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ELRCPartially AllowedELRC Cause (not stated in excerpt; claim filed 2015)· [2020] KEELRC 1446 (KLR)

Grace Muthoni Muhoro v Githunguri Dairy and Community Sacco Limited [2020] KEELRC 1446 (KLR)

Employment and Labour Relations Court
28 February 2020
HWHellen Wasilwa
1,736 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~7 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court ruled that a notice clause in a contract cannot replace valid reasons and a fair hearing before terminating an employee.

What this practically means

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Executive summary

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The Claimant, employed by the Respondent Sacco from 1 September 2007 until 21 May 2013, claimed unlawful termination. She sought one month's salary in lieu of notice, May 2013 salary, twelve months' salary as damages for unfair termination, payment for 23 unutilized leave days and a certificate of service. The Respondent asserted that fraud was not the ground for termination and that it had exercised a contractual right to terminate on one month's notice, with terminal dues offset against the Claimant's debt, and relied on the repealed Employment Act. During trial, the Claimant conceded she had no evidence of being cleared of fraud allegations, of frozen accounts, or of her alleged business. RW1 conceded that the Claimant was not afforded a hearing and that the termination letter did not disclose the reason or right of appeal. The court held that under Section 43 of the Employment Act the employer must prove valid reasons, and under Section 45 must also follow fair procedure; a contractual notice clause cannot displace these requirements. The court found the termination unfair and unlawful and awarded the Claimant KShs. 29,222 for 23 unutilized leave days, KShs. 457,380 being twelve months' salary as compensation (total KShs. 486,602), and a certificate of service, with costs and interest at court rates. Notice pay and May 2013 salary were not included in the final award. The claim thus partially succeeded.

Key legal issues

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01

Whether termination by contractual notice without a disciplinary hearing was lawful

Holding

The termination was unfair and unlawful because the Respondent failed to prove a valid reason and did not afford the Claimant a hearing

Reasoning

The termination letter showed fraud was not the reason; the Respondent relied on a contractual clause allowing termination by one month's notice. Section 43 requires the employer to prove the reason for termination, and Section 45 requires both a valid and fair reason plus fair procedure. RW1 conceded the Claimant was not afforded a hearing and that the termination letter did not disclose reasons or appeal rights. The contractual notice option cannot displace statutory requirements.

p. 3

Legal principles established

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  • An employer cannot terminate a contract merely by exercising a contractual notice option without valid reasons under Section 43 of the Employment Act
  • A fair termination requires both valid reasons and adherence to fair procedure under Section 45

Court orders

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  1. 1.Payment of unutilized leave of 23 days amounting to KShs. 29,222
  2. 2.Payment of 12 months' salary as compensation for unlawful termination amounting to KShs. 457,380 (total KShs. 486,602)
  3. 3.Issuance of a certificate of service
  4. 4.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 43
  • Employment ActSection 45
  • Employment ActSection 41
  • Employment ActSection 49
  • Repealed Employment Actnot specified

Cases cited (5)

  • Moses Daniel Nyongesa vs. Mumias Sugar Company Limited
    ELRC Cause 1472 of 2013
  • Kenya Ports Authority vs. Festus Kipkorir
    Civil Appeal 1 of 2004
  • Joseph Mwangi Gioche vs. Gatamaiyu Dairy Farmers Cooperative Society Limited
    [2019]
  • Githunguri Dairy and Community Sacco Limited vs. Grace Muthoni Muhoro
    Githunguri CMCC 21 of 2015
  • Directline Assurance Company Limited vs. Jeremiah Wachira Ichaura
    CA 68 of 2014
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (Sections 41, 43, 45 and 49 applied)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Grace Muthoni Muhoro v Githunguri Dairy and Community Sacco Limited [2020] KEELRC 1446 (KLR)", Case Analysis (2020). ELRC Cause (not stated in excerpt; claim filed 2015). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2020/1446/eng@2020-02-28

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