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ELRCPartially AllowedCause No 81 of 2019· [2020] KEELRC 787 (KLR)

Peter Kaburu Karanja v Kirinyaga Construction (K) Limited [2020] KEELRC 787 (KLR)

Employment and Labour Relations Court
26 June 2020
1,990 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 that failing to pay a worker's salary for nine months forced his resignation, entitling him to over Kshs.2.1 million.

What this practically means

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Executive summary

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The Claimant, formerly employed by the Respondent as a crusher foreman from 16th September 2014 at a net monthly salary of Kshs.160,000.00, resigned by letter dated 29th March 2016 effective 1st April 2016, citing delay in payment of his salary - nine months of which remained unpaid. He filed this claim on 8th February 2019 seeking a declaration that his resignation was involuntary and amounted to wrongful/unfair termination, salary arrears, underpayments, service pay, damages of twelve months' pay, itemised pay statements and a certificate of service. The suit was undefended: the Respondent filed no response and called no witness. The Court framed three issues: limitation, constructive dismissal, and entitlement to reliefs. On limitation, it held the cause of action in constructive dismissal arose when the resignation took effect at the end of April 2016, so the claim filed on 8th February 2019 was within the three-year period under section 90 of the Employment Act. Applying the contractual test in Coca Cola East and Central Africa Limited v Maria Kagai Ligaga, the Court found the failure to pay nine months' salary, including three consecutive months before resignation, was a fundamental repudiatory breach amounting to constructive dismissal, the claim remaining uncontroverted. The Court awarded nine months' salary arrears (Kshs.1,440,000.00) less Kshs.300,000.00 paid after resignation, underpayments of Kshs.5,600.00, and six months' compensation (Kshs.960,000.00) under section 49(4), totalling Kshs.2,105,620.00 due. Service pay was declined for lack of proof of computation. The Respondent was ordered to issue a certificate of service and itemised pay statements, with costs and interest at court rates from the date of judgment.

Key legal issues

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01

Limitation of time under section 90 of the Employment Act

Holding

The claim was filed within the three-year limitation period since the cause of action arose when the resignation took effect at the end of April 2016

Reasoning

Section 90 requires claims to be commenced within three years of the act complained of. In constructive dismissal, the cause of action arises when the resignation becomes effective, i.e. end of April 2016 after the one-month notice. The claim filed on 8th February 2019 was therefore within time.

p. 2
02

Whether non-payment of salary amounted to constructive dismissal

Holding

Failure to pay salary for a cumulative nine months was a fundamental breach amounting to constructive dismissal

Reasoning

Applying the Coca Cola v Ligaga principles, the Court found a repudiatory breach going to the root of the contract: nine months' unpaid salary, including three consecutive months before resignation, as evidenced by bank statements and the resignation letter itself. The Respondent adduced no evidence, leaving the claim uncontroverted.

p. 3
03

Entitlement to reliefs

Holding

Salary arrears, underpayments and six months' compensation awarded; service pay declined for lack of proof of basis

Reasoning

The Claimant proved nine months' salary arrears, less Kshs.300,000.00 paid post-resignation, and underpayments of Kshs.5,620.00. Compensation was fixed at six months under section 49(4) of the Employment Act considering the 19 months of service, lack of service pay or pension, and the financial embarrassment suffered. Service pay was declined for want of NSSF statements.

p. 3

Legal principles established

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  • Failure by an employer to pay salary for a cumulative period of nine months constitutes a fundamental/repudiatory breach amounting to constructive dismissal
  • Where a respondent does not file a response, the allegations pleaded in the claim remain uncontroverted
  • In a constructive dismissal claim, the cause of action arises when the resignation becomes effective, which is the date from which limitation under section 90 runs

Court orders

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  1. 1.Declaration that the Claimant's resignation amounted to constructive dismissal
  2. 2.Unpaid salary for 9 months of Kshs.1,440,000.00
  3. 3.Salary underpayments of Kshs.5,600.00
  4. 4.6 months' salary as compensation for constructive dismissal of Kshs.960,000.00
  5. 5.Total of Kshs.2,405,620.00 less Kshs.300,000.00 paid, leaving Kshs.2,105,620.00 due
  6. 6.Respondent to issue a certificate of service in line with Section 51(2) of the Employment Act
  7. 7.Respondent to issue itemised pay statements for the work paid
  8. 8.Costs to the Claimant
  9. 9.Interest at court rates from date of judgment

Authorities

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Legislation

  • Employment ActSection 90
  • Employment ActSection 35(5)
  • Employment ActSection 49(4)
  • Employment ActSection 51(2)
  • Civil Procedure RulesOrder 21 Rule 1
  • Civil Procedure ActSection 1B
  • Constitution of KenyaArticle 159(2)(d)
  • Constitution of KenyaArticle 48

Cases cited (2)

  • Coca Cola East and Central Africa Limited v Maria Kagai Ligaga
    [2015] eKLR
  • Maureen Wanjiru Mwangi v Blue Sea Energy Limited
    [2020] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (not expressly cited in judgment); claim under the Employment Act, 2007

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, "Peter Kaburu Karanja v Kirinyaga Construction (K) Limited [2020] KEELRC 787 (KLR)", Case Analysis (2020). Cause No 81 of 2019. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2020/787/eng@2020-06-26

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