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ELRCPartially AllowedCause 973 of 2017· [2020] KEELRC 1160 (KLR)

Caroline Wanjiru Mwai v Labonte Limited & another [2020] KEELRC 1160 (KLR)

Employment and Labour Relations Court of Kenya
30 April 2020
HWHellen S. Wasilwa
2,328 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~9 min to read original · ~4 min brief

The bottom line

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A Kenyan court ruled that firing an employee by text message over bad business is a redundancy, and skipping the required legal procedure makes it unfair.

What this practically means

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Executive summary

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The Claimant sued the 1st Respondent company and its 2nd Respondent shareholder, alleging unfair termination of her employment as a salesperson on 31/3/2017 without cause or notice, and claiming notice pay, house allowance, compensation, leave, NSSF and NHIF dues and unpaid salary totalling Kshs. 672,192/=. The Respondents denied employing her on the pleaded salary, asserting a written contract she refused to sign, and maintained that she was retrenched on account of a negative business environment, that statutory deductions were remitted, and that her salary was inclusive of accommodation. The 1st Respondent counter-claimed for Kshs. 840,000/= being the value of goods allegedly entrusted to the Claimant and unaccounted for, plus return of company records and cheques. The Claimant testified she was never issued an appointment letter, was paid via M-pesa by the 2nd Respondent, and was dismissed by SMS. RW1 admitted no evidence existed of the written contract, the audit report, or NSSF/NHIF remittances, and that the forged cheque and audit report were not produced. The court found an oral contract at Kshs. 18,000/= monthly, and that the SMS terminating services on account of bad business amounted to a redundancy which had to follow Section 40 of the Employment Act 2007; as the statutory procedure was not followed, the termination was unfair and unjustified. The counter-claim failed for want of evidence of goods worth Kshs. 840,000/=. The court awarded one month's salary in lieu of notice (Kshs. 18,000/=) and eight months' compensation (Kshs. 144,000/=), dismissed the NSSF/NHIF claim, and awarded the Claimant costs plus interest at court rates from the date of judgment.

Key legal issues

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01

Nature of the contract of employment and salary

Holding

The Claimant was engaged under an oral contract at a monthly salary of Kshs. 18,000/= paid via M-pesa.

Reasoning

No written contract was exhibited in court despite the Respondent's assertion that one was issued. The Claimant's M-pesa printouts proved payment of Kshs. 18,000/= monthly, corroborating her testimony over the Respondent's unsupported claims of a signed contract and an all-inclusive salary.

p. 4
02

Fairness of the termination

Holding

The termination on account of lack of business was unfair and unjustified because the procedure under Section 40 of the Employment Act was not followed.

Reasoning

The text message of 30/3/2017 indicated the business could not continue and offered one month's salary in lieu of notice subject to handover. This amounted to a redundancy, engaging Section 40 of the Employment Act 2007. There was no indication the statutory redundancy procedure was adhered to, so the termination was unfair.

p. 4
03

The counter-claim for goods worth Kshs. 840,000/=

Holding

The counter-claim failed for want of evidence.

Reasoning

The Respondent produced invoices totalling only Kshs. 28,760/=, part of what it relied on. There was no evidence showing how the figure of Kshs. 840,000/= was arrived at, nor that goods of that value were given to the Claimant or left unaccounted for. The burden of proving the counter-claim was not discharged.

p. 4
04

NSSF and NHIF contributions

Holding

The claim for unremitted NSSF and NHIF deductions was dismissed for lack of evidential support.

Reasoning

RW1 admitted the Respondent started remitting NSSF and NHIF from 2014 but had no evidence of the payments. The Claimant likewise did not prove non-remittance, so the court found the claim unsupported by any evidence and dismissed it.

p. 4

Legal principles established

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  • Termination on account of lack of business is a redundancy which must follow the procedure prescribed under Section 40 of the Employment Act; failure to adhere renders the termination unfair and unjustified.
  • A counter-claim unsupported by evidence of the value of goods alleged to have been entrusted to and unaccounted for by the claimant must fail.

Court orders

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  1. 1.1 month's salary in lieu of notice of Kshs. 18,000/=
  2. 2.Compensation for unfair termination of 8 months' salary, Kshs. 18,000 x 8 = Kshs. 144,000/=
  3. 3.Total award of Kshs. 162,000/= to the Claimant
  4. 4.Claim for unremitted NSSF and NHIF deductions dismissed as not supported by evidence
  5. 5.Respondent to pay costs of the suit plus interest at court rates from the date of judgment

Authorities

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Legislation

  • Employment ActSection 8
  • Employment ActSection 9
  • Employment ActSection 10
  • Employment ActSection 10(1)
  • Employment ActSection 6
  • Employment ActSection 7
  • Employment ActSection 14(3)
  • Employment Act 2007Section 40
  • Civil Procedure RulesOrder 7 Rule 5(a)
  • Civil Procedure RulesOrder 4 Rule 1(2)

Cases cited (2)

  • Martin Ireri Ndwiga v Olerai Management Company
    [2017] eKLR
  • Bridge-up Container Services Ltd v CFc Stanbic Bank Ltd
    [2011] eKLR
Jurisdiction invoked
Employment and labour relations jurisdiction under Article 162(2) of the Constitution (court's established jurisdiction; not expressly cited in judgment)

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, "Caroline Wanjiru Mwai v Labonte Limited & another [2020] KEELRC 1160 (KLR)", Case Analysis (2020). Cause 973 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2020/1160/eng@2020-04-30

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