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ELRCPartially AllowedCause No 10 of 2013· [2014] KEELRC 778 (KLR)

Shamas Velani v Raka Milk Processors Limited [2014] KEELRC 778 (KLR)

Industrial Court of Kenya
28 January 2014
808 words in judgment
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The bottom line

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A Kenyan court awarded a former manager over Kshs 1.2 million after his employer backed out of a written settlement offer without explanation and failed to keep leave records.

What this practically means

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Executive summary

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The Claimant, employed orally in August 2010 as General Manager of the Respondent at a gross salary of Kshs. 277,703, sued for outstanding terminal dues after his employment was terminated on 16th October 2012. By letter dated 23rd October 2012 the Respondent had offered to pay long term service dues of Kshs. 347,662.80, one month's salary in lieu of notice, half a month's salary for October 2012 and a transport expenses refund of Kshs. 76,400. The Claimant accepted the proposal but sought additional heads: enhanced notice of three months, pay in lieu of 42 accrued leave days, and a lump sum settlement. The Respondent filed a Reply denying accrued leave and repudiating the settlement offer, but made no appearance at the hearing, and the claim proceeded undefended. The Court held that no reason was advanced for the Respondent's change of course and treated the offered dues as admitted, awarding them in full. The claim for three months' notice pay was dismissed for lack of justification, the statutory one month applying absent express contractual provision. The leave claim succeeded because the Respondent produced no leave records as required by Sections 10 and 74 of the Employment Act, 2007, and the Court invoked Section 10(7). Service pay was refused as the Claimant had been offered long term service dues and was a contributing NSSF member. Total award: Kshs. 1,229,401, subject to statutory deductions under Section 49(2), with costs to the Claimant.

Key legal issues

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01

Binding effect of the Respondent's settlement offer of 23rd October 2012

Holding

The Respondent's repudiation of its offer without any reason failed; the offered dues were treated as admitted and awarded in full

Reasoning

The Respondent's Reply attempted to withdraw the undertaking in its letter of 23rd October 2012 but advanced no reason for the change of course. The Court therefore treated those dues as admitted and only addressed the additional claims, awarding the service dues, notice pay, October half salary and transport refund as offered.

p. 2
02

Entitlement to enhanced notice pay of three months

Holding

Dismissed; in the absence of an express contractual provision, the statutory one month's notice applies

Reasoning

Notice period is ordinarily a basic term of the contract of service. Where there is no express provision, the law provides one month. The Claimant gave only a general statement about the responsibilities of his position and offered no justification for enhancement to three months, so the claim failed.

p. 2
03

Pay in lieu of accrued leave days

Holding

Allowed; the Respondent bore the record-keeping burden under Sections 10 and 74 of the Employment Act and produced no leave records

Reasoning

The Respondent asserted that the Claimant had exhausted his leave by taking it or commuting it but produced no leave records as required by Sections 10 and 74 of the Employment Act, 2007. Invoking Section 10(7), the Court allowed the claim for pay in lieu of 42 accrued leave days, quantified at Kshs. 388,784.

p. 2
04

Service pay for every year worked

Holding

Refused; the Claimant had been offered long term service dues and was a contributing NSSF member

Reasoning

The Respondent had already offered long term service dues of Kshs. 347,662.80, and the Claimant was a contributing member of the National Social Security Fund. On both counts the Court found no basis for a further award of service pay and declined that head of claim.

p. 2

Legal principles established

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  • Where no express provision for notice period exists in a contract of service, the law provides for one month's notice
  • An employer who fails to keep leave records as required under Sections 10 and 74 of the Employment Act cannot rely on the assertion that leave was exhausted; Section 10(7) shifts the burden in the employee's favour
  • An undertaking to pay terminal dues, once made, cannot be repudiated without a reason; unchallenged it is treated as admitted

Court orders

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  1. 1.Award to the Claimant of Kshs. 347,662.80 as service dues
  2. 2.Award of Kshs. 277,703.00 being one month's salary in lieu of notice
  3. 3.Award of Kshs. 138,851.50 being half month's salary for October 2012
  4. 4.Award of Kshs. 76,400.00 as outstanding transport expenses refund
  5. 5.Award of Kshs. 388,784.00 being pay in lieu of 42 days' accrued leave
  6. 6.Total award of Kshs. 1,229,401 subject to statutory deductions under Section 49(2) of the Employment Act, 2007
  7. 7.Respondent to meet the costs of the case

Authorities

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Legislation

  • Employment Act, 2007Section 10
  • Employment Act, 2007Section 10(7)
  • Employment Act, 2007Section 74
  • Employment Act, 2007Section 49(2)
Jurisdiction invoked
Industrial Court of Kenya jurisdiction under the Labour Institutions Act over employment and labour relations disputes

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, "Shamas Velani v Raka Milk Processors Limited [2014] KEELRC 778 (KLR)", Case Analysis (2014). Cause No 10 of 2013. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2014/778/eng@2014-01-28

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