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ELRCPartially AllowedCause No. 310 of 2015· [2015] KEELRC 36 (KLR)

Justus Obara Okari v Roto Moulders Limited [2015] KEELRC 36 (KLR)

Employment and Labour Relations Court of Kenya at Nairobi
16 December 2015
2,229 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 employer who never issued a written employment contract had to accept the worker's own account of his 11-year employment and pay full redundancy dues.

What this practically means

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Executive summary

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The Claimant, employed by the Respondent as a Machine Operator, was terminated on 15th August 2014 on grounds of redundancy due to lack of raw materials. He claimed terminal dues including notice pay, leave, severance, salary arrears, underpayments and compensation for unfair termination, contending the redundancy was a pretext for victimising him for union membership. The Respondent maintained the redundancy was genuine, that dues were computed with the Labour Officer and the union, and that the Claimant was employed as a casual in 2007/2008 and confirmed in 2008, refusing to collect his computed dues. The court found the Claimant had no written contract or letter of appointment, breaching sections 9 and 10 of the Employment Act which mandate a written contract within two months. In the absence of employer records, the Claimant's assertion of employment from 2003 stood. The court held that terminating an employee on redundancy without first settling owing terminal dues, and without full compliance with section 40, renders the termination unprocedural and unfair under section 45, entitling the Claimant to compensation. The underpayment claim failed as the Claimant's earnings exceeded the statutory minimum wage, and the lump-sum leave claim was not proved, though the Respondent's offered leave amount was allowed. Judgment was entered for the Claimant: declaration of unprocedural termination, compensation of Kshs.12,654.90, severance pay of Kshs.63,274.50 computed from 2003 to 2014, August 2014 salary of Kshs.5,906.00, leave of Kshs.5,641.00, notice pay of Kshs.12,654.90, and a certificate of service within 7 days. Each party was ordered to bear their own costs.

Key legal issues

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01

Absence of a written contract of employment

Holding

The employer's failure to issue a contract or letter of appointment meant the Claimant's assertion of employment from 2003 had to stand, and the employer bore the burden of proving otherwise

Reasoning

Sections 9 and 10 of the Employment Act mandate a written contract within two months. NSSF payment confirmations do not constitute proof of employment terms. Since records are kept by the employer under sections 73 and 74, the duty of production lay with the Respondent, which failed to show the Claimant only became permanent in 2008.

p. 3
02

Procedural fairness of the redundancy under section 40

Holding

The redundancy was unprocedural because terminal dues were not settled before termination and the statutory procedure was not fully followed, entitling the Claimant to compensation under section 45

Reasoning

Section 40 requires the employer to issue notice of redundancy and notice to affected employees. The court added that all owing dues, such as leave pay, should be paid before lay-off so the employee leaves with something tangible. Termination without this is unprocedural and unfair, warranting compensation of one month's pay.

p. 4
03

Severance pay computation

Holding

Severance pay at 15 days' pay per year was computed from 2003 to 2014 (10 complete years) on the last salary of Kshs.12,654.90, totaling Kshs.63,274.50

Reasoning

Because the employer failed to produce work records or a letter of appointment, the court accepted the Claimant's asserted start date. Severance at 15 days per complete year under section 40 on the admitted last salary yielded Kshs.63,274.50, higher than the Respondent's offer computed from 2008.

p. 4
04

Underpayment claim

Holding

No underpayment was established because the Claimant's total earnings exceeded the statutory minimum basic wage

Reasoning

The Respondent admitted the applicable minimum wage was Kshs.12,654.90, and the Claimant's own payslip showed total earnings of Kshs.13,764.04, above the basic minimum. The Claimant did not discharge the burden of showing how any additional underpayment arose.

p. 3

Legal principles established

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  • A written contract of employment must be issued not later than two months after the beginning of employment under section 10(1) of the Employment Act
  • Where there is no contract or employment letter, the word of the claimant as to the date of employment stands, and the employer bears the duty to produce employment records under sections 73 and 74 of the Employment Act
  • Terminating an employee on redundancy without first settling owing terminal dues, and without the two notices required by section 40, renders the termination unprocedural and unfair

Court orders

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  1. 1.Declaration that the Claimant was unprocedurally terminated
  2. 2.Compensation at Kshs.12,654.90
  3. 3.Severance pay at Kshs.63,274.50 computed from 2003 to 2014
  4. 4.Salary for August 2014 at Kshs.5,906.00
  5. 5.Leave at Kshs.5,641.00
  6. 6.Notice pay at Kshs.12,654.90
  7. 7.Certificate of service to issue within 7 days
  8. 8.Each party shall bear their own costs

Authorities

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Legislation

  • Employment Actsection 9
  • Employment Actsection 10(1)
  • Employment Actsection 40
  • Employment Actsection 45
  • Employment Actsection 73
  • Employment Actsection 74
  • General Wages Order2012 and 2013
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over employment disputes (Employment Act; claim for unfair termination and terminal benefits)

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, "Justus Obara Okari v Roto Moulders Limited [2015] KEELRC 36 (KLR)", Case Analysis (2015). Cause No. 310 of 2015. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2015/36/eng@2015-12-16

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