Desh Bhushan Taneja v Linksoft Group Limited & 2 others [2020] KEELRC 1023 (KLR)
The bottom line
#Kenya's Employment Court ruled a CEO who resigned under pressure after unpaid salary was constructively dismissed, awarding him over USD 142,000 against two group companies.
What this practically means
#Executive summary
#Key legal issues
#Jurisdiction - who is the proper employer among a group of companies
The court has jurisdiction because the respondents created confusion as to the identity of the employer, shared payment of salary, and invoked the corporate veil dishonestly; the 3rd Respondent was properly joined and the 1st and 2nd Respondents liable
The employment letter bore the 1st Respondent's letterhead and Nairobi contacts; salary was paid by different Linksoft entities depending on cash flow; the companies shared directors, legal manager, HR, offices and insurance. The certificate of incorporation did not bear the name 'Linksoft International Mauritius Limited'. The court held the invocation of the corporate veil was ill-intended, adopted the lifting principle from Githunguri Dairy Farmers, and found the claimant right to sue the 1st and 2nd Respondents.
Constructive dismissal
The claimant was constructively dismissed; the resignation was coerced at a meeting where he was given the option to resign or be dismissed without benefits, and salary and rent were in arrears
The resignation letter recorded that Linksoft no longer needed his services owing to difficult market conditions; the respondents did not contest that the claimant was compelled to resign to become entitled to his benefits. Applying the Kimani Mburu and Isanya formulations, the arrears of salary and the ultimatum destroyed trust and confidence, amounting to repudiatory breach responded to by resignation.
Entitlement to performance bonus
Not entitled; the bonus was payable subject to performance and at the employer's discretion, and the claimant's performance did not warrant it
The contract made the variable pay conditional on achieving targets. The respondent's own minutes and financial results showed decreased revenue and Kenya revenue 54% below budget, although RW1 conceded the claimant was not ordinarily responsible for lost business. The court found no case established for the bonus.
Unpaid basic pay and benefits
Claimant awarded USD 48,528 unpaid basic pay and USD 52,083.35 benefits for June to November only
RW1 admitted a small balance of dues remained unpaid. The final dues computation excluded benefits, and the claimant was informed he would not get benefits for October and November, with no evidence from respondents that benefits were paid. However, the claimant failed to prove benefits for 1 year 5 months, so the award was limited to June to November.
Legal principles established
#- The corporate veil may be lifted where there is a motive to be dishonest, act improperly or defeat the enforcement of the law, including where the veil is invoked to avoid paying employment dues
- A constructive dismissal is an unfair dismissal
- The elements of constructive dismissal are breach of contract, fundamental repudiatory breach, resignation in response to the breach, and no delay in resigning
- A bonus payable subject to performance and at the employer's discretion is not owed where the employee has not demonstrated entitlement
Court orders
#- 1.Award of three months' salary as compensation for unfair dismissal in the sum of USD 42,000 based on basic salary of USD 14,000
- 2.Award of unpaid basic pay of USD 48,528 net of all taxes
- 3.Award of benefits for June to November at the rate of USD 125,000 per annum, amounting to USD 52,083.35
- 4.Total award of USD 142,611.50
- 5.Claimant awarded costs of the suit
- 6.Interest to accrue at court rates from date of judgment till payment in full
- 7.Judgment entered against the 1st and 2nd Respondents jointly and severally
- 8.Dismissal of the claim for performance bonus
- 9.Dismissal of the claim for bank charges of the dishonoured cheque
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction under its constitutive statute; invoked after piercing the corporate veil to find the respondents liable for the claimant's employment
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Desh Bhushan Taneja v Linksoft Group Limited & 2 others [2020] KEELRC 1023 (KLR)", Case Analysis (2020). Cause No 56 of 2015. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2020/1023/eng@2020-05-15
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.