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ELRCPartially AllowedCause transferred from High Court (originally filed 21 November 2006); consolidated file formerly with Judicial Review Application No. 28 of 2014· [2020] KEELRC 1533 (KLR)

Abok James Odera v National Housing Corporation [2020] KEELRC 1533 (KLR)

Employment and Labour Relations Court
28 February 2020
1,657 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Employment Court ruled a fixed-term contract that simply expired isn't unfair termination, and an employee owing a car loan could end up paying his employer.

What this practically means

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Executive summary

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This first-instance judgment of the Employment and Labour Relations Court at Nairobi, delivered by Radido Stephen, Judge on 28 February 2020, concludes a dispute pending roughly 13 years, having originated in the High Court in November 2006 and been transferred to the ELRC. The Claimant, former Managing Director of the National Housing Corporation, held a three-year fixed-term contract from 18 June 2003. Before its expiry he applied for renewal but was sent on leave in April 2006 pending investigations into irregular allocation of houses at Pumwani Housing Scheme. The contract lapsed without any determinative finding. He claimed unfair termination, unpaid salaries for May and June 2006, gratuity, comprehensive health cover and provident fund dues. The Respondent counterclaimed for the outstanding balance of a car loan. The Court applied the Court of Appeal decision in Amatsi Water Services Co Ltd v Francis Shire Chachi and held that the contract expired by effluxion of time, not unfair termination, defeating the general damages claim. Gratuity, health cover and provident fund claims failed for want of proof, the provident fund entitlement being special damages. The Respondent proved the car loan counterclaim, and after reconciling terminal dues (including the unpaid salaries) against the loan balance, judgment was entered for the Respondent in the sum of Kshs 437,360/25/-. Noting the employment relationship had simply expired, the Court ordered each party to bear its own costs.

Key legal issues

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01

Unfair termination of a fixed-term contract expiring during pending investigations

Holding

No unfair termination; the contract expired by effluxion of time

Reasoning

The Claimant's three-year contract was set to lapse around 17 June 2006. He was sent on leave pending investigations into irregular allocation of houses, and invited to respond to the investigation report, but the Respondent took no determinative action before the contract's natural expiry. Renewal was admittedly not automatic. Relying on the similar facts in Amatsi Water Services Co Ltd v Francis Shire Chachi, the Court held the contract was not terminated but simply ran its course, precluding damages for unfair termination.

p. 2
02

Entitlement to unpaid salaries for May and June 2006

Holding

Entitled as of right, but subject to offset against liabilities owed to the Respondent

Reasoning

The Respondent admitted the salaries of Kshs 798,600/- were unpaid pending clearance. The Court held an employee is entitled to earned salary as of right, while observing a duty on the employee to cooperate and formally hand over upon separation. The amount was to be brought into a reconciliation with the Counterclaim rather than paid out standalone.

p. 2
03

Gratuity, health cover and provident fund claims

Holding

Not proved; relief declined

Reasoning

Gratuity must rest on contract or statute; the Claimant produced no contract or legal basis. The health cover claim lacked proof of denied cover or incurred medical expenses. The provident fund claim was treated as special damages requiring proof to the required standard; the Claimant did not file the Provident Fund Rules or prove any underpayment beyond the admitted sum already offset against his liabilities.

p. 3
04

The Counterclaim for the outstanding car loan

Holding

Claimant indebted to Respondent in Kshs 437,360/15 after reconciliation

Reasoning

The Respondent advanced a car loan of Kshs 2,120,000/- repayable over 72 months. Journal extracts and payslips showed monthly deductions of Kshs 38,214/- for about 18 months. Simple arithmetic factoring interest showed Kshs 1,826,672/- outstanding, with no evidence of lump-sum repayment. Reconciling terminal dues, including the unpaid May and June 2006 salaries, against the loan balance left the Claimant indebted to the Respondent.

p. 3

Legal principles established

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  • Where a fixed-term contract lapses before an employer makes a determinative finding on pending disciplinary allegations, the contract ends by effluxion of time and is not unfairly terminated
  • An employee is entitled to unpaid salary as of right unless it is applied to offset liabilities owing from the employee
  • Gratuity must be anchored on contract or law
  • Costs in employment causes need not follow the event

Court orders

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  1. 1.Declaration that the Claimant's contract expired by effluxion of time and not through unfair termination
  2. 2.Finding that the Claimant failed to prove breach of contract in respect of gratuity, health cover and provident fund
  3. 3.Finding that the Claimant is indebted to the Respondent in the sum of Kshs 437,360/15
  4. 4.Judgment entered for the Respondent in the sum of Kshs 437,360/25/-
  5. 5.Each party to bear own costs

Authorities

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Legislation

  • Employment and Labour Relations Court Actsection 12(4)

Cases cited (1)

  • Amatsi Water Services Co Ltd v Francis Shire Chachi
    (2018) eKLR
Jurisdiction invoked
Jurisdiction under section 12 of the Employment and Labour Relations Court Act (transfer from the High Court; costs jurisdiction under section 12(4))

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, "Abok James Odera v National Housing Corporation [2020] KEELRC 1533 (KLR)", Case Analysis (2020). Cause transferred from High Court (originally filed 21 November 2006); consolidated file formerly with Judicial Review Application No. 28 of 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2020/1533/eng@2020-02-28

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