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ELRCPartially AllowedCause No 51 of 2016· [2019] KEELRC 167 (KLR)

Mary Wacheke Thongoh-Muia v Central Bank of Kenya & Patrick Ngugi Njoroge [2019] KEELRC 167 (KLR)

Employment and Labour Relations Court
29 November 2019
6,399 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~26 min to read original · ~4 min brief

The bottom line

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A Kenyan court ruled the Central Bank of Kenya wrongly disciplined a dismissed executive, awarding her Sh14.4 million but rejecting her larger payout claims.

What this practically means

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Executive summary

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The claimant, Director of Human Resources at the Central Bank of Kenya under a five-year contract, sued after being handed a termination letter on 21st September 2015 without reasons or hearing, followed by Circular No. 7 of 2015 stating she had relinquished her responsibilities. Following a demand letter, the Governor withdrew the termination letter on 2nd October 2015 and expunged it from her records, but no reinstatement circular issued. Negotiations for a 'mutual decoupling' followed, and in January 2016 the claimant was served with a show cause letter for absconding. She claimed invalidation of the termination, constitutional damages, salary for the unexpired contract, gratuity, leave, defamation damages and payment of taxes. The respondents argued the withdrawal reinstated her, that she absconded, and that she was estopped. The court held that the rescission of the termination letter was by mutual agreement and restored her employment, so the cause of action based on that letter was gone; that the parties thereafter mutually agreed to terminate the contract from 6th October 2015, so she did not desert; and that the January 2016 disciplinary process was overtaken by events. The court declined to invalidate the termination and dismissed the constitutional and defamation claims for want of proof. She was awarded September 2015 salary plus three months' pay in lieu of notice (Kshs. 4,240,805.80) and pro rata gratuity of 30% for 32 months (Kshs. 10,177,933.92), totaling Kshs. 14,418,676.72, less statutory deductions and a car loan balance of Kshs. 3,214,218, with costs and interest against the 1st respondent. The claim against the Governor personally was dismissed for misjoinder.

Key legal issues

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01

Whether the termination letter dated 21.9.2015 founded a viable cause of action

Holding

No - the demand for rescission was granted on 2.10.2015 and that cause of action ended

Reasoning

The claimant demanded immediate rescission of the termination letter, and the 2nd respondent withdrew it and expunged it from her records. The court held the dispute over the termination letter ended, and that cause of action was no longer a proper basis for the suit.

p. 6
02

Whether the claimant deserted her employment

Holding

No - the parties mutually agreed to terminate the contract from 6.10.2015

Reasoning

The correspondence after rescission showed the parties had, in principle, agreed to separate mutually, with only the terms (three months' salary in lieu versus unexpired contract salary) outstanding. The claimant therefore had good cause not to report back and did not desert.

p. 7
03

Whether the claimant was bound to respond to the show cause letter of 15.1.2016

Holding

No - the contract had already ended by mutual agreement

Reasoning

Since the claimant was right to treat the contract as ended by the time the notice was served on 18.1.2016, the disciplinary process was overtaken by events. The court observed that the show cause letter also implicated the 2nd respondent for having denied her due process under section 41 of the Employment Act at the time of the aborted termination.

p. 8
04

What remedies flow from the mutual termination

Holding

Four months' salary (September 2015 plus three months in lieu of notice) and pro rata gratuity at 30%; no unexpired-term salary, leave, medical, defamation or constitutional damages

Reasoning

The contract allowed termination on three months' notice or pay in lieu, so unexpired-term salary was refused. Gratuity at 30% was payable for the period worked (32 months). Leave, medical and insurance claims failed for lack of particulars and evidence, and defamation failed for want of proof. The car loan balance was set off.

p. 8

Legal principles established

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  • A termination notice cannot be unilaterally withdrawn; withdrawal requires mutual agreement between the parties
  • Once a termination letter is rescinded by mutual agreement, the employee's status is restored and she should report back to work
  • Where parties negotiate a mutual separation, the employee has good cause not to report to work pending agreement on terms

Court orders

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  1. 1.Judgment entered for the claimant against the 1st respondent in the sum of Kshs. 14,418,676.72 less statutory deductions and car loan balance of Kshs. 3,214,218.00
  2. 2.Interest on the judgment sum at court rates
  3. 3.Costs of the suit awarded to the claimant against the 1st respondent
  4. 4.Claim for salary for the unexpired period of the fixed term contract dismissed; claimant awarded four months' salary (Kshs. 4,240,805.80) being September 2015 salary plus three months' salary in lieu of notice
  5. 5.Claimant awarded pro rata gratuity at 30% for 32 months (Kshs. 10,177,933.92)
  6. 6.Claims for leave, medical premium and insurance, defamation and constitutional damages dismissed
  7. 7.Claim against the 2nd respondent dismissed entirely for misjoinder
  8. 8.Reliefs to invalidate termination, declare breach of contract, and restrain fresh disciplinary proceedings declined

Authorities

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Legislation

  • Employment Actsection 45
  • Employment Actsection 41
  • Employment Actsection 49
  • Employment Actsection 5 (3)
  • Constitution of KenyaArticle 47
  • Constitution of KenyaArticle 41
  • Constitution of KenyaArticle 27
  • Constitution of KenyaArticle 10
  • Fair Administrative Action Actsection 4 (1) and (2)
  • Employment and Labour Relations Court Actsection 12 (3) (iv)
  • Evidence Actsection 80

Cases cited (13)

  • Liz Ayany v Leisure Lodges Limited
    [2018] eKLR
  • Aggrey Lukorito Wasike v KPLC
    [2016] eKLR
  • Stanley Omwoyo Onchweri v BOM Nakuru YMCA Secondary
    [2015] eKLR
  • Meshak M. Saboke v Chairman Board of Directors & 2 Others
    [2015] eKLR
  • Abraham Nyambane Asiago v Barclays Bank of Kenya Limited
    [2013] eKLR
  • Serah Njeri Mwobi v John Kimani Njoroge
    [2013] eKLR
  • Miguna Miguna v Standard Group Limited & 4 others
    [2016] eKLR
  • Robert Kimutai Rutto v Hotel Cathay Limited
    [2018] eKLR
  • Kiambaa Dairy Farmers Co-operative Society Limited v Rhoda Njeri & 3 others
    [2018] eKLR
  • D. K. Marete v Teacher Service Commission
    [2013] eKLR
  • Elizabeth Wakanyi Kibe v Telkom Kenya Limited
    [2014] eKLR
  • Sonye v Siaya Teachers Co-operative Savings and Credit Society and another
    (1999) 2 EA 311
  • Birrell v Australian National Airlines Commission
    (1984) 9 IR 101
Jurisdiction invoked
Employment and Labour Relations Court Act, section 12 (3) (iv) invoked; original employment jurisdiction under Article 41 read with the Employment 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, "Mary Wacheke Thongoh-Muia v Central Bank of Kenya & Patrick Ngugi Njoroge [2019] KEELRC 167 (KLR)", Case Analysis (2019). Cause No 51 of 2016. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2019/167/eng@2019-11-29

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