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ELRCPartially AllowedCause No 1527 of 2014· [2016] KEELRC 1453 (KLR)
Tom Wafula Masinde v Urgent Cargo Handling Limited [2016] KEELRC 1453 (KLR)
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·~3 min to read original · ~4 min briefThe bottom line
#A Kenyan court ruled that stopping an employee's salary for refusing to sign a new contract with a successor company counts as unfair termination, entitling him to compensation.
What this practically means
#Executive summary
#The claimant, a driver employed by the respondent from 17th February 2006 on a monthly salary of Kshs.20,379.00, claimed constructive dismissal and unpaid terminal dues. In October 2013 the respondent's Transport Department at Mombasa was de-linked to operate under a company known as Uni Group, and the claimant was required to sign a fresh employment contract with Uni Group. He declined, contending his contract with the respondent had not been lawfully terminated, and his salary was withheld from November 2013. He sought a declaration of constructive dismissal, one month's salary in lieu of notice, unpaid salary for November 2013, leave pay for six years, twelve months' salary as damages, costs and interest. The respondent did not file a reply despite due service, and the matter was heard ex parte on 15th December 2015. The court framed two issues: whether the claimant was constructively dismissed and whether he was entitled to the remedies sought. Adopting the definition of constructive dismissal and the principle that in an outsourcing or transfer of business the affected employees must give individual consent, with unwilling employees entitled to exit with full benefits, the court held the respondent's action amounted to unfair termination under Section 45 of the Employment Act, 2007. The court awarded seven months' salary as damages, one month's salary in lieu of notice, and leave pay for six years in the absence of leave records, totalling Kshs.248,624.00. The claim for November 2013 salary failed as the claimant admitted he did not work that month. The respondent was directed to issue a certificate of service, to pay costs, and the award attracts interest at court rates from the date of the award until payment in full.
Key legal issues
#01
Whether withholding salary after an employee declines to sign a fresh contract with a successor company amounts to constructive dismissal / unfair termination
Holding
The Respondent's action amounted to unfair termination within the meaning of Section 45 of the Employment Act, 2007
Reasoning
The Claimant was told to sign a fresh employment contract with Uni Group following the transfer of the Transport Department. Upon his refusal, his salary was stopped. Applying the principles on outsourcing and transfer of business, an unwilling employee must be allowed to exit with full benefits. Coercion and withholding of salary rendered the termination unfair, entitling the Claimant to compensation under Section 45.
p. 2
Legal principles established
#- In an outsourcing or transfer of business arrangement, employees' terms must be secured and each affected employee must individually consent; an unwilling employee must be allowed to terminate employment with full benefits, failing which the transfer amounts to unfair termination
Court orders
#- 1.Award of 7 months' salary as damages for unlawful termination of Kshs.142,653.00
- 2.Award of 1 month's salary in lieu of notice of Kshs.20,379.00
- 3.Award of leave pay for 6 years of Kshs.85,592.00 (total award Kshs.248,624.00)
- 4.Respondent to issue the Claimant with a certificate of service
- 5.Respondent to pay the costs of the case
- 6.Interest on the award at court rates from the date of the award until payment in full
- 7.Claim for salary for November 2013 dismissed
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction under the Employment Act, 2007
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Tom Wafula Masinde v Urgent Cargo Handling Limited [2016] KEELRC 1453 (KLR)", Case Analysis (2016). Cause No 1527 of 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2016/1453/eng@2016-02-26
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.