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ELRCPartially AllowedN/A - not stated in the judgment extract· [2019] KEELRC 2247 (KLR)

Kananga M’nchebere & another v East African Portland Cement Company Limited [2019] KEELRC 2247 (KLR)

Employment and Labour Relations Court
15 February 2019
3,075 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~12 min to read original · ~4 min brief

The bottom line

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A Kenyan court awarded two dismissed managers over Kshs.8 million total, ruling they were unfairly caught in their employer's ownership power struggle.

What this practically means

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Executive summary

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Two senior managers (the 1st Claimant, Head of Operations, and Stephen Kamau, Head of Human Resource) sued the Respondent for unlawful and unfair termination of employment on 21st March 2012, claiming notice pay, lost earnings, bonus, gratuity at 31%, and 12 months' compensation. They were dismissed for alleged insubordination and incitement during a power struggle between the Government, which had suspended the Board and Managing Director, and the Board, which had obtained High Court orders to resume office. The Respondent denied the claims and counterclaimed for losses from the factory closure. The court found the terminations were not based on tangible evidence; the Claimants were innocent victims caught between the Government and the Board, and no genuine disciplinary process was possible or conducted in the turmoil. The termination violated sections 41, 43 and 45 of the Employment Act, failing both substantive and procedural fairness. On reliefs, the court held the 1st Claimant was correctly paid notice pay; bonus was not contractual; and lost earnings had no basis in law. However, gratuity had been under-calculated at 18% instead of the contractual 31%, entitling both Claimants to the 13% differential, and leave pay should have been computed on gross salary. Applying section 49(1)(c), the court awarded each Claimant three months' salary in compensation, considering the mitigating effect of six months' notice pay and their alternative employment. The counterclaim failed for want of evidence linking the Claimants to the losses. Judgment was entered for the 1st Claimant at Kshs.4,283,013.53 and the 2nd Claimant at Kshs.3,874,652.59, with interest and costs to the Claimants.

Key legal issues

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01

Validity and fairness of the termination

Holding

Termination was not for a valid reason and did not follow a fair procedure, violating sections 41, 43 and 45 of the Employment Act

Reasoning

The Claimants were caught between an ownership and control wrangle between the Government and the Board. The disciplinary action by the Managing Director was not based on tangible evidence, was conducted in the turmoil of the dispute, and the Claimants were hounded out merely for being seen to support Government. Both substantive justification and procedural fairness failed.

p. 3
02

Gratuity calculated at 18% instead of contractual 31%

Holding

Claimants entitled to the 13% differential on the basic salary for completed years of service

Reasoning

The appointment letters provided gratuity at 31% of basic salary per completed year, but the Respondent calculated at 18% for the 21 served months. The court awarded the 13% shortfall to both Claimants.

p. 4
03

Quantum of compensation under section 49(1)(c)

Holding

Three months' salary each awarded despite the unlawful and unfair termination

Reasoning

The six months' notice pay largely mitigated the loss and the Claimants had acquired alternative employment. Considering cited precedents awarding 3 to 12 months, the court settled on 3 months' salary each.

p. 4
04

Counterclaim for losses from factory closure

Holding

Counterclaim not established; no evidence linking the Claimants to the losses

Reasoning

RW 2 confirmed under cross-examination that the operation of the Respondent depended on the Board, Managing Director, heads of departments and individual staff, and its closure did not depend on the two Claimants. The counterclaim therefore had no merit.

p. 3

Legal principles established

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  • For a termination of employment to pass the fairness test, there must be both substantive justification and procedural fairness

Court orders

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  1. 1.Declaration that the termination of the Claimants' employment was unlawful and unfair
  2. 2.1st Claimant awarded: Kshs.2,499,975 in compensation; additional gratuity Kshs.1,428,677.25; in lieu of leave Kshs.354,361.28; total Kshs.4,283,013.53
  3. 3.2nd Claimant awarded: Kshs.2,365,203 in compensation; additional gratuity Kshs.1,428,884.73; in lieu of leave Kshs.80,564.86; total Kshs.3,874,652.59
  4. 4.Interest at court rates from date of judgment on compensation and from date of filing suit on gratuity and leave pay till payment in full
  5. 5.Respondent to pay costs of the suit to both Claimants
  6. 6.Counterclaim dismissed (no relief granted to the Respondent on the counterclaim)

Authorities

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Legislation

  • Employment Act, 2007sections 41, 43, 45
  • Employment Act, 2007sections 47, 49(1)(c)

Cases cited (5)

  • Moses Kaunda Moro v CMC Motors Group Limited
    [2013] eKLR
  • Walter Ogal Anuro v Teachers Service Commission
    [2013] eKLR
  • Sylvester Ouma Onduu v Prime Steel Mills Limited
    [2017] eKLR
  • Charles Abiero & another v One Acre Fund
    [2018] eKLR
  • Kenya Union of Sugar Plantation and Allied Workers v Sony Sugar Co. Limited
    [2018] eKLR
Jurisdiction invoked
Original jurisdiction under the Employment Act, 2007 (sections 41, 43, 45, 47, 49(1)(c) 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, "Kananga M’nchebere & another v East African Portland Cement Company Limited [2019] KEELRC 2247 (KLR)", Case Analysis (2019). N/A - not stated in the judgment extract. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2019/2247/eng@2019-02-15

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