Richard Kioko Kakuli v Sai Raj Limited [2020] KEELRC 1214 (KLR)
The bottom line
#Kenya's Employment Court ruled that demoting an employee and cutting pay without a hearing is unfair dismissal, and lifetime non-compete clauses are unenforceable.
What this practically means
#Executive summary
#Key legal issues
#Whether the claimant was unfairly terminated or absconded duty
The respondent unfairly terminated the claimant's employment; the demotion and salary reduction were imposed without a hearing, and the allegation of absconding was unsupported by evidence. The conduct amounted to repudiation and constructive dismissal.
The demotion letter accused the claimant of unsubstantiated misconduct. No disciplinary hearing preceded the demotion and salary reduction. The claimant's unrebutted evidence that he was told to remove his uniform and leave stood. RW1 was not at the meeting and contradicted himself. Whichever lens - unfair termination or repudiation - the respondent was liable.
Whether the Confidentiality and Non-Disclosure restraint clause was unconscionable
The clause forbidding the claimant from ever working for any fiberglass or related company, on pain of a USD 100,000 penalty, was declared unconscionable, null and void.
The clause restrained the claimant for life from using his learned skill without compensation, denying him his livelihood. Had it been limited to protecting trade secrets or to a defined period such as one year, it would have been reasonable.
What remedies flow from the unfair termination
The claimant was awarded one month's salary in lieu of notice (Kshs.22,000) and compensation of 8 months' salary (Kshs.176,000), taking into account the highhanded treatment, the manner of termination and the length of service.
Statutory compensation under the Employment Act is capped at 12 months' salary. The court weighed the circumstances, including the highhanded manner in which the respondent treated the claimant, the manner of termination and the length of service, and found 8 months' salary reasonable. The USD 100,000 claim was unproven.
Legal principles established
#- A demotion and salary reduction are disciplinary measures that can only follow a disciplinary process in which the employee is heard, and an employee must be consulted and given the choice between demotion and termination.
- A unilateral reduction of salary is a fundamental breach of contract entitling the employee to repudiate the contract, amounting to constructive dismissal.
- A restraint of trade barring an employee for life from using learned skills without compensation is unconscionable and void.
Court orders
#- 1.Payment in lieu of notice of Kshs.22,000 to the claimant
- 2.Compensation of 8 months' salary for unfair termination, Kshs.176,000
- 3.Declaration that clause 1 of the contract under the title 'Discretion' (the Confidentiality and Non-Disclosure restraint) is unconscionable, null and void
- 4.Respondent to pay the claimant's costs of the claim, with interest on the decretal sum from the date of judgment
- Jurisdiction invoked
- Employment and labour relations dispute under Article 162(2) of the Constitution (implied; the judgment does not expressly cite the provision establishing the court's jurisdiction)
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (1)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Sikuku v AIC Cure International Hospital Kijabe (Cause 1055 of 2018) [2024] KEELRC 354 (KLR)[2024] KEELRC 354 (KLR)23 Feb 2024applied
Cite this brief
#Cite this brief
Caselaw, "Richard Kioko Kakuli v Sai Raj Limited [2020] KEELRC 1214 (KLR)", Case Analysis (2020). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2020/1214/eng@2020-04-23
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.