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ELRCDismissedCause 1935 of 2015· [2018] KEELRC 1293 (KLR)

John Kungu Kiarie v Kenya Commercial Bank (K) Limited [2018] KEELRC 1293 (KLR)

Employment and Labour Relations Court of Kenya
9 August 2018
ANAbuodha J. N.
1,337 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court dismissed a former KCB director's Sh337 million claim because the old Employment Act, not today's, governed his 2003 dismissal.

What this practically means

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Executive summary

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The claimant, formerly a Director of Risk Management at Kenya Commercial Bank, sued for compensation arising from the termination of his employment. He alleged he was arrested in May 2003 on charges arising from a bank customer's complaint, and that a week after his release the bank terminated his services on three months' notice, citing irregularities in various reports he denied knowing about. He sought a declaration of entitlement to compensation for breach of contract and special damages of Kshs 337,703,597/63, including salary, increments, annual leave, leave allowance and non-contributory pension until retirement. The respondent contended the claimant's contract was open-ended but terminable by notice or summary dismissal for gross misconduct, that irregularities and adverse reports justified the termination, and that his terminal dues had been remitted, discharging its obligations. The court held that since termination occurred on 22nd May 2003, the repealed Employment Act (Cap 226) applied; it contained no concept of unfair termination and imposed no obligation on employers to give reasons. The claimant produced no contract proving entitlement to the claimed heads of compensation, and his contract contained a termination clause permitting premature termination for any reason. The measure of damages under the repealed Act was pay in lieu of notice, which had already been paid. The court found the claim without merit and dismissed it with costs.

Key legal issues

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01

Applicable law for termination in 2003

Holding

The repealed Employment Act (Cap 226) governed since the current Act only commenced on 2nd June 2008

Reasoning

The claimant's services were terminated on 22nd May 2003, before the Employment Act 2007 came into operation. Under the repealed Act there was no concept of unfair termination and no obligation on the employer to give reasons; the court could not therefore import the current statutory protections retroactively.

p. 2
02

Entitlement to compensation until retirement

Holding

The claim for salary and benefits until retirement was refused for want of contractual basis

Reasoning

The claimant sought salary, increments, leave and pension to retirement but produced no contract entitling him to those heads upon termination. His claim rested merely on his seniority. Moreover, the contract was open-ended with a termination clause, so either party could end it prematurely for any reason, making a retirement-based claim unreasonable.

p. 2
03

Measure of damages for wrongful termination

Holding

Only pay in lieu of notice was recoverable, which had already been paid

Reasoning

Even if the court found the dismissal wrongful, the repealed Act limited damages to the notice period in the contract. The claimant had already received three months' salary in lieu of notice, which satisfied that measure, leaving no further damages recoverable.

p. 2

Legal principles established

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  • Under the repealed Employment Act (Cap 226) there was no provision for unfair termination and no statutory obligation on an employer to give reasons for termination
  • The measure of damages for wrongful termination under the repealed Employment Act is the notice period provided in the contract

Court orders

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  1. 1.The claim is dismissed with costs

Authorities

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Legislation

  • Employment Act (repealed) (Cap 226)
  • Employment Act (current)
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over employment disputes (Employment Act; Labour Relations Act)

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 Kungu Kiarie v Kenya Commercial Bank (K) Limited [2018] KEELRC 1293 (KLR)", Case Analysis (2018). Cause 1935 of 2015. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2018/1293/eng@2018-08-09

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