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ELRCPartially AllowedCause No 1230 of 2015· [2021] KEELRC 883 (KLR)

Naftali Ndumbe Mwangi v Ipsos Limited [2021] KEELRC 883 (KLR)

Employment and Labour Relations Court
27 September 2021
13,515 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~54 min to read original · ~4 min brief

The bottom line

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What this practically means

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Executive summary

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The Claimant, employed by the Respondent from 26th November 2001 and rising to Chief Finance Officer, Pan Africa, had his employment terminated on 15th October 2014 under Clause 7(a)(iv) of the Executive Employment Agreement dated 18th December 2012, with three months' notice (garden leave) and no reasons given. He claimed terminal dues, unfair termination compensation, non-compete and redundancy payments, director's compensation, leave pay, declarations of constitutional infringement and continuing directorship, and general damages for defamation. The court framed six issues. It held the termination unfair and unlawful: the Respondent elected the contractual route but later introduced performance-based reasons that were an afterthought, uncommunicated to the Claimant, unsupported by documentation, minutes or evidence of the alleged losses, and unqualified audit opinions contradicted the alleged failures. Sections 41, 43(2) and 45 of the Employment Act were not satisfied. However, the constitutional claim failed the Anarita Karimi Njeru threshold despite the shabby, humiliating treatment; the defamation claim failed for want of attribution to the Respondent and non-joinder of the publisher; redundancy, non-compete payment and director's compensation were unproven; and the 2008 contract was discharged by the 2012 agreement, defeating the claim for six months' notice. The court awarded ten months' salary (Kshs.15,900,000) as compensation for unfair termination and Kshs.8,061,800 for 126 outstanding leave days, entering judgment for Kshs.23,961,800 with interest at court rates from judgment until payment in full, and 50% of taxed costs to the Claimant.

Key legal issues

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01

Whether termination was unfair and unlawful

Holding

Termination was unfair and unlawful; the reasons were an afterthought and procedural fairness under Section 41 was not observed

Reasoning

The termination letter gave no reason, the employer having elected the contractual route. It later sought to justify termination on performance failures communicated neither before nor during the meeting. No notice to show cause, no agenda or minutes, no documentation of alleged communication, and unqualified audit opinions undermined the alleged losses. The burden under Sections 41, 43(2) and 45 was not discharged.

p. 11
02

Whether constitutional rights were infringed

Holding

Not proved; conduct was shabby and humiliating but below the constitutional threshold

Reasoning

Applying Anarita Karimi Njeru, the Claimant had to particularise the infringements and manner of violation. The alleged verbal insults and humiliation were not corroborated; counsel present during the events did not testify and colleagues were not called. The court acknowledged the shabby treatment but held it did not attain the threshold of constitutional infringement.

p. 12
03

Whether the Claimant was defamed

Holding

Defamation not proved

Reasoning

Although the online publication identified the Claimant and was potentially defamatory, the Claimant did not establish that the Respondent published or caused the publication, the publisher was not joined, and the Court of Appeal in Paramount Bank v Vaqvi Syed Qamara had set aside a similar award for failure to establish the libellous character of statements.

p. 12
04

Whether termination was redundancy through restructuring

Holding

Redundancy not proved

Reasoning

The party pleading redundancy must prove it. Although the 'New Way' restructuring existed and reorganisation occurred in April 2015, the Claimant led no evidence of restructuring in the Nairobi office or why he alone was terminated in October 2014, seven months before reorganisation; the position was re-advertised.

p. 13
05

Entitlement to leave pay for 126 days

Holding

Claim allowed; leave is a statutory entitlement and the Respondent failed to controvert the computation

Reasoning

The Respondent, custodian of leave records, produced no evidence to controvert the Claimant's computation and did not contest it. The 25-day entitlement under the 2008 contract did not survive the 2012 agreement, but the accrued leave days remained payable as a statutory entitlement under Section 28 of the Employment Act.

