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ELRCPartially AllowedCause No. 130 of 2013· [2015] KEELRC 445 (KLR)

Rose Achieng Mihudhi v Jos Hansen & Soehne (EA) Limited [2015] KEELRC 445 (KLR)

Employment and Labour Relations Court of Kenya
10 August 2015
3,610 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 an employer unfairly terminated an employee who refused a new contract with a sister company, awarding 12 months' salary.

What this practically means

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Executive summary

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The Claimant, formerly employed at a law firm, was employed by the Respondent under a contract signed on 23rd January 2012 as Sales and Marketing Representative, to be deployed to the Respondent's premises at Ohio Street, Dar es Salaam, on a six-month probation. After relocation to Tanzania she was asked to sign a Certificate of Discharge ending her contract with the Respondent and a new contract with the Respondent's Tanzanian sister company; she refused the new contract as less favourable and was terminated on 7th December 2012. She claimed unfair termination, discrimination, inducement to leave her previous employment, relocation expenses, notice and leave dues. The Respondent denied unfair termination, asserting her contract had ended via the Certificate of Discharge, that all terminal dues were paid, and counter-claimed Kshs.337,000.00 as an unrecovered loan. The court held the contract had been confirmed by operation of section 42 of the Employment Act when probation lapsed without extension; the attempt to substitute a new contract through a sister company circumvented the Kenyan contract and was an unfair labour practice contrary to Article 41 of the Constitution. Termination without notice or reason contravened section 45 of the Employment Act. Discrimination and inducement claims failed for want of evidence, as did claims for accommodation, relocation, notice and leave. The counter-claim failed because the loan was advanced by the sister company, a separate entity not enjoined as a party. The court awarded compensation of Kshs.960,000.00 (12 months' salary) and ordered each party to bear their own costs.

Key legal issues

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01

Inducement to leave previous employment

Holding

No actionable inducement by the Respondent; the inducement alleged was by a third party and the Claimant willingly signed the contract

Reasoning

The court found the Claimant signed a valid contract of employment dated 23rd January 2012 without alleging fraud, forgery or misrepresentation. The alleged inducement came from a third party rather than the Respondent's representative. Having signed knowingly and opted for better pay, there was no interference with her freedom to contract, so no damages for inducement were due.

p. 4
02

Unfair termination

Holding

The termination was unfair - without notice, without reason and contrary to section 45 of the Employment Act

Reasoning

Probation ended by operation of section 42 of the Employment Act since it was not extended by mutual consent, confirming the Claimant as an employee. The contract contemplated deployment to Tanzania. Issuing a Certificate of Discharge on a confirmed contract and demanding a new contract from a sister entity without consent was an unfair labour practice contrary to Article 41 of the Constitution. Termination for refusing the new contract was therefore unjustified.

p. 5
03

Discrimination

Holding

No discrimination proved; the Claimant was under a specific contract with no evidence of different treatment on a protected ground

Reasoning

Applying the test in Collins Osoro v AAA Growers Limited, the court found no clear outline of differential treatment contrary to set policy or arising from legitimate expectation of promotion or allowances. The claim was speculative, lacking evidence of the different circumstances needed to establish discrimination.

p. 5
04

Respondent's counter-claim for loan repayment

Holding

Counter-claim dismissed; the loan was advanced by the Tanzanian sister company, not the Respondent, which was not entitled to recover it

Reasoning

The cheque, application and payment vouchers were all issued by Jos Hansen & Soehne (T) Ltd, a separate legal entity that was not joined as a party. Without express authority to receive the money for the sister company, the Respondent had no legal basis to claim repayment, and the counter-claim failed.

p. 6
05

Remedies

Holding

Compensation of 12 months' gross salary awarded for unfair termination; other heads refused for want of proof

Reasoning

The Claimant served one year, was terminated without justifiable cause or notice and was frustrated by the issuance of a new contract she refused to sign. Circumstances no employee should be subjected to warranted the maximum-equivalent 12 months' compensation on her Kshs.80,000 salary. Damages for discrimination, inducement and poor work environment, relocation expenses, notice and leave were refused for lack of proof or payment.

p. 5

Legal principles established

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  • Courts respect parties' freedom to contract unless there is illegality, fraud, misrepresentation or unfair labour practice
  • By operation of section 42 of the Employment Act, where probation is not extended by mutual consent the employee becomes confirmed
  • Unilaterally varying a mutually agreed employment contract is an unfair labour practice contrary to Article 41 of the Constitution
  • A counter-claim cannot be sustained against an employee for monies advanced by a separate entity that has not been enjoined as a party
  • Discrimination requires evidence of different treatment from others similarly situated on a specified or unspecified ground

Court orders

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  1. 1.A declaration that the Claimant was unfairly terminated from her employment by the respondent
  2. 2.Compensation of Kshs.960,000.00 awarded to the Claimant (12 months' salary at Kshs.80,000.00)
  3. 3.The Respondent's counter-claim is dismissed
  4. 4.Each party shall bear their own costs

Authorities

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Legislation

  • Employment Actsection 42
  • Employment Actsection 43
  • Employment Actsection 45
  • Employment Actsection 49
  • Constitution of KenyaArticle 41

Cases cited (6)

  • Edwin Kabogo Munene versus Equity Bank Ltd
    Cause No. 1123 of 2012
  • Jane Wairimu Macharia versus Mugo Waweru & Associates
    Cause No. 62 of 2012
  • Ivetta Mkala versus Nation Media Group
    Cause No. 2367 of 2012
  • Peris Nyambura Kimani versus Delbit Group Limited
    Petition No. 63 of 2014
  • Collins Osoro versus AAA Growers Limited
    Cause No. 100 of 2012
  • Hesbon Ngaruiya Waigi versus Equatorial Commercial Bank Limited
    Cause No. 60 of 2013
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over employment disputes (Employment Act; unfair termination claim under sections 43, 45 and 49 of the Employment Act)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (3)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Rose Achieng Mihudhi v Jos Hansen & Soehne (EA) Limited [2015] KEELRC 445 (KLR)", Case Analysis (2015). Cause No. 130 of 2013. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2015/445/eng@2015-08-20

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