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ELRCPartially AllowedELRC No. 2160 of 2015· [2019] KEELRC 1211 (KLR)

Joseph Okoto Ajwang v Kengen Company Limited [2019] KEELRC 1211 (KLR)

Employment and Labour Relations Court
2 July 2019
HWHellen S. Wasilwa
2,031 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 confirmed employers can retire staff early under their HR policies, but must still issue notice or pay notice pay.

What this practically means

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Executive summary

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The Claimant, employed by the Respondent since 7th April 2003 and promoted to Administration Manager, was retired early with effect from 17th July 2015 under Clause 1.11.6.6 of the Respondent's Human Resource and Administration Policies, with a memo circulated to all staff the same day. He sued claiming damages of Kshs. 53,834,667 for breach of contract to retirement age, lost pension contributions and 12 months' compensation under Section 49 of the Employment Act, plus declarations of unfair dismissal, forced retirement and violation of his constitutional rights to privacy, dignity and fair labour relations, general damages, interest and costs. The Respondent maintained the retirement was lawful under its Human Resource Manual, that terminal dues of about Kshs. 7 million were paid, and urged dismissal of the claim with costs. The court found that the Human Resource Manual permitted employer-instigated early retirement of staff above 50 at management's discretion, so the retirement itself was provided for under the policy. However, applying Section 36 of the Employment Act, the court held that issuance of notice or notice pay was of necessity in any termination, and the Respondent never issued notice before retiring the Claimant. The only omission was therefore notice, which the court granted in the sum of Kshs. 614,557 plus costs of the suit. The broader claims for declarations, constitutional compensation, general damages and the Kshs. 53 million quantification were not granted. Judgment was delivered by Hon. Lady Justice Hellen Wasilwa on 2nd July 2019.

Key legal issues

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01

Whether the early retirement instigated by the employer under Clause 1.11.6.6 of the HR Manual was lawful

Holding

The employer was entitled under the HR Manual to instigate early retirement of an employee above 50 years at management's discretion, so the retirement itself was provided for under the Manual

Reasoning

Clause 1.11.6.6 allowed early retirement at the employer's instigation where performance had stagnated or at management's discretion. The memo suggested restructuring rather than poor performance, but the Manual also allowed retirement above 50 at the employer's discretion. The court thus found the retirement itself was sanctioned by the policy. However, discretion had to be exercised lawfully and procedurally.

p. 3
02

Whether failure to issue notice or notice pay rendered the early retirement procedurally defective

Holding

The Respondent failed to issue notice or notice pay, which was necessary; the court awarded notice pay of Kshs. 614,557

Reasoning

Section 36 of the Employment Act permits termination without notice only upon payment of remuneration for the notice period. The Respondent paid the early retirement package under Clause 1.11.6.6 but never issued notice or notice pay. The court held notice/notice pay was of necessity and granted the equivalent of one month's salary as the remedy.

p. 4

Legal principles established

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  • Whatever the reason for terminating an employee's services, issuance of notice or payment of notice pay is mandatory
  • Section 36 of the Employment Act, 2007 permits termination of a contract of service without notice upon payment of remuneration for the period of notice

Court orders

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  1. 1.Award of notice pay of Kshs. 614,557 to the Claimant
  2. 2.Costs of the suit to the Claimant

Authorities

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Legislation

  • Employment Act, 2007Section 36
  • Employment Act, 2007Section 49
  • Constitution of Kenya, 2010Article 28
  • Constitution of Kenya, 2010Article 31
  • Constitution of Kenya, 2010Article 41(1)
  • Constitution of Kenya, 2010Article 47

Cases cited (9)

  • Michael Kagoma Maina Vs Kenya Police Service & 2 Others
    (2013) eKLR
  • James Mwathi Nguri vs Egerton University
    (2013) eKLR
  • John Benson Githinji Vs Attorney General & 4 Others
    (2014) eKLR
  • Paul Muhoro Kihara Vs Barclays Bank of Kenya Limited
    (2008) eKLR
  • Kenya Airways Corporation Limited Vs Tobias Oganya Auma & 5 Others
    (2007) eKLR
  • National Bank of Kenya Limited Vs Hamida Bana & 103 Others
    (2017) eKLR
  • Caleb Bw'auma Manyaga Vs Kenya Pipeline Company Limited
    (2019) eKLR
  • Joel Kibet Rotich Vs Kenya Power and Lighting Co, Ltd & Another
    (2017) eKLR
  • Anarita Karimi Njeru (No. 1)
    (1979) 1 KLR 154
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (Section 36 and Section 49 invoked)

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, "Joseph Okoto Ajwang v Kengen Company Limited [2019] KEELRC 1211 (KLR)", Case Analysis (2019). ELRC No. 2160 of 2015. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2019/1211/eng@2019-07-02

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