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ELRCPartially AllowedCause No 971 of 2013· [2014] KEELRC 369 (KLR)

Pasaka Ogumbo v Corporate Talk Ltd [2014] KEELRC 369 (KLR)

Industrial Court of Kenya
11 June 2014
MBMbaru
2,635 words in judgment
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The bottom line

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A Kenyan court ordered an employer to pay a former employee Kshs.193,289 in unpaid commissions because it kept key employment terms in unsigned documents.

What this practically means

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Executive summary

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The claimant, formerly employed by the respondent as Business Executive and later Regional Business Manager, claimed unpaid commissions for December 2008, March 2009 and April 2009 and full salary for July 2009 following her resignation on 8th July 2009. She asserted a commission structure entitling her to 18% of direct sales and 8% of indirect sales, under which commissions had previously been paid. The respondent denied liability, contending the commission structure was an unapproved draft prepared by its accountant (later dismissed for fraud), that the claimant had been overpaid, and that she resigned immediately after sponsored training in South Africa without offering to serve notice. The court found the contract of service expressly provided for commissions, that the respondent relied on an unsigned contract and an unsigned commission structure yet had applied that structure to pay the 2008 commissions, and that the respondent never quantified the alleged overpayment or produced an alternative schedule. The accountant's fraud could not be visited on the claimant. The commissions, totalling Kshs.229,653.00, were held due. However, because the resignation letter did not state its effective date or an intention to serve notice, the court applied section 35 of the Employment Act and deducted Kshs.50,000.00 as payment in lieu of notice, awarding Kshs.179,653.00 for commissions and Kshs.13,636.36 for pay from 1st to 8th July 2009. Each party was ordered to bear its own costs. Judgment delivered on 11th June 2014 by Mbaru J.

Key legal issues

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01

Entitlement to unpaid commissions (December 2008, March 2009, April 2009)

Holding

The commissions claimed are due. The contract of service provided for commissions on sales targets achieved; the commission structure used was applied in three occasions when the claimant was paid her 2008 commissions, and the respondent never quantified the alleged overpayment or produced a schedule of due commissions

Reasoning

The contract (clause 4(a)) expressly provided for commissions payable on gross after client payment. The respondent alleged an overpayment but never stated how much it was nor attached a schedule. The unsigned commission structure was used to pay 2008 commissions, and the accountant's fraud was unrelated to the claimant. The claimed commissions therefore fell due.

p. 4
02

Whether the claimant was entitled to full July 2009 salary for an unserved notice period

Holding

No. Her resignation letter did not indicate a date of effect or a wish to serve notice, so payment in lieu of notice (Kshs.50,000.00) was deducted from the award under section 35 of the Employment Act

Reasoning

Section 35 requires notice or payment in lieu on termination. The resignation letter thanked management but did not state when it took effect or that the claimant wished to serve notice. The court read the letter as an immediate resignation and applied payment in lieu of notice against the claimant's dues.

p. 4
03

Weight of an unsigned employment document relied on by the employer

Holding

The respondent could not rely on the unsigned contract to disown the commission structure it had previously applied; if the employer kept crucial employment terms in an unsigned document, other operational documents could equally be unsigned

Reasoning

The court questioned why the respondent kept the claimant's terms unsigned and observed the claimant worked and was paid under the unapproved structure. An employer relying on an unsigned document to allege a wrong commission structure undermines its own case.

p. 3

Legal principles established

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  • An employer is obliged under section 74 of the Employment Act to keep written records of employees, including the contract of service, even after the employee leaves; an employer relying on an unsigned employment document cannot disown that document's terms when it suits it
  • Fraud by one employee (the accountant) cannot be visited upon a claimant employee who was owed commissions under the document the employer itself relied on
  • A resignation letter must state its effective date and whether the employee intends to serve notice, or pay in lieu of notice applies; an employee cannot rely on an ambiguous resignation to claim full notice-period salary

Court orders

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  1. 1.Judgment entered for the claimant against the respondent
  2. 2.The sum of Kshs.179,653.00 as commissions due
  3. 3.The sum of Kshs.13,636.36 due pay for 1st to 8th July 2009
  4. 4.Each party to bear their own costs

Authorities

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Legislation

  • Employment ActSection 74(1)
  • Employment ActSection 35
  • Employment ActSection 10(3)
  • Employment ActSection 7(2)
  • Employment ActSection 13
  • Employment ActSections 21 and 22
  • Employment ActSection 27
  • Employment ActSection 28
Jurisdiction invoked
Original employment and labour relations jurisdiction of the Industrial Court of Kenya (Employment and Labour Relations Court)

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, "Pasaka Ogumbo v Corporate Talk Ltd [2014] KEELRC 369 (KLR)", Case Analysis (2014). Cause No 971 of 2013. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2014/369/eng@2014-06-11

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