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ELRCDismissedNot stated in the judgment (ELRC claim filed 23.09.2016)· [2021] KEELRC 1073 (KLR)

Alfred Nzomo Kithusi v Hillcrest Investments Limited [2021] KEELRC 1073 (KLR)

Employment and Labour Relations Court
19 August 2021
OMONESMUS N. MAKAU
4,242 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~17 min to read original · ~4 min brief

The bottom line

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A Kenyan court enforced a signed discharge agreement, denying a CFO's unfair dismissal claims, even though it found his termination was unfair.

What this practically means

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Executive summary

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The claimant, employed as Finance Director and later Chief Financial Officer, sued alleging that his employment contract was unlawfully and unfairly terminated by the respondent's letter dated 1/3/2016, seeking declarations, damages of Kshs.48,537,051, interest, a certificate of service and costs. The respondent maintained the separation was by mutual agreement, evidenced by the Notice of termination signed by the claimant on 24/3/2016 containing a discharge clause. The court framed four issues: whether the termination was mutual or unilateral, whether it was unfair, whether the discharge was signed freely and willingly, and entitlement to reliefs. The court held the termination was unilateral, not mutual, and found it substantively and procedurally unfair because the employer failed to prove a valid and fair reason and compliance with fair procedure under sections 43 and 45 of the Employment Act. However, on the discharge clause, applying Thomas De La Rue, the court found the claimant had the terms since 2/3/2016, sought no clarification, did not sign immediately or before the directors, and signed weeks later after careful consideration; he therefore freely and willingly signed the discharge. Absent vitiating factors, the discharge agreement was held to be an enforceable binding contract waiving further claims. Consequently all reliefs were denied, yet - inconsistently - costs of the suit with interest were awarded to the claimant on the basis that he succeeded in showing the termination was unfair.

Key legal issues

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01

Whether termination was by mutual agreement or unilateral decision

Holding

The termination was a unilateral decision by the respondent; the Notice of termination was a final decision, not a proposal, and the offer of dues was merely optional.

Reasoning

The court analysed the termination Notice as conveying two messages: a Notice of termination (a final decision by the employer) and an offer of final dues (optional to the claimant). No written evidence of a negotiated mutual agreement was produced in respect of the 29/2/2016 meeting, and the claimant denied agreeing to the terms. Therefore the notice was not a mutual separation agreement.

p. 5
02

Whether the termination was substantively and procedurally unfair

Holding

Yes - the termination failed the test of both substantive and procedural fairness under section 45 despite proper notice.

Reasoning

The employer failed to prove a valid and fair reason for termination and that fair procedure was followed. The claimant's evidence that no reason was given and no hearing accorded was not rebutted; RW1 admitted he was unaware of the reason for the termination and could not testify on matters of 29/2/2016. Proper notice alone does not satisfy section 45.

p. 5
03

Whether the discharge clause was signed freely and willingly

Holding

Yes - the claimant read and understood the discharge clause, had all necessary information, did not seek clarification, and signed weeks later after careful consideration.

Reasoning

The claimant became aware of the terms as early as 2/3/2016, had two months before the termination date, did not request clarifications or protest, and did not sign immediately or in the presence of the respondent's directors. In the court's view this negated the alleged subtle coercion and established a sound judgment to take the offered dues.

p. 6
04

Whether the claimant was discriminated against in the ex-gratia payment

Holding

Effectively rejected - the discharge barred further claims and the comparator employees left in different circumstances.

Reasoning

The respondent argued, relying on John Harun Mwau, that a person alleging violation of Article 27 must establish the distinction denied him equal protection, and that the three named former employees were not in the same work and their contracts ended in different circumstances. The confidential-information objection was met by the fact the documents were produced by consent, but the claim ultimately failed through the discharge agreement.

p. 3

Legal principles established

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  • A settlement or discharge agreement at separation is a binding contract unless vitiated by coercion, fraud, mistake, misrepresentation or undue influence.
  • A discharge voucher per se cannot absolve an employer from statutory obligations or preclude the court from inquiring into the fairness of a termination.
  • Under sections 43 and 45 of the Employment Act, the burden of proving the reason for dismissal and that fair procedure was followed rests on the employer.

Court orders

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  1. 1.All the reliefs sought in the suit are denied; the discharge agreement is enforced as a binding contract
  2. 2.Costs of the suit awarded to the claimant plus interest

Authorities

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Legislation

  • Constitution of Kenya, 2010Article 41(1)
  • Constitution of Kenya, 2010Article 48
  • Constitution of Kenya, 2010Article 27
  • Employment ActSections 5(3), 35, 43, 45, 49 and 50
  • ELRC Procedure RulesRule 28(3)

Cases cited (13)

  • Kenfreight (EA) Ltd V. Benson K. Nguti
    [2016]eKLR
  • Kenya Bus Service Limited Vs. Minister for Transport & 2 others
    [2012]eKLR
  • Dennis Kipngetich Koech Vs. MKAPP Kenya Limited
    [2018]eKLR
  • Thomas De la Rue (K) Limited Vs. David Opondo Omutelema
    [2013]eKLR
  • Moses Daniel Kyalo Vs. Freedmaster Tyres Limited
    [2019]eKLR
  • Peter K. Waweru Vs. Republic
    [2006]eKLR
  • Muyira Gbenga – Oluwatore Vs. Reckitt Benskisar South Africa (Pty) Limited and another
    Case CC 41/16
  • SB1 International Holdings Ag (Kenya) vs. Amos Hadav
    [2015]eKLR
  • John Harun Mwau Vs. Independent Electoral and Boundaries Commission and another
    [2013]eKLR
  • Elizabeth Wakary Kibe Vs. Telcom Kenya Limited
    [2014]eKLR
  • Engineer Francis N. Gachuri Vs. Energy Regulatory Commission
  • Robert Kennedy Moi Vs. Attorney General & another
    [2017]eKLR
  • George Assey Vs. Mabati Rolling Mills Limited
    [2014]eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act (suще as sections 35, 43, 45, 49 and 50) - first-instance claim for unfair termination

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (4)

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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, "Alfred Nzomo Kithusi v Hillcrest Investments Limited [2021] KEELRC 1073 (KLR)", Case Analysis (2021). Not stated in the judgment (ELRC claim filed 23.09.2016). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2021/1073/eng@2021-08-19

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