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ELRCPartially AllowedELRC Cause (Memorandum of Claim dated 20th May, 2015)· [2022] KEELRC 902 (KLR)

James Wanjala Mureka v Nzoia Sugar Company [2022] KEELRC 902 (KLR)

Employment and Labour Relations Court
3 February 2022
CBChristine N. Baari
1,740 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~7 min to read original · ~4 min brief

The bottom line

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A Kenyan court ruled employers cannot make employees sign away back-pay as a condition of reinstatement, awarding the worker Kshs. 288,000.

What this practically means

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Executive summary

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The Claimant, employed by the Respondent since 1978 and rising to head of Agronomy Laboratory, alleged he was victimised for agitating for registration of a trade union in the sugar industry. After a suspension and termination in March 2012 on grounds of insubordination and use of insulting language, he appealed internally and was reinstated in June 2012 on condition that he would not be paid for the termination period. He served until retirement and sued for four months' salary for the termination period, annual increments, reimbursement, pension and NSSF contributions, costs and interest. The Respondent did not participate in the hearing despite service of hearing notices, and its defence denied the claims, asserting increments were merit-based, that termination followed the company code of conduct under Section 44(4) of the Employment Act, and that the Claimant was estopped from suing on reinstatement conditions he accepted. The court framed one issue: entitlement to the reliefs sought. It held the no-payment clause in the reinstatement letter was an unconscionable term of no legal effect, applying BIFU v Kenya Commercial Bank, and awarded four months' salary of Kshs. 288,000/-. The increments claim failed as the Claimant's own pay slip showed a gross of Kshs. 95,055.00, contradicting his assertion of stagnation at Kshs. 72,000, and the reimbursement claim was unproven. Pension contribution was awarded per the Retirement Benefits Act, with NSSF recoverable from the Fund via statutory deductions. Judgment was entered for the Claimant with costs and interest.

Key legal issues

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01

Whether the Claimant was entitled to salary for the four months he was on termination

Holding

He was entitled; the no-pay clause in the reinstatement letter was unconscionable and the estoppel defence failed

Reasoning

The court found that the reinstatement letter's condition signed by the Claimant concerned adherence to company policies, not acceptance of non-payment. Reinstatement on appeal restores the employee as if no wrong is assignable to him, and introducing a clause denying salary is unconscionable. Consent to an unconscionable term has no legal effect, so estoppel cannot stand.

p. 3
02

Whether the Claimant proved the claim for annual salary increments and reimbursement

Holding

No; the claim failed for want of proof

Reasoning

The only pay slip produced showed a gross salary of Kshs. 95,055.00, which contradicted the Claimant's assertion that he earned Kshs. 72,000 or less than contemporaries. The reimbursement claim was unclear as to what the check-off covered and the amount was not proved owing or paid from his own pocket.

p. 3
03

Whether the Claimant was entitled to pension and NSSF contributions

Holding

Pension contribution awarded under the Retirement Benefits Act; NSSF handled via statutory deductions on the salary award

Reasoning

The pay slip produced showed the Claimant was in a Contributory Pension Scheme, so the pension claim was merited and payable per the Retirement Benefits Act. The court clarified that all awards are subject to statutory deductions, with NSSF deductions payable from the four months' salary award and claimable from the Fund.

p. 3

Legal principles established

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  • A clause in a reinstatement letter denying an employee salary for the termination period is an unconscionable term and an employee's consent to it is of no legal effect
  • Reinstatement after a successful internal appeal restores the employee to the position occupied on the basis that no wrong is assignable to the employee

Court orders

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  1. 1.Payment of four months' salary at Kshs. 288,000/-
  2. 2.Payment of Pension Contribution in accordance with the RBA
  3. 3.Costs of the suit and interest
  4. 4.Awards subject to statutory deductions, including NSSF deductions which the Claimant can thereafter claim from the Fund

Authorities

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Legislation

  • Employment ActSection 44(4)
  • Retirement Benefits Actnot specified

Cases cited (1)

  • Banking Insurance and Finance Union of Kenya v Kenya Commercial Bank Limited
    ELRC Cause No. 642 of 2013
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (first-instance employment cause)

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, "James Wanjala Mureka v Nzoia Sugar Company [2022] KEELRC 902 (KLR)", Case Analysis (2022). ELRC Cause (Memorandum of Claim dated 20th May, 2015). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2022/902/eng@2022-02-03

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