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ELRCPartially AllowedCause No 599 of 2014· [2016] KEELRC 1197 (KLR)

Vivian Azangu Matunda v Swahili Beach Resorts Limited [2016] KEELRC 1197 (KLR)

Employment and Labour Relations Court
6 May 2016
1,124 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A hotel accountant won KSh 307,427 after the court ruled two years of continuous fixed-term contracts made him a permanent employee who could not be dismissed without notice.

What this practically means

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Executive summary

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The claimant was employed by the respondent as an Accountant under consecutive fixed term contracts from 1 December 2011 to 31 January 2014, giving continuous service of two years and one month. Though not a union member, he paid agency fees and thereby benefited from the CBA negotiated by the recognised union. His services were terminated by a letter dated 31 January 2014 stating that the fixed term contract had ended on 31 December 2013, with an offer of certain terminal dues. The claimant complained to the labour officer, who secured payment of kshs.48,992.00, and later instructed his lawyer to demand further dues and a certificate of service. When the demand failed, he sued in person for kshs.680,458.00 plus compensation for unlawful termination. The respondent denied liability, arguing that payment through Form LD 64 discharged her, though she offered kshs.74,730.00. The court framed four issues and found that the CBA governed the employment; that continuous service of over one year converted the claimant into a permanent employee terminable only by two months' notice under section 35(1)(c) of the Employment Act and clause 9(a) of the CBA; that payment via Form LD 64 created no estoppel absent a valid signed discharge agreement; and that the termination was unfair in both reason and procedure. The court awarded two months' salary in lieu of notice, pay for 52 days of annual leave, service charge for January 2014, and four months' salary as compensation, totalling kshs.307,427.50, with costs and interest. Leave travelling allowance was refused because the claimant never took leave.

Key legal issues

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01

Whether the CBA governed the claimant's employment

Holding

The CBA applied to the claimant's contract with respect to the negotiated terms and conditions of service, since he paid agency fees to the union.

Reasoning

The claimant, though not a union member, paid agency fees as required by law to benefit from the CBA negotiated by the union. Rw1 admitted this, and the payslips produced confirmed the deductions. The court accordingly made a finding of fact that the CBA applied to the employment contract with respect to negotiated terms and conditions.

p. 2
02

Whether the employment could be terminated without notice

Holding

The claimant's continuous service of over two years converted his employment to permanent and terminable only by two months' written notice or salary in lieu.

Reasoning

Under clause 19 of the CBA, seasonal contracts could not exceed one year, and such employees were subject to section 35(1)(c) of the Employment Act. The claimant served continuously for over two years, so he became a permanent employee after one year. His termination was therefore subject to notice under section 35(1)(c) and clause 9(a) of the CBA, entitling him to two months' notice or salary in lieu.

p. 2
03

Whether the claimant was estopped from suing after payment via Form LD 64

Holding

No estoppel arose because there was no valid discharge agreement signed by the claimant; the claimant was not barred from suing.

Reasoning

The respondent contended that complying with the labour officer's demand through Form LD 64 discharged her from further claims, but cited no law or precedent for that proposition. In the absence of a valid discharge agreement duly signed by the claimant, the respondent could not rely on estoppel, and the court proceeded to consider the whole claim on merit.

p. 2
04

Whether the termination was unfair

Holding

The termination was unfair both in reason and procedure, and the claimant was awarded four months' salary under section 49(1) and (4) of the Employment Act.

Reasoning

The stated reason - lapse of the fixed term contract - was invalid because the service had converted to an indefinite contract terminable by notice. Procedurally, no prior written notice was served, no lawful redundancy was declared, and no misconduct, poor performance or incapacity was cited or proved. The court awarded four months' salary because the claimant did not contribute to the termination through misconduct, though his relatively short service warranted a moderate award.

p. 2

Legal principles established

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  • An employee who serves continuously on fixed term contracts for over one year becomes a permanent employee terminable only by notice under section 35(1)(c) of the Employment Act
  • Compliance with a labour officer's demand through Form LD 64 does not discharge an employer from further claims absent a valid signed discharge agreement; estoppel cannot arise
  • An employee who pays agency fees under section 49 of the Labour Relations Act is entitled to the benefit of the CBA negotiated by the recognised union

Court orders

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  1. 1.Judgment entered for the claimant declaring the termination of his employment unlawful
  2. 2.Award of kshs.307,427.50 to the claimant, comprising two months' salary in lieu of notice (kshs.80,152.00), pay for 52 days annual leave (kshs.57,671.50), service charge for January 2014 (kshs.9,300.00) and four months' salary as compensation for unfair termination (kshs.160,304.00)
  3. 3.Costs of the suit to the claimant
  4. 4.Interest on the awarded sum

Authorities

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Legislation

  • Employment Act 2007section 35(1)(c)
  • Employment Act 2007sections 49(1) and 49(4)
  • Labour Relations Actsection 49
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act 2007 and Labour Relations Act; specific constitutional provision not stated in the judgment

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, "Vivian Azangu Matunda v Swahili Beach Resorts Limited [2016] KEELRC 1197 (KLR)", Case Analysis (2016). Cause No 599 of 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2016/1197/eng@2016-05-06

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