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ELRCPartially AllowedCause No 567 of 2017· [2020] KEELRC 710 (KLR)

LAO v Compact Freight Systems Limited [2020] KEELRC 710 (KLR)

Employment and Labour Relations Court
16 July 2020
LNLINNET NDOLO
1,951 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 ruled an employee's dismissal without a valid reason or proper redundancy procedure was unfair, awarding her over Kshs. 300,000.

What this practically means

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Executive summary

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The Claimant, formerly employed as a Human Resource Officer, sued her former employer for unfair termination, discrimination, demotion and non-payment of terminal dues, alleging she was dismissed after reporting that the Audit and Finance Manager sexually harassed her by fondling her breasts in the presence of colleagues. The Respondent admitted the employment and certain terminal dues but maintained the termination was lawful, denied knowledge of any harassment complaint, and counterclaimed a Sacco loan balance. The Court framed three issues: lawfulness of the termination, sexual harassment, and remedies. On the first, it held that the termination letter disclosed no reason, and although the Respondent's Finance Manager testified the Claimant was declared redundant, the Respondent complied with none of the stringent conditions of Section 40 of the Employment Act; relying on Fatma Ali Dabaso v First Community Bank Limited, the Court found the termination substantively and procedurally unfair. The sexual harassment claim failed for lack of independent corroborative evidence, both the alleged aggressor and the General Manager having denied the allegation, but the Court noted the admission that no sexual harassment policy existed. The Court awarded six months' salary as compensation, one month's notice pay, salary for August 2016, leave pay for five days and admitted gratuity/service pay, totalling Kshs. 303,333 with interest from judgment, ordered the Respondent to adopt and implement a sexual harassment policy within three months, and awarded the Claimant a certificate of service and costs. The claim was thus partially allowed.

Key legal issues

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01

Lawfulness and fairness of the termination

Holding

The termination was substantively and procedurally unfair; the letter disclosed no valid reason and the alleged redundancy followed none of the Section 40 conditions

Reasoning

The termination letter gave no reason beyond the employer having reviewed its operations. The Respondent's witness stated the Claimant was declared redundant, which would require compliance with the stringent conditions in Section 40 of the Employment Act, including notification, fair selection, leave pay and severance pay. The Respondent made no attempt to comply with any of these conditions, rendering the termination unfair both substantively and procedurally.

p. 4
02

Sexual harassment claim

Holding

Not proved on the evidence, but the Respondent's admission that it had no sexual harassment policy warranted a mandatory order

Reasoning

The alleged aggressor denied the fondling allegation and the General Manager denied receiving the report of harassment. The Claimant called no independent evidence to corroborate her word, so the Court could not find the harassment proved. However, the General Manager admitted there was no sexual harassment policy in place, and the Court exercised its power to order adoption and implementation of one within three months.

p. 4
03

Remedies for unfair termination

Holding

Six months' salary in compensation plus notice pay, August salary, leave pay and admitted gratuity/service pay

Reasoning

In assessing compensation the Court considered the Claimant's length of service, her lack of contribution to the termination and the Respondent's blatant violation of the law in effecting the termination. The admitted terminal dues - notice pay, salary for August 2016, leave pay for 5 days and gratuity/service pay for one year - were awarded as computed against the monthly salary of Kshs. 35,000.

p. 4

Legal principles established

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  • Every termination of employment must have a reason; termination by notice cannot pass for such a reason, whether the contract is written or oral
  • A termination on account of redundancy that ignores the conditions in Section 40 of the Employment Act is an unfair termination within the meaning of Section 45

Court orders

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  1. 1.Judgment entered in favour of the Claimant: Kshs. 210,000 (6 months' salary compensation), Kshs. 35,000 (one month's salary in lieu of notice), Kshs. 35,000 (salary for August 2016), Kshs. 5,833 (leave pay for 5 days), Kshs. 17,500 (gratuity/service pay for 1 year) - total Kshs. 303,333
  2. 2.The decretal amount to attract interest at court rates from the date of judgment until payment in full
  3. 3.An order directing the Respondent to adopt and implement a sexual harassment policy within three months from the date of the judgment
  4. 4.The Claimant to be issued a certificate of service
  5. 5.Costs of the case to the Claimant

Authorities

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Legislation

  • Employment Act, 2007Section 40(1)(a)-(g)
  • Employment Act, 2007Section 45

Cases cited (1)

  • Fatma Ali Dabaso v First Community Bank Limited
    [2018] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (employment dispute)

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, "LAO v Compact Freight Systems Limited [2020] KEELRC 710 (KLR)", Case Analysis (2020). Cause No 567 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2020/710/eng@2020-07-16

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