provident fund contributions, ten months' salary compensation, certificate of service, interest and costs
Because the employment was curtailed by abolition of the position, the Claimant was treated as declared redundant and entitled to Section 40 benefits including the voluntary exit package offered to other staff. Compensation of ten months' salary reflected her very long service, excellent performance, tribulations at the hands of the employer, media tarnishing of her reputation and failure to issue a certificate of service. Reinstatement was not granted.
Legal principles established
#- An employer may not simultaneously pursue a disciplinary process and render the employee's position redundant; where the position is abolished before the disciplinary process concludes, the process must stop to avoid double jeopardy
- Keeping an employee on suspension for an inordinately long period is unfair and workplace regulations should place reasonable time limits on disciplinary processes
- Termination of an employee whose position no longer exists is incapable of implementation and amounts to unfair termination under Section 45(2)(c) of the Employment Act
Court orders
#- 1.Certificate of service to be issued to the Claimant reflecting the reality of the termination
- 2.Payment of half salary unpaid for the entire period of suspension from June 2009 to April 2010 in the sum of Kshs.1,609,206
- 3.Severance pay at fifteen days basic salary for each completed year of service in the sum of Kshs.2,331,344.83
- 4.One month salary in lieu of notice in the sum of Kshs.292,593.87
- 5.Payment of unpaid provident fund at 10% of basic salary during the suspension in the sum of Kshs.160,927
- 6.Compensation equivalent to ten months' salary for unlawful and unfair termination in the sum of Kshs.2,925,938.70
- 7.Total award of Kshs.7,622,010.40 with interest at Court rates from date of judgment to payment in full
- 8.Costs of the suit to the Claimant
- Jurisdiction invoked
- Original jurisdiction of the Industrial Court over employment and labour relations disputes (memorandum of claim under the Court's cause procedure)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Cecilia Muthoni Njoroge v Nairobi Stock Exchange [2014] KEELRC 158 (KLR)", Case Analysis (2014). Cause No. 344 of 2010. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2014/158/eng@2014-10-31
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.