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ELRCDismissedMemorandum of Claim dated 29th May 2018, filed 30th May 2018 (Mombasa ELRC)· [2021] KEELRC 1289 (KLR)

Peter Muunda Mwanzia v Air Sea Logistics Limited [2021] KEELRC 1289 (KLR)

Employment and Labour Relations Court
8 July 2021
2,327 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 an employee who refused equivalent alternative employment and received all dues cannot claim unfair termination compensation.

What this practically means

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Executive summary

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This Employment and Labour Relations Court judgment at Mombasa, delivered by Linnet Ndolo J on 8th July 2021, determines a claim by Peter Muunda Mwanzia, a former Accountant of Air Sea Logistics Limited, for compensation for unfair termination and a Certificate of Service. The Claimant was employed on 6th June 2013. Following the sale of Air Connection Ltd to Panalpina Ltd, the Respondent resolved to wind up its Kenyan operations in favour of sister companies. All employees, including the Claimant, were offered positions in Panalpina Ltd; the Claimant alone declined, conditioning acceptance on a higher salary. He was terminated by letter dated 4th July 2017 effective 31st July 2017, with terminal dues of Kshs. 341,356.66 covering gratuity, leave, and one month's notice pay. The court framed two issues: whether there was unlawful and unfair termination, and whether the remedies sought were payable. It characterised the case as a transfer of services or outsourcing, applying the parameters it previously set in Wrigley Company (East Africa) Limited v Attorney General & 2 others. Although the termination letter did not state reasons, the court found a valid operational reason existed, that the offer of alternative employment on obtaining terms was genuine, and that the Claimant's refusal was based on an unreasonable condition the employer could not meet. Since the Claimant received all accrued dues, his claim for unfair termination compensation was dismissed. In light of the parties' prior relationship, the court directed that each party bear its own costs.

Key legal issues

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01

Whether termination following the Claimant's refusal of a transfer of services to a sister company was unfair

Holding

Termination was not unfair; the offer of similar employment on obtaining terms was a valid mitigating step and the Claimant's refusal negated any unfairness claim

Reasoning

The court characterised the situation as a transfer of services or outsourcing. Although no statutory law governs this area, the court applied its own jurisprudence in Wrigley Company (East Africa) Limited v Attorney General & 2 others. The Respondent offered the Claimant a similar job on the same terms; the Claimant demanded a higher salary which the employer could not meet. The Claimant was paid all accrued dues, including notice pay and gratuity, so he has no recourse against the Respondent.

p. 5
02

Whether the absence of a reason in the termination letter invalidated the termination

Holding

Although the termination letter did not state the reason, the surrounding correspondence and testimony showed a valid operational reason (winding up of Kenyan operations)

Reasoning

The court acknowledged that the letter of 4th July 2017 did not disclose the reason for termination. However, it found on the record that the Respondent's operations in Kenya were being wound up in favour of Panalpina Ltd following the sale of Air Connection Ltd's business, and that the Claimant was aware of the reorganisation and was offered, but declined, a position in the successor company.

p. 4

Legal principles established

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  • Parameters on transfer of services/outsourcing: employers are ordinarily not to outsource core functions, cannot use outsourcing to escape contractual obligations, cannot transfer services without express employee acceptance, and outsourcing must not discriminate
  • An employee who declines an offer of alternative employment on obtaining terms and is paid all accrued dues has no recourse in unfair termination

Court orders

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  1. 1.Claim for compensation for unfair termination dismissed
  2. 2.Claim for Certificate of Service not granted; each party to bear own costs

Authorities

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Legislation

  • Employment ActSection 40
  • United Kingdom Transfer of Undertakings (Protection of Employment) Regulations, 2006general
  • Basic Conditions of Employment Act (South Africa)general

Cases cited (2)

  • Wrigley Company (East Africa) Limited v Attorney General & 2 others
    [2013] eKLR
  • Elizabeth Washeke & 62 others v Airtel Networks (K) Ltd & another
    [2013] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act and Employment and Labour Relations Court Act (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, "Peter Muunda Mwanzia v Air Sea Logistics Limited [2021] KEELRC 1289 (KLR)", Case Analysis (2021). Memorandum of Claim dated 29th May 2018, filed 30th May 2018 (Mombasa ELRC). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2021/1289/eng@2021-07-08

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