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ELRCDismissedCause No 2240 of 2014· [2018] KEELRC 384 (KLR)

John Mureithi Kiarie v Karangi Coftea Limited & another [2018] KEELRC 384 (KLR)

Employment and Labour Relations Court
30 November 2018
MOMaureen Onyango
3,028 words in judgment
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The bottom line

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The Employment Court dismissed a former manager's claim for commissions and unfair dismissal because his termination happened before Kenya's 2007 Employment Act protections existed.

What this practically means

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Executive summary

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The claimant, engaged from July 2006 as General Manager of the respondents' business at a monthly salary of Kshs.60,000, sued for unpaid management commissions on Kajewa, Jamena, Muthaiga, Pangani and Lavender Flats, a 5% commission on the subdivision and sale of Kahungu Farm (Kshs.2,400,000), unpaid salary from June 2013 to judgment, and a declaration that his dismissal was unprocedural, unfair and unlawful. The respondents denied the commission agreements, contending that the signed management contracts were never operationalised because the claimant lacked capacity as an agent, that he remained an employee on salary, and that RW2 Luke K. Ngethe was the actual selling agent for Kahungu Farm. They justified his March 2008 termination on his conversion of Kshs.200,000 court bail money to his own use. The court framed three issues: whether the claimant was both employee and commission agent; whether the termination was unlawful; and entitlement to remedies. It found the claimant was an employee only, the management contracts never took off and were rescinded by conduct. The termination predated the Employment Act, 2007; under the repealed Employment Act, Cap 226, summary dismissal for gross misconduct required no hearing, and following Kenya Revenue Authority v Menginya Salim Murgani and Addis v Gramophone Co., no natural justice obligations applied. Relying on Elizabeth Wakanyi Kibe v Telkom Kenya, loss of future earnings was refused. The entire claim was dismissed with each party bearing its own costs.

Key legal issues

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01

Whether the claimant was both an employee and a commission agent

Holding

The claimant was an employee only; he failed to prove engagement as a management or commission agent, and the management contracts were rescinded by conduct.

Reasoning

The respondent admitted signing a management contract but stated it was never implemented because the claimant lacked capacity to operate as an agent. All letters and rent receipts produced supported employment, not agency. RW2 was the selling agent for Kahungu Farm. The commission claims arose only after the relationship broke down.

p. 3
02

Whether the termination was unprocedural, unlawful and unfair

Holding

The termination was justified as summary dismissal for gross misconduct, and no procedural fairness obligations applied under the repealed Employment Act, Cap 226.

Reasoning

The cause of action arose in March 2008, before the Employment Act, 2007 came into operation on 2 June 2008. Section 17(g) of the repealed Act permitted summary dismissal for suspected criminal offences against the employer's property. The claimant admitted converting Kshs.200,000 to his own use, and his terms did not provide for a fair procedure.

p. 4
03

Whether the claimant was entitled to the remedies sought

Holding

All remedies were refused; the entire claim was dismissed.

Reasoning

The commission agreements were never actualised and the prayer for commission was dismissed. Loss of future earnings/salary from termination to judgment is not payable per the Elizabeth Wakanyi Kibe case. Having failed on liability, the entire claim collapsed with each party bearing its own costs.

p. 4

Legal principles established

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  • Prior to the Employment Act, 2007, employers had no obligation to observe principles of natural justice in termination of contracts of employment; employment was at the will of the employer.
  • Where the contract of employment, even before the 2007 Act, imposed a duty to observe natural justice, the Court could enforce such obligations; fairness obligations arise only where the terms of employment provide for them.
  • Employees whose contracts are terminated have no claim to remuneration for periods after termination for work not performed.

Court orders

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  1. 1.The entire claim is dismissed
  2. 2.Each party to bear its own costs

Authorities

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Legislation

  • Employment Act, 2007section 45(1) and (2); came into operation 2 June 2008
  • Employment Act, Cap 226 (repealed)section 17(g)

Cases cited (6)

  • Kenya Revenue Authority v. Menginya Salim Murgani
    [2010] e-KLR
  • Addis v. Gramophone Co.
    [1909] AC 488
  • Geoffrey Muguna Mburugu v. The Attorney-General
    Civil Case Number 3472 of 1994
  • Lt. Col. Benjamin Mwema v. the Attorney-General
    Civil Case Number 2230 of 2001
  • Ezekiel Nyangoya Okemwa v Kenya Marine & Fisheries Research Institute
    [2016] eKLR
  • Elizabeth Wakanyi Kibe v. Telkom Kenya Limited
    Civil Appeal No. 25A of 2013, [2014] e-KLR
Jurisdiction invoked
Original employment and labour relations jurisdiction of the Employment and Labour Relations Court (claim for unpaid commissions, salaries and terminal benefits arising from a contract of employment)

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, "John Mureithi Kiarie v Karangi Coftea Limited & another [2018] KEELRC 384 (KLR)", Case Analysis (2018). Cause No 2240 of 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2018/384/eng@2018-11-30

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