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ELRCPartially AllowedCause No 277 of 2015· [2019] KEELRC 257 (KLR)

Simon Munyi Maranga & another v Express Kenya Limited [2019] KEELRC 257 (KLR)

Employment and Labour Relations Court
29 November 2019
2,443 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Two long-serving managers won millions in gratuity and leave pay, but the court rejected their claim that they had been unfairly declared redundant.

What this practically means

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Executive summary

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Two former managers of Express Kenya Limited, Simon Munyi Maranga (Manager, Warehousing) and Jasper Kiai Kimweli (Manager, Packaging and Removals), sued claiming their September 2004 terminations were disguised retrenchments following a restructuring, entitling them to redundancy pay, gratuity and outstanding leave pay totalling about Kshs.7.3 million. The Respondent maintained they were lawfully terminated for gross misconduct. The court found that although restructuring was discussed in management meetings, the termination letters made no reference to redundancy and the minutes never declared the Claimants redundant; the terminations were therefore not on account of redundancy. Since the cause of action predated the Employment Act 2007, the repealed Employment Act Cap 226 governed, which imposed no obligation to give reasons or accord a hearing; accordingly no unfair termination was proved. However, under Clause 20 of the Respondent's terms and conditions, the Claimants were entitled to gratuity of 15 days' pay per completed year of service because they were not summarily dismissed but terminated on three months' notice. They were also entitled to pay in lieu of outstanding leave, as the employer could not force leave to run concurrently with the notice period, a position supported by the Respondent's own HR policy. Judgment was entered for gratuity and leave pay with interest from the date of judgment, and the Respondent was ordered to bear the costs. Claims for the declaration of unlawful redundancy-based termination and severance pay failed.

Key legal issues

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01

Whether the termination was on account of redundancy or misconduct

Holding

The termination was not on account of redundancy; the termination letters did not refer to retrenchment and the minutes did not declare the Claimants redundant

Reasoning

The termination letters dated 9th September 2004 made no reference to retrenchment, and the minutes of 21st August 2004 only agreed to come up with a reorganisation plan in due course without declaring the Claimants redundant. Although the Claimants were aware of impending restructuring, the stated reason for termination was different. No redundancy letters were issued to them.

p. 3
02

Whether the Claimants were unfairly terminated

Holding

No proof of unfair termination, as the repealed Employment Act Cap 226 governed and imposed no requirement of reason or hearing

Reasoning

The cause of action arose in 2004, before the Employment Act 2007 was enacted, so provisions of the 2007 Act and case law on actions after its enactment were not applicable. The repealed Employment Act Cap 226, which was in force, did not require a reason to be given prior to termination or a right to be heard.

p. 4
03

Entitlement to gratuity

Holding

Claimants entitled to gratuity under Clause 20 of the terms and conditions of employment since they were not summarily dismissed but terminated on 3 months' notice

Reasoning

Clause 20 of the Respondent's Terms and Conditions of Employment provided for gratuity of 15 days' pay per completed year after five years' service, but excluded employees summarily dismissed for lawful cause. The Claimants were not summarily dismissed but terminated under Clause 17 with 3 months' notice, so the exclusion did not apply. Entitlement arises from the contract, not from what colleagues were paid.

p. 4
04

Entitlement to outstanding leave pay

Holding

Claimants entitled to outstanding leave pay; employer cannot force leave to run concurrently with notice

Reasoning

The termination letters directed the Claimants to take their full outstanding leave immediately. The court held the employer had no justification to force them to take leave concurrently with the notice period, and neither the repealed Employment Act Cap 226 nor the terms of employment authorised forcing leave instead of payment. The Respondent's own HR policy (Clauses D4 and D5) provided for both notice pay and pay in lieu of outstanding leave.

p. 4

Legal principles established

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  • Where the Employment Act Cap 226 (repealed) applied, an employer was not required to give a reason prior to termination or accord a right to be heard
  • Gratuity entitlement flows from the terms and conditions of employment, not from what colleagues received, provided the employee was not summarily dismissed
  • An employer cannot force an employee to take leave running concurrently with the notice period; the employee is entitled to both pay in lieu of notice and pay in lieu of outstanding leave

Court orders

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  1. 1.Gratuity pay of Kshs.1,740,562.00 to the 1st Claimant (15 days' pay for every completed year of service: 204,722 x 17 years)
  2. 2.Outstanding leave pay of Kshs.307,158.00 to the 1st Claimant (36 days)
  3. 3.Gratuity pay of Kshs.1,622,432.00 to the 2nd Claimant (15 days' pay for every completed year of service: 101,402 x 32 years)
  4. 4.Outstanding leave pay of Kshs.291,530.75 to the 2nd Claimant (69 days)
  5. 5.Interest to accrue from date of judgment
  6. 6.Respondent to bear costs of the suit

Authorities

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Legislation

  • Employment ActCap 226 (repealed)
  • Employment Act 2007

Cases cited (3)

  • Patricia Wangari Munene v Equity Bank Limited
    [2015] eKLR
  • Eddah Anyango Akumu v AAR Insurance Kenya Limited
    [2019] eKLR
  • Michael Obudho Amondi v United Millers Limited
    [2016] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over employment claims (Article 162(2)(a) of the Constitution, not expressly cited in the judgment)

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, "Simon Munyi Maranga & another v Express Kenya Limited [2019] KEELRC 257 (KLR)", Case Analysis (2019). Cause No 277 of 2015. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2019/257/eng@2019-11-29

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