George Ndutire Karugo v Kenya Orient Insurance Limited [2016] KEELRC 1681 (KLR)
The bottom line
#Kenyan employers cannot lawfully fire staff without a valid reason, even if the employment contract says they can.
What this practically means
#Executive summary
#Key legal issues
#Whether termination without any stated reason, relying on a contractual clause permitting termination without cause, is lawful
Unlawful and unfair for want of substantive justification; contractual clauses permitting termination without reason cannot override the statutory requirement of a valid reason under Section 43
The termination letter gave no reason for terminating the employment. The Respondent relied on Clause 7 of the letter of appointment permitting termination on one month's notice or pay in lieu without reasons. The Court held this reflected the old law; Section 43 of the Employment Act, 2007 now mandates a valid reason regardless of contract, and any contract derogating from the statute is null and void to that extent.
Whether the termination was procedurally fair
Procedurally unfair as no evidence showed the Claimant was given an opportunity to defend himself as required by Section 41
Section 41 of the Employment Act, 2007 mandates that an employee facing disciplinary action be given an adequate opportunity to be heard and defend themselves. No evidence was presented that the Claimant was afforded such an opportunity before termination, so the termination was procedurally unfair in addition to lacking substantive justification.
What remedies are due
Six months' salary as compensation, Kshs.900,000, plus interest and costs
The Court adopted the uncontroverted salary figures presented by the Claimant and, considering his length of service and the Respondent's conduct in the termination, awarded six months' salary in compensation rather than the twelve months claimed. The claim for certificate of service was abandoned at trial.
Legal principles established
#- Section 43 of the Employment Act, 2007 requires an employer to have a valid reason for termination irrespective of the contractual terms, and a contract derogating from the statute is void to the extent of the derogation
- Section 41 of the Employment Act, 2007 requires an employee facing disciplinary action be given an adequate opportunity to defend themselves; failure renders the termination procedurally unfair
Court orders
#- 1.Respondent to pay the Claimant Kshs.900,000.00 being the equivalent of six (6) months' salary as compensation for unlawful and unfair termination
- 2.The award amount to attract interest at court rates from the date of the award until payment in full
- 3.Respondent to pay the costs of the case
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction under Article 162(2) of the Constitution (as the specialised court hearing employment claims); claim brought under the Employment Act, 2007
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "George Ndutire Karugo v Kenya Orient Insurance Limited [2016] KEELRC 1681 (KLR)", Case Analysis (2016). Cause No 2281 of 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2016/1681/eng@2016-02-19
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.