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ELRCDismissedNot stated in the judgment as provided· [2021] KEELRC 1384 (KLR)

Paddy Chris Adhola v Orpower 4 INC. Limited [2021] KEELRC 1384 (KLR)

Employment and Labour Relations Court
15 June 2021
NMNzioki wa Makau
2,785 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~11 min to read original · ~4 min brief

The bottom line

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An employee who accepts terminal dues and signs a full and final settlement cannot later sue for unfair redundancy in Kenya, even if the payout seems inadequate.

What this practically means

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Executive summary

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The Claimant, formerly employed by the Respondent as a Storekeeper from 1st July 2009, sued for wrongful termination of employment vide a redundancy letter dated 8th April 2014. He alleged the redundancy was a pretext, that his position was retained and re-advertised, that he received no personal written notice or disciplinary hearing, and that no redundancy package covering his remaining working years was paid. He sought punitive damages, general damages of Kshs. 1 Million for breach of the right to fair labour practices under Article 41(1) of the Constitution, 12 months' salary as compensation, and costs, having abandoned claims for payment in lieu of notice and expected income. The Respondent defended the termination as a lawful redundancy under Section 40 of the Employment Act, asserting that the Claimant and the Labour Office were notified, that his position was abolished, that a colleague with longer service and greater experience was retained, and that the Claimant accepted his terminal dues as full and final settlement. Both parties filed written submissions and cited authorities on Section 40 compliance and the availability of general damages in termination claims. The Court held that a redundancy must comply with Section 40 of the Employment Act, including notification and a selection criterion, but found dispositive the fact that the Claimant accepted the final dues calculated by the Respondent and signed a discharge. Applying Coastal Bottlers Limited v Kimathi Mithika, the Court held the discharge was a binding contract between the parties that could not be rewritten by the Court absent grounds for vitiation. The suit was dismissed with each party bearing their own costs.

Key legal issues

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01

Compliance with Section 40 of the Employment Act in redundancy terminations

Holding

The Court accepted that redundancy must comply with Section 40, but did not find in the Claimant's favour because he accepted final dues and signed a discharge

Reasoning

The Court recited the Section 40 requirements: notification of the union or personal written notice to the employee, notice to the labour officer, and a selection criterion. The Respondent asserted the process included notification, counselling and payment of final dues, and the Claimant accepted the dues and signed a discharge, which the Court treated as conclusive of the matter.

p. 3
02

Effect of a full and final settlement agreement on claims for unfair termination

Holding

The discharge signed by the Claimant was a binding contract that absolved the Respondent from further claims and defeated the suit

Reasoning

Relying on Coastal Bottlers Limited v Kimathi Mithika, the Court held that where a party signs a settlement/discharge without misrepresentation or incapacity, it is binding regardless of adequacy of the amount. The Claimant sought to overturn the agreement without establishing any ground for vitiation, so the claim was misplaced and the suit was dismissed.

p. 3

Legal principles established

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  • A declaration of redundancy must comply with Section 40 of the Employment Act, including notification of the employee and the labour officer, and a criterion for selection of affected staff
  • A full and final settlement/discharge signed by an employee is a binding contract that bars further claims, even if the amount paid may be deemed inadequate
  • The Court will not rewrite a contract voluntarily entered into by the parties

Court orders

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  1. 1.Suit dismissed
  2. 2.Each party to bear their own costs

Authorities

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Legislation

  • Employment Act 2007Section 40(1)
  • Employment Act 2007Section 40(1)(b)
  • Employment Act 2007Section 40(1)(c)
  • Constitution of KenyaArticle 41(1)
  • Employment and Labour Relations Court (Procedure) Rules, 2016Rule 21

Cases cited (12)

  • Hesbon Ngaruiya Waigi v Equitorial Commercial Bank Limited
    [2013] eKLR
  • Faiza Mayabi v First Community Bank Limited
    [2019] eKLR
  • Alice Ndaani & 5 Others v Mwalimu National Savings and Credit Co-Operative Society Limited
    [2021] eKLR
  • George Onyango Akuti v G4S Security Services Kenya Ltd
    [2013] eKLR
  • Dorcas Kemunto Wainaina v IPAS
    [2018] eKLR
  • Kenfreight (E.A.) Limited v Benson K. Nguti
    [2016] eKLR
  • Walter Musi Anyanje v Hilton International Kenya Ltd & Another
    Civil Appeal No. 269 of 2003
  • Kenya Ports Authority v Edward Otieno
    Civil Appeal No. 120 of 1997
  • Addis v Gramophone Company
    (1909) AC 488
  • Rift Valley Textiles Ltd v Edward Onyango Oganda
    Civil Appeal No. 2 of 1992
  • Ombanya v Gailey & Roberts
    (1974) EALR 522
  • Coastal Bottlers Limited v Kimathi Mithika
    [2018] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over employment and labour relations disputes (Employment Act 2007; Employment and Labour Relations Court (Procedure) Rules, 2016)

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, "Paddy Chris Adhola v Orpower 4 INC. Limited [2021] KEELRC 1384 (KLR)", Case Analysis (2021). Not stated in the judgment as provided. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2021/1384/eng@2021-06-15

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