Olgha Auma Adede v New Kenya Co-op Creameries Ltd [2014] KEELRC 1045 (KLR)
The bottom line
#Kenya's Industrial Court ruled a State Corporation unfairly fired an employee without a proper hearing, awarding her over Kshs 2.3 million but refusing full contract payment.
What this practically means
#Executive summary
#Key legal issues
#Whether the termination was unfair for want of a hearing
The termination was unfair because the Claimant was never given a hearing under Section 41 of the Employment Act before the Board
Section 41 mandates a hearing with written notification before termination or dismissal. The Claimant was given a letter to show cause and responded, and appeared before an investigation committee, but the Board that decided her fate sat on its own, adopted the committee report and terminated her without specific charges or an opportunity to defend herself. A contract clause dispensing with reasons cannot override the statutory minimum under Sections 26 and 41.
Whether reinstatement was available
Reinstatement was refused as the statutory 3-year window under the Industrial Court Act had lapsed
Section 12 of the Industrial Court Act 2011 permits reinstatement only within 3 years of termination. Termination occurred on 2nd September 2010, more than 3 years before judgment. Re-engagement was also refused since the claimant was on a fixed-term contract that would have expired, and the termination circumstances would not suit re-engagement.
Entitlement to gratuity
The Claimant was entitled to gratuity for the period served under the renewed contract, awarded at Shs. 739,350/-
Gratuity was payable upon completion of 12 months service under the contract. Serving on the second term, the Claimant had worked more than 3 years, so gratuity was due for the period from 1st December 2009 to 30th August 2010 which had not been paid, not for the whole unexpired contract term.
Compensation under Section 49(1)(c)
Six months' gross wages (Shs. 1,590,000) awarded as compensation for unfair termination
Having served just under 4 years on a renewable contract with a legitimate expectation of further renewal, the court considered Section 49(4) factors, especially length of service, and found 6 months' compensation reasonable.
Payment for the unexpired portion of the contract
Refused; neither the law nor the contract provides for anticipatory salaries and compensation under the Employment Act is the full entitlement
Following D.K Njagi Marete v TSC and Menginya Salim Murgani v Kenya Revenue Authority, the court held that anticipatory remuneration is not a fair remedy; an employee must mitigate losses, consistent with Section 49(4)(l) and the principle of a fair go all round.
Legal principles established
#- Section 41 of the Employment Act requires an employer to give an employee notice in writing of grounds and a hearing before termination, and this cannot be contracted out of; a contractual clause dispensing with reasons offends Section 26 which only permits more favourable terms
- Where a Board decides termination on the report of an investigation committee without giving the employee the specific charges or an opportunity to be heard, the termination is unfair
- Anticipatory salaries for the unexpired term of a fixed-term contract are not a remedy for unfair termination; an aggrieved employee has an obligation to mitigate
Court orders
#- 1.Award of Shs. 739,350/- being gratuity for the period served under the renewed contract from 1st December 2009 to 30th August 2010
- 2.Award of Shs. 1,590,000 being 6 months gross monthly wages as compensation for unfair termination
- 3.Claimant to be paid her costs by the Respondent
- 4.Interest at court rates from the date of judgment
- Jurisdiction invoked
- Industrial Court Act, 2011 and Employment Act, 2007
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Olgha Auma Adede v New Kenya Co-op Creameries Ltd [2014] KEELRC 1045 (KLR)", Case Analysis (2014). Memorandum of Claim dated 25th January 2011. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2014/1045/eng@2014-05-09
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.