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ELRCPartially AllowedCause No. 219 of 2015 (formerly Nairobi HCCC No. 751 of 2005)· [2018] KEELRC 2542 (KLR)

John Njenga Ndung’u v Kenya Wine Agencies Ltd [2018] KEELRC 2542 (KLR)

Employment and Labour Relations Court of Kenya
20 April 2018
8,266 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~33 min to read original · ~4 min brief

The bottom line

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A Kenyan court limited a dismissed executive's damages to his contractual notice period, rejected his claims to a company car and future earnings, and largely upheld his employer's counterclaim.

What this practically means

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Executive summary

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The claimant, formerly Deputy Managing Director of the respondent on a two-year contract running from 1st April 2004, was summarily dismissed by letter dated 21st April 2005 following a disciplinary process over alleged financial irregularities. He claimed terminal dues, expected earnings to the end of the contract, transfer of company vehicle KAN 143R and a certificate of employment; the respondent counterclaimed for various debts and irregular payments. The court, applying the repealed Employment Act Cap 226 as the applicable law at the time of dismissal, held that there was then no statutory requirement for procedural or substantive fairness, and that the claimant in any event received a hearing before the disciplinary committee and the board. The dismissal was therefore not wrongful. Relying on Court of Appeal authority, the court held that damages are limited to the contractual notice period, so the claim for expected earnings to contract completion failed. Claims for quiet possession and transfer of vehicle KAN 143R also failed because the vehicle remained the respondent's property, having been purchased without the required board approval under the car scheme, and the claimant refused to return it for assessment. Claims for tyres, board minutes, and long service/units of participation were disallowed as not due, double benefits or double pay. The court awarded the claimant salary for 18 days, untaken leave pay, leave transport allowance, pro-rated gratuity and long service pay, plus a certificate of employment, and substantially allowed the counterclaim for advances, goods, house security, the NIC loan with commercial-rate interest, and school fees, ordering a set-off of the two awards. Each party was ordered to bear its own costs.

Key legal issues

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01

Whether the summary dismissal was wrongful under the repealed Employment Act Cap 226

Holding

The termination was not wrongful; under the applicable repealed law no procedural or substantive justice was owed, and a hearing was in fact given

Reasoning

The cause of action arose in April 2005 under the repealed Employment Act Cap 226, which permitted termination per contract without reasons. Although the 2007 Act introduced procedural fairness, it did not apply retrospectively. The claimant received notice of allegations, responded, and appeared before a disciplinary committee. The court distinguished cases decided under the Employment Act, 2007 and applied Court of Appeal authority that a contractual notice need not be reasoned.

p. 11
02

Measure of damages for termination on contractual notice

Holding

The claimant is only entitled to pay for days worked, accrued gratuity and benefits to the last date at work; future earnings fail

Reasoning

Following Dalmas B Ogoye v KNTC Ltd and Barclays Bank of Kenya Ltd v Njau, where the contract embodies a notice period, damages for unlawful dismissal are computed on the notice period, with entitlements assessed by reference to the letter of appointment. Expected earnings to the end of a contract validly terminated under its terms are not justified.

p. 11
03

Entitlement to motor vehicle KAN 143R

Holding

No quiet possession or transfer order; the claimant must return the vehicle for assessment as the respondent remained owner

Reasoning

The vehicle was purchased without the board approval required by the car scheme and procurement regulations for cars exceeding 1600cc or Kshs.500,000. At termination the vehicle remained the respondent's property, title and log book held by it. The demand for return for assessment and disposal with claimant priority was fair; the claimant's failure to oblige defeated the claim to ownership.

p. 12
04

The counterclaim for debts and irregular payments

Holding

Most counterclaim heads succeed: advances, goods, house security, NIC loan with interest, and school fees; claims based on overstated basic pay fail

Reasoning

Goods and house security were uncontested. The school fees claim succeeded because the claimant admitted benefiting from the education trust fund without offering contrary evidence. The NIC loan was admitted and secured by the respondent. However, claims for irregular performance pay and overpaid gratuity failed because the respondent's own computation used an overstated basic pay basis.

p. 14
05

Effect of the claimant's conviction for gross misconduct

Holding

The claimant's conviction for guaranteeing the managing director's loan under the Anti-Corruption and Economic Crimes Act amounted to gross misconduct and bars him from benefiting from an illegality

Reasoning

Although not the stated reason for termination, the claimant's admitted conviction arising from his employment conduct was gross misconduct under section 16 of the repealed Employment Act; a party cannot benefit from an illegality.

p. 12

Legal principles established

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  • Where a notice period is provided in the contract of employment, an employer need not assign any reason for giving notice to terminate the contract; damages for unlawful dismissal are worked out on the basis of the notice period
  • Under the repealed Employment Act Cap 226, there was no statutory requirement for procedural or substantive fairness before summary dismissal; such requirements arose under the Employment Act, 2007
  • Where statute stipulates procedures to be followed before termination and the employer fails to follow them, the resulting termination is wrongful

Court orders

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  1. 1.Claimant awarded: (a) Salary due for 18 days in April, 2005 at Kshs.359,445.60; (b) Untaken leave days Kshs.1,198,152.00; (c) Leave transport allowance Kshs.112,350.00; (d) Gratuity due Kshs.589,837.00; (e) Long service pay Kshs.144,719.00; (f) Certificate of Employment
  2. 2.Respondent awarded in counterclaim: (a) Unpaid Advances to the claimant Kshs.340,000.00; (b) Unpaid Goods sold to the claimant Kshs.3,939.13; (c) Unpaid claimant's house security Kshs.146,992.90; (d) Unpaid NIC loan balance Kshs.1,387,532.00 payable with interest at current ongoing commercial rates; (e) Unpaid school fees Kshs.4,481,549.56
  3. 3.The dues owed to the claimant shall be offset from the dues owing from the respondent in counterclaim whichever is higher
  4. 4.Whatever is paid and acknowledged shall be put into account
  5. 5.Each party shall bear own costs
Jurisdiction invoked
Transfer of a suit from the High Court to the Employment and Labour Relations Court (HCCC No. 751 of 2005 transferred to ELRC Cause No. 219 of 2015); employment and counterclaim jurisdiction

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 Njenga Ndung’u v Kenya Wine Agencies Ltd [2018] KEELRC 2542 (KLR)", Case Analysis (2018). Cause No. 219 of 2015 (formerly Nairobi HCCC No. 751 of 2005). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2018/2542/eng@2018-04-20

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