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ELRCPartially AllowedCause No 90 of 2017· [2022] KEELRC 61 (KLR)

Wasike v Nzoia Sugar Company Limited (Cause 90 of 2017) [2022] KEELRC 61 (KLR)

Employment and Labour Relations Court
19 May 2022
4,314 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Nzoia Sugar must pay a former manager KShs 4.46 million after a Kenyan court ruled his 'probation' had legally expired and his dismissal ignored fair procedure.

What this practically means

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Executive summary

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The Claimant, formerly Purchasing Manager of the Respondent, sued after his employment was terminated on June 17, 2016 on the ground of unsatisfactory performance during probation. He sought declarations that the termination was unfair and unlawful, twelve months' gross pay as damages, reinstatement, and damages for loss of future earnings. The Respondent contended the Claimant was on probation and could be dismissed summarily under Clause 8.2.3.4 of its HR Manual for gross misconduct, and raised issues over his academic qualifications. The court framed three issues: the Claimant's employment status, the lawfulness and fairness of the termination, and entitlement to reliefs. Relying on Sections 42(2) and 42(3) of the Employment Act, the court held that the aggregate statutory probation period of twelve months had lapsed by March 12, 2016, so the contract was automatically converted into confirmed employment before termination. On the reason for termination, the Respondent produced no appraisal report or evaluation criteria, and the internal audit memo could not substitute for an assessment of the Claimant's performance; the court applied the tests endorsed in Jane Samba Mukala v Ol Tukai Lodge Limited and National Bank of Kenya v Samuel Nguru Mutonya. Procedurally, the Claimant was never invited to disciplinary proceedings, and the court held Section 41 is mandatory and cannot be ousted by an HR manual. The termination was declared unlawful and unfair. Considering Section 49 factors, including newspaper adverts that harmed the Claimant's employment prospects, the court awarded maximum compensation of twelve months' gross salary (kshs.4,457,388/-, subject to statutory deductions), interest at court rates from the date of judgment, and costs of the suit to the Claimant.

Key legal issues

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01

Whether the Claimant was still on probation at the time of termination

Holding

The Claimant's probationary contract had automatically converted into confirmed employment on lapse of the aggregate 12-month probation period, i.e. by March 12, 2016, before the June 17, 2016 termination.

Reasoning

Section 42(2) of the Employment Act caps probation at six months, extendable by a further six months by agreement, and Section 42(3) prohibits employment under a probationary contract beyond that aggregate period. The appointment letter provided for six months' probation and the Claimant served from March 11, 2015 to June 17, 2016. Even the Respondent's own witness confirmed that as per the law the Claimant was not on probation at termination.

p. 5
02

Whether the reason for termination (unsatisfactory performance during probation) was valid and justified

Holding

The employer failed to prove the reason for termination; there was no appraisal report or clear criteria, and the internal audit memo could not substitute for evaluation of the Claimant's performance.

Reasoning

Section 43 places the burden of proving reasons for termination on the employer. The termination letter relied on unsatisfactory performance during probation, yet RWI admitted no appraisal report existed. The internal memo of March 3, 2016 related to procurement matters, referred to an audit predating the Claimant's employment, and was not specific to his performance. Academic qualifications, raised at trial, were not stated in the termination letter and were therefore irrelevant under Section 43. The court adopted the Court of Appeal's endorsement of the Jane Samba Mukala criteria on proving poor performance.

p. 7
03

Whether the procedure for termination was fair

Holding

The termination was procedurally unfair; the Claimant was never invited to disciplinary proceedings, and the manual clause allowing summary dismissal cannot displace Section 41 of the Employment Act.

Reasoning

Section 41 requires an employer contemplating termination on grounds of misconduct, poor performance or incapacity to explain the reasons to the employee in a language they understand and allow the presence of a fellow employee or union representative. RWI admitted the Claimant was not invited to any disciplinary proceedings, and the Respondent relied on Clause 8.2.3.4 of its HR Manual permitting dismissal without hearing for gross misconduct. The court held that manual provisions cannot oust mandatory statutory procedure, and no third warning was issued contrary to the manual's own scheme.

p. 8
04

Whether the Claimant was entitled to the reliefs sought, including maximum compensation

Holding

The Claimant was awarded the maximum 12 months' gross salary as compensation under Section 49(1)(c), plus interest and costs; reinstatement was not pursued.

Reasoning

Under Section 49(4) the court considered the circumstances of termination, length of service, reasonable expectation of continued employment and employment prospects. The Claimant had served over 13 months, was confirmed by operation of law, and newspaper adverts by the Respondent publishing his photograph and cessation of employment negatively affected his future employment chances. Given the absence of valid reasons and procedural fairness, and his prior credible employment history, maximum compensation of 12 months' gross salary of kshs.371,449.00 was warranted, subject to statutory deductions.

p. 9

Legal principles established

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  • A probationary contract cannot exceed an aggregate of twelve months and is automatically converted into confirmed employment upon lapse of that period.
  • An employer bears the burden of proving valid reasons for termination, and poor performance must be established through a clear evaluation or appraisal criteria; an internal memo does not amount to evaluation of performance.
  • The procedural requirements of Section 41 of the Employment Act are mandatory and cannot be ousted by an employer's human resources manual.

Court orders

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  1. 1.A declaration that the termination of the Claimant's employment contract by the Respondent was unlawful and unfair.
  2. 2.The Respondent to pay the Claimant compensation for unfair and unlawful termination equivalent to 12 months of last gross monthly salary of kshs. 371,449.00, total kshs.4,457,388/-, subject to statutory deductions.
  3. 3.Interest on the compensation at court rates from date of judgment until payment in full.
  4. 4.The Respondent to pay costs of the suit.

Authorities

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Legislation

  • Employment ActSection 42(2)
  • Employment ActSection 42(3)
  • Employment ActSection 43(1)
  • Employment ActSection 43(2)
  • Employment ActSection 45(1), (2), (3) and (5)
  • Employment ActSection 41
  • Employment ActSection 49(1)(c) and 49(4)
  • Constitution of KenyaNot specified (cited in the reliefs regarding breach of mandatory process)

Cases cited (2)

  • National Bank of Kenya v Samuel Nguru Mutonya
    [2019] eKLR
  • Jane Samba Mukala v Ol Tukai Lodge Limited
    Industrial Cause Number 823 of 2010 LLR 255 (ICK) (September 2013)
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (Sections 41, 42, 43, 45 and 49 applied)

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, "Wasike v Nzoia Sugar Company Limited (Cause 90 of 2017) [2022] KEELRC 61 (KLR)", Case Analysis (2022). Cause No 90 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2022/61/eng@2022-05-19

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