Eunice Kamau v AAR Insurance (K) Limited [2017] KEELRC 1671 (KLR)
The bottom line
#A Kenyan court cut a dismissed manager's payout because her employer fired her for poor performance without a hearing, but still had a valid reason.
What this practically means
#Executive summary
#Key legal issues
#Whether the Respondent had a valid reason for termination under Section 43
Yes - performance concerns and the Claimant's failure to relocate as instructed gave the Respondent a valid reason
The court reviewed the correspondence showing sustained performance discussions, missed targets and late evaluation reports, plus the Claimant's refusal to relocate from the Head Office as directed by the Managing Director. Applying the reasonable employer test, it held that in the totality of circumstances a valid reason existed. This reduced the compensatory award despite the procedural failure.
Whether the termination was procedurally fair under Section 41
No - no performance improvement plan or capability hearing was conducted, and the insubordination accusations were not subjected to Section 41 procedure
Though performance concerns existed, the employer produced no performance improvement plan and held no capability hearing before termination. The insubordination claims were likewise dealt with without adherence to the mandatory Section 41 procedure of notification and hearing. The termination therefore failed the procedural fairness test, entitling the Claimant to compensation.
The effective date of the Claimant's employment
18th June 2012; between November 2008 and June 2012 the Claimant was an agent, not an employee
The 15th October 2008 letter and accompanying agreement engaged the Claimant as a Business Development Consultant on override commission of 1.350% for business from Voyager Agency. Since Section 2 of the Employment Act defines an employee as a person employed for wages or salary, the commission-based agency relationship did not create employment. Employment therefore commenced on 18th June 2012.
The notice pay period - one or three months
One month, as pleaded; the contra proferentem rule does not displace the pleaded position
The contract's Clause 1.1(i) provided for three months and one month in the same breath, prompting a contra proferentem argument. The court held the rule applies only in cases of ambiguity or where other rules of construction have failed, and that the parties' real intention was ascertainable. Since the Claimant pleaded one month in her Memorandum of Claim, she was held to that pleading.
Legal principles established
#- Under Section 43 of the Employment Act the employer must establish a reason that would cause a reasonable employer to terminate employment
- An employer relying on poor performance must demonstrate that the employee was made aware of specific shortcomings and given reasonable time and support to improve, and must conduct a capability hearing under Section 41
- Parties are bound by their pleadings
Court orders
#- 1.Award of Kshs. 1,329,582 being three (3) months' salary in compensation for procedurally unfair termination, subject to statutory deductions
- 2.The award to attract interest at court rates from the date of judgment until payment in full
- 3.The Claimant to have the costs of the case
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction under the Employment Act, 2007
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (1)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Julius Githaiga Mwangi v Ultra Limited [2019] KEELRC 1221 (KLR)[2019] KEELRC 1221 (KLR)3 Jul 2019
Cite this brief
#Cite this brief
Caselaw, "Eunice Kamau v AAR Insurance (K) Limited [2017] KEELRC 1671 (KLR)", Case Analysis (2017). Memorandum of Claim dated 1st September 2015, filed 9th September 2015. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2017/1671/eng@2017-03-10
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.