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ELRCPartially AllowedCause No 70 of 2013· [2019] KEELRC 2282 (KLR)

Abubakar Ali Shee v Tourism Promotion Services (Kenya) Limited [2019] KEELRC 2282 (KLR)

Employment and Labour Relations Court
18 January 2019
2,958 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 awarded a former manager Kshs.975,975 in terminal dues plus interest and costs, but rejected bigger claims because pre-2007 law allowed termination without a hearing.

What this practically means

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Executive summary

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The Claimant, formerly General Manager of Sweet Waters Tented Camp, Nanyuki, sued Tourism Promotion Services Limited (T.P.S) claiming Kshs.7,169,355.20 as special damages plus general and exemplary damages for what he alleged was unlawful, unfair and malicious summary termination of his employment on 18th/23rd May 2005. He claimed service gratuity, twelve months' statutory compensation for unfair termination, accrued house, medical, education and leave allowances, four months' salary in lieu of notice, and tax deducted on early pension withdrawal. The Respondent admitted the termination but maintained it was lawful under the then-applicable repealed Employment Act, which permitted termination on notice or payment in lieu without reasons, and that it had offered Kshs.975,975.00 in terminal dues which the Claimant declined. The court framed three issues: lawfulness of the termination, entitlement to reliefs, and costs. Holding that the repealed Employment Act governed and imposed no duty of procedural fairness, the court found the termination lawful. On quantum, it awarded only the Kshs.975,975.00 terminal dues itemised in the termination letter, rejecting gratuity (no contractual provision and pension membership), statutory compensation (introduced only by the 2007 Act), house allowance (Claimant was housed), medical and education allowances (payable only during employment), and pension tax (not the employer's liability). Because the Respondent never tabulated or tendered the dues, interest was awarded from date of filing suit. The Respondent was ordered to pay the Claimant's costs. Judgment delivered at Nairobi on 18th January 2019 by Maureen Onyango, Judge.

Key legal issues

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01

Whether the 2005 termination was wrongful, unfair and unlawful

Holding

The termination was lawful under the law then applicable; the repealed Employment Act did not require a hearing or reasons, and the contract allowed termination on notice or payment in lieu.

Reasoning

The court accepted that the applicable law was the repealed Employment Act (1976). It adopted authorities holding that prior to the Employment Act, 2007, employers could terminate for good cause, bad cause or no cause, on notice or payment in lieu, with no obligation to notify or hear the employee. The contract itself provided for notice or payment in lieu, which the Claimant had acknowledged in his letter of protest.

p. 4
02

What terminal dues and reliefs the Claimant is entitled to

Holding

The Claimant is entitled only to the terminal dues of Kshs.975,975.00/- itemised in the termination letter, with interest from filing suit; all other heads fail.

Reasoning

The court confined the award to the heads listed in the termination letter (salary up to 22nd May 2005, four months' salary in lieu of notice, leave days and off days). Service gratuity, statutory compensation, allowances and pension tax claims all failed as unsupported by contract, evidence or the law applicable in 2005.

p. 5
03

Whether the Respondent's failure to pay dues at termination defeats or delays interest

Holding

The Respondent should have computed and paid the dues on termination; interest is awarded but only from the date of filing suit, not termination.

Reasoning

The termination letter gave heads without figures, so dues were never tendered. The employer had a statutory duty under section 5(4) of the repealed Act to ensure payment. Because the employer traded with the Claimant's money, interest was fair as opportunity cost, but the court exercised discretion to run it from filing suit rather than termination as prayed.

p. 5
04

Who bears the costs of the suit

Holding

The Respondent pays the Claimant's costs.

Reasoning

Having succeeded in the claim for terminal dues, the Claimant was awarded costs against the Respondent in the final orders.

p. 6

Legal principles established

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  • Under the repealed Employment Act regime, prior to the Employment Act, 2007, employers were not obliged to afford a hearing or observe natural justice before terminating employment; termination on notice or payment in lieu was lawful even without a reason.
  • Upon termination, it is the employer's duty to compute and pay terminal dues; the employer cannot wait for the employee to accept an offer of unquantified dues before paying.
  • An employer that withholds terminal dues must pay the opportunity cost of that money, by way of interest.

Court orders

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  1. 1.The Claimant is entitled to terminal dues of Kshs.975,975.00/- only, being the heads set out in the termination letter
  2. 2.Interest on the terminal dues from the date of filing suit
  3. 3.The Respondent shall pay the Claimant's costs of the case

Authorities

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Legislation

  • Employment Act (1975/1976) (repealed)Section 5(4); Section 16A (redundancy/severance, cited by Claimant)
  • Employment Act, 2007Sections 41 and 45 (compensation for unfair termination, procedural fairness)

Cases cited (12)

  • David Wanjau Muhoro Versus Ol Pejeta Ranching Limited
    (2014) eKLR
  • Michie Gitau Versus NSSF Board of Trustees
    HCC 3264 of 1993 (unreported)
  • Central Bank of Kenya Versus Davies Kivieko Muteti
    (2009) eKLR
  • Galaxy Paints Company Limited Versus Falcon Guards Limited
    (2000) 2 EZ 385
  • Ezekiel Nyangoya Okemwa versus Kenya Marine & Fisheries Research Institute
    (2016) eKLR
  • Rift Valley Textiles Limited Versus Edward Onyango Oganda
    (1994) eKLR
  • Unilever Tea Kenya Limited Versus John Kememia Gitau
    (2017) eKLR
  • Godfrey Mwangi Wanjohi Versus Mitchell Cotts Kenya Limited
    (2002) eKLR
  • Luhume Versus Coffee Marketing Board of Uganda
    (1970) EA 155
  • Wakiro Versus Committee of Bagisu Co-op Union
    (1968) EA 523
  • Jane Wanjiku Wambui Versus Anthony Kigamba Hato & 3 Others
    (2018) eKLR
  • Anthony Makala Chitavi Versus Malindi Water & Sewerage Company Limited
    (2013) eKLR
Jurisdiction invoked
First-instance employment and labour relations claim under the Employment and Labour Relations Court's jurisdiction; employment terminated in 2005 so the repealed Employment Act (1976) applies

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, "Abubakar Ali Shee v Tourism Promotion Services (Kenya) Limited [2019] KEELRC 2282 (KLR)", Case Analysis (2019). Cause No 70 of 2013. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2019/2282/eng@2019-01-18

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