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ELRCDismissed(as per memorandum of claim filed 05.02.2015)· [2020] KEELRC 1302 (KLR)

Lucas Otieno Ondong’ v Equatorial Commercial Bank Limited [2020] KEELRC 1302 (KLR)

Employment and Labour Relations Court

9 April 2020

BOByram Ongaya

1,644 words in judgment

View original judgment Read on Kenya Law Watch case

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The bottom line

Kenya's Employment Court ruled that a signed mutual separation agreement is binding, so an employee who agreed to early retirement cannot later claim unfair termination.

What this practically means

Executive summary

The claimant, employed by the respondent bank since 1995 and rising to the position of Risk Manager, claimed that his termination by letter dated 14.07.2014 was unjustifiable, unfair, un-procedural and unlawful. He sought a declaration to that effect, Kshs.3,684,000.00 being 12 months' salary as compensation, interest, and costs. His case was that after he reported to the Central Bank of Kenya governance concerns about the respondent, the respondent pressed him to leave on grounds of poor performance, leaving him no option but to negotiate an early exit, and that the separation was effected without a disciplinary process or hearing. The respondent maintained that the claimant's performance was wanting, but that the parties negotiated and agreed on an early retirement package set out in the letter dated 14.07.2014, which the claimant signed acknowledging full and final settlement. The Court found the employment relationship established, the termination effected by the 14.07.2014 letter, and that the parties had agreed on terms of separation through a mutual, voluntary early exit which was duly performed. It held it was misconceived to demand a section 41 disciplinary process where separation was by consent, and that the reason and procedure were lawful and valid under sections 43 and 45. No coercion was proved. Judgment was entered for the respondent dismissing the memorandum of claim, with each party to bear own costs, delivered at Nairobi on 9th April 2020.

Key legal issues

Whether the early exit was an unfair or unlawful termination

Holding

The termination was a negotiated mutual separation agreement, lawful and valid; no coercion or unfairness was established

Reasoning

The claimant initiated an early retirement proposal which the respondent accepted with terms set out in the letter of 14.07.2014, which both parties signed and performed. The reason and procedure for termination satisfied sections 43 and 45 of the Employment Act. There was no evidence of force or coercion, so the protections of section 41 for disciplinary termination were not engaged.

p. 3

Entitlement to compensation for unlawful termination

Holding

Claim dismissed as the foundational finding of unlawful or unfair termination was not made

Reasoning

All reliefs claimed depended on a declaration that termination was unlawful or unfair. Having found a valid mutual separation agreement, the Court held the prayers unjustified. The claimant also acknowledged receipt of the exit package in full and final settlement.

p. 3

Legal principles established

Where parties agree on terms of separation through mutual early retirement, the termination is not unfair for want of a disciplinary process under section 41 of the Employment Act
A mutual and voluntary separation agreement binds the parties unless shown to be unlawful

Court orders

1.Judgment entered for the respondent against the claimant
2.Dismissal of the memorandum of claim
3.Each party to bear own costs of the proceedings

Authorities

Legislation

Employment Act, 2007section 41
Employment Act, 2007section 43
Employment Act, 2007section 45
Retirement Benefits Actnot specified

Jurisdiction invoked: Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (first-instance memorandum of claim)

Key timeline

Practical implications

Frequently asked questions

Cite this brief

Caselaw, "Lucas Otieno Ondong’ v Equatorial Commercial Bank Limited [2020] KEELRC 1302 (KLR)", Case Analysis (2020). (as per memorandum of claim filed 05.02.2015). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2020/1302/eng@2020-04-09

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