Rem Ogodo Ogana v Kenya Sugar Board [2015] KEELRC 210 (KLR)
The bottom line
#Kenya's Employment Court ruled that an employer must pay agreed salary even if it said the employee would pay himself from a struggling company's income.
What this practically means
#Executive summary
#Key legal issues
#Responsibility for the Claimant's remuneration
The Respondent, being the employer under the letter of appointment, was legally bound to pay the Claimant's monthly salary of Kshs.150,000; the Claimant could not be expected to earn nothing until SOC generated sufficient income.
The Court conducted a plain reading of the contract of employment, which was between the Claimant and the Respondent and provided that the salary would be generated internally from operations at SOC. The Court held that the contract would have been with SOC in receivership if the Claimant was to pay himself, which was not the case. Since SOC was in financial dire straits at appointment, the employer remained liable for the unpaid 13 months' salary.
Whether the Claimant owed the monies in the counterclaim
Only Kshs.202,540 paid to himself outside the contract (house rent, security and servant allowance) and the admitted Kshs.94,650 were due; the claims for Kshs.405,000 trailer proceeds and Kshs.180,000 overdraft failed for want of proof.
The letter of appointment did not provide for the monthly benefits of Kshs.15,580, so those payments were unlawfully received. On the balance of the surcharge, the burden lay on the Respondent to prove misapplication of funds on a balance of probabilities. Documentation showed the trailer proceeds were applied to SOC's operations, including staff salaries, and the Respondent failed to prove the overdraft funds were misappropriated.
Remedies available
Net award of Kshs.1,652,810 after set-off, with interest at court rates from filing, plus costs to the Claimant.
The Court awarded the arrear salary of Kshs.1,950,000, set off the Kshs.297,190 found owing under the counterclaim, and awarded interest from the date of filing the suit until payment in full. Costs followed the event, the Respondent having failed to pay the lawfully earned salary for many months.
Legal principles established
#- The employer named in a contract of employment is legally liable to pay the agreed salary notwithstanding a term that the salary be generated internally from the operations of a loss-making enterprise.
- The party alleging misappropriation of funds bears the burden of proving it on a balance of probabilities.
- Monies paid to oneself outside the contractual arrangement, and sums admitted as owed, may be set off against an award of salary arrears.
Court orders
#- 1.Respondent liable to pay arrear salary of Kshs.1,950,000 for April 2010 to April 2011
- 2.Counter claim dismissed except Kshs.202,540 and Kshs.94,650, totaling Kshs.297,190
- 3.Kshs.297,190 set off against the award, leaving a net award of Kshs.1,652,810
- 4.Net award of Kshs.1,652,810 payable with interest at court rates from date of filing suit until payment in full
- 5.Respondent to pay the costs of the suit
- Jurisdiction invoked
- Employment and labour relations dispute heard as a first-instance claim and counterclaim before the Industrial Court
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Rem Ogodo Ogana v Kenya Sugar Board [2015] KEELRC 210 (KLR)", Case Analysis (2015). Cause No 1005 of 2013. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2015/210/eng@2015-11-20
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.