Andia Laura Chakava v Alpha Africa Asset Managers Limited [2020] KEELRC 1389 (KLR)
The bottom line
#Kenya's Employment Court awarded a bank executive KShs 8.5 million after her employer fired her for poor performance without any appraisal, hearing, or regulator approval.
What this practically means
#Executive summary
#Key legal issues
#Validity and fairness of the reason for termination (poor performance)
The reason was not valid and fair; the respondent failed to prove any performance appraisal or improvement plan
Section 43 requires the employer to prove the reasons for termination, failing which the termination is unfair under section 45. RW1 claimed an appraisal was done but produced no documentary evidence. The claimant was never warned or appraised. The burden on the employer, on a balance of probability, was not discharged, so the alleged poor performance was not established as a valid and fair reason.
Fairness of the termination procedure under section 41 of the Employment Act
No fair procedure was followed; the claimant was given an ultimatum to resign or be dismissed without a hearing
Section 41 obliges the employer to explain the reasons for termination and hear the employee's representations, with a companion of choice present. RW1 admitted the board meeting agenda did not include a disciplinary hearing, no notice to show cause was issued, and the decision had already been made when the claimant was recalled. Section 41 is mandatory and its breach renders the termination unfair.
Compliance with the Capital Markets Act and Regulation 53(B) of the Capital Markets Licensing General Requirements
Termination was also unlawful for want of prior regulator approval
A letter of 7 June 2016 from the Capital Markets Authority showed the respondent could not change directors, chief executives or key personnel without prior written confirmation from the regulator. Removing the Managing Director without seeking that approval contravened Regulation 53(B), rendering the termination unlawful in addition to being unfair under the Employment Act.
Entitlement to house allowance
Claim refused; salary was consolidated gross pay
Section 31(2)(a) of the Employment Act exempts contracts that consolidate a housing element into the basic wage or salary. The claimant admitted her salary of KShs 700,000, later KShs 850,000, was gross pay. Consistent with section 31(2)(a), no separate house allowance was payable.
Jurisdiction over a shareholder/director/Managing Director
The ELRC had jurisdiction because the claimant was an employee under a contract of service
There was no dispute that the claimant was a shareholder, director and employee. As Managing Director she earned a salary and worked under the control of the board, making her an employee within section 2 of the Employment Act. The court therefore had jurisdiction notwithstanding her corporate offices.
Legal principles established
#- An employer terminating on grounds of poor performance must prove that performance evaluation measures were in place and that the employee was given an opportunity to respond
- Termination of a Managing Director licensed by the Capital Markets Authority required prior approval of the regulator under Regulation 53(B)
Court orders
#- 1.Declaration that the termination of the Claimant's employment was unfair and unlawful
- 2.Award of 10 months' salary compensation for unfair termination (KShs 850,000 x 10 = KShs 8,500,000), subject to statutory deductions
- 3.Interest at court rates from the date of judgment
- 4.Costs of the suit to the Claimant
- Jurisdiction invoked
- Jurisdiction under the Employment Act, the claimant being an employee under a contract of service within the meaning of section 2 of the Employment Act
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Andia Laura Chakava v Alpha Africa Asset Managers Limited [2020] KEELRC 1389 (KLR)", Case Analysis (2020). Cause No 2561 of 2016. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2020/1389/eng@2020-03-06
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.