p. 15
06

Compensation for unfair termination

Holding

Ten months' salary awarded as fair compensation

Reasoning

Relying on Christopher Onyango, Kenfreight and Kenya Broadcasting Corporation v Wako, and considering the humiliating manner of termination, the abruptness, the Claimant's rank and 13 years of service, ten months' salary (Kshs.15,900,000) was awarded as equivalent compensation under Section 49.

p. 15

Legal principles established

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  • An employer who elects to terminate under contractual terms need not assign reasons, but where termination is challenged and found unfair, Section 49 remedies apply regardless
  • Fair termination requires both substantive justification and procedural fairness
  • A subsequent written contract discharges the previous contract and governs the relationship unless expressly provided otherwise

Court orders

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  1. 1.Compensation for unfair termination of ten months' salary, Kshs.15,900,000
  2. 2.Payment for 126 outstanding leave days, Kshs.8,061,800
  3. 3.Judgment entered for the Claimant in the sum of Kshs.23,961,800
  4. 4.Interest at court rates from the date of judgment till payment in full
  5. 5.Claimant awarded 50% of taxed costs of the suit
  6. 6.Rejection of claims for interest on 3 months' pay, unpaid 3 months' termination notice, non-compete payment, redundancy payment, director's compensation, declarations of constitutional infringement and remaining directorship, and general damages for defamation

Authorities

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Legislation

  • Constitution of Kenya, 2010Articles 25, 27, 28, 29, 31, 34, 41, 47, 50, 159(2)(d), 48
  • Employment Act, 2007Sections 2, 3(1), 5(3), 28, 35, 36, 40, 41, 42(1), 43, 43(2), 44(3)-(4), 45, 45(2), 45(5), 47, 49
  • Civil Procedure ActSection 1B
  • Civil Procedure RulesOrder 21 Rule 1
  • Contracts in Restraint of Trade ActSection 2
  • International Labour Organisation Convention No. 158

Cases cited (20)

  • Kenfreight (EA) Ltd v Benson K. Nguti
    (2015) eKLR
  • Kenfreight (EA) Ltd v Benson K. Nguti
    (2019) eKLR
  • Kenfreight (EA) Ltd v Benson K. Nguti
    [2017] eKLR
  • Kenfreight (EA) Ltd v Benson K. Nguti
    (2016) eKLR
  • Walter Ogal Anuro v Teachers Service Commission
    [2013] eKLR
  • Pamela Nerima Lutta v Mumias Sugar Company Ltd
    [2017] eKLR
  • National Bank of Kenya Ltd v Anthony John Njue
    [2019] eKLR
  • Janet Nyandiko v Kenya Commercial Bank Limited
    [2017] eKLR
  • Anarita Karimi Njeru v The Republic
    [1976 - 1980] KLR
  • VMK v CUEA
    [2013] eKLR
  • Vaqvi Syed Qamara v Paramount Bank & Attorney General
    (2015) eKLR
  • Paramount Bank Limited v Vaqvi Syed Qamara & another
    [2017] eKLR
  • Kenya Airways Ltd v Aviation and Allied Workers Union Kenya & 3 Others
    [2013] eKLR
  • Credit Reference Bureau Holdings Ltd v Steven Kunyiha
    [2017] eKLR
  • Nordenfelt v The Maxim Nordenfelt Guns & Ammunition Co. Ltd.
    [1894] AC 535
  • Petrofina (Great Britain) Ltd v Martin
    [1966] Ch. 146
  • Martha Wangari Kariuki v Muli Musyoka & Another
    [2001] eKLR
  • Amos Kitave Kivite v Kenya Revenue Authority
    (2020) eKLR
  • Christopher Onyango & Others v Heritage Insurance Co. Ltd
    (2018) eKLR
  • Kenya Broadcasting Corporation v Geoffrey Wako
    (2019) eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (employment dispute)

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, "Naftali Ndumbe Mwangi v Ipsos Limited [2021] KEELRC 883 (KLR)", Case Analysis (2021). Cause No 1230 of 2015. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2021/883/eng@2021-09-27

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