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ELRCDismissedCause No 1953 of 2016· [2022] KEELRC 1088 (KLR)

Amos Kioko Musyoka & 7 others v Cmc Motors Group Limited [2022] KEELRC 1088 (KLR)

Employment and Labour Relations Court
3 January 2022
6,022 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 that signed discharge letters waived the workers' claims, and management staff are only entitled to 15 days' severance per year.

What this practically means

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Executive summary

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Eight former management employees of CMC Motors Group Limited, declared redundant on 20th January 2016, claimed that although unionisable employees were paid severance at 21 days per completed year under a CBA, they as non-unionisable staff were paid at the statutory 15 days, contrary to Section 40(1)(d) of the Employment Act and clause 7(f) of the Respondent's HR Manual. They sought Kshs.1,789,338 as severance shortfall, general damages for discrimination, costs and interest. The Respondent maintained that Section 40(1)(g) prescribes 15 days as the minimum; that Section 40(1)(d) applies only to unionisable employees; that it was a stranger to the CBA; and that the Claimants, having signed discharge letters dated 13th January 2016 and staff clearance certificates acknowledging full and final settlement, were estopped from claiming further. Gakeri J framed two issues: the effect of the discharge letters and entitlement to 21 days' severance. Relying on the Court of Appeal in Coastal Bottlers v Kimathi Mithika and Trinity Prime Investment v Lion of Kenya, the court held the discharge letters and clearance certificates were complete, binding contracts voluntarily executed with full knowledge, without fraud, coercion or undue influence, and constituted deeds of release attracting the exception to the rule in Pinnel's case and Foakes v Beer. The Claimants were additionally estopped by conduct. On severance, following Fredrick Ngari Muchira v Pyrethrum Board and Charles Kambo Wamai v Bamburi Cement, the court held Section 40(1)(d) does not apply to non-unionisable management staff, who are entitled only to 15 days per completed year under Section 40(1)(g); the North Coast Beach Hotel case was distinguished. The suit was dismissed with each party bearing its own costs, judgment delivered virtually at Nairobi on 3rd January 2022.

Key legal issues

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01

Whether the discharge letters dated 13th January 2016 and staff clearance certificates extinguished the Claimants' claims

Holding

The discharge letters and clearance certificates were binding agreements voluntarily executed with full knowledge, by which the Claimants waived further claims

Reasoning

The court found the discharge letter was an offer accepted by signature without any pleaded incapacity, misrepresentation, fraud, undue influence or coercion, and none signed under protest. The burden under Section 107(1) of the Evidence Act to prove invalidity was not discharged. Applying Coastal Bottlers and Trinity Prime, the agreements were complete contracts binding on the parties, and the Claimants were also estopped by conduct as the Respondent paid on the strength of their representations.

p. 8
02

Whether the Claimants were entitled to severance pay at 21 days per completed year like unionisable employees

Holding

No; as non-unionisable management employees Section 40(1)(d) did not apply and they were entitled only to the statutory 15 days under Section 40(1)(g)

Reasoning

It was uncontroverted that the Claimants held managerial, non-unionisable positions ineligible for trade union membership. Relying on Fredrick Ngari Muchira and Charles Kambo Wamai, the court held that Section 40(1)(d) protects unionisable employees and does not extend to management staff, so no disadvantage arose from paying them at 15 days per year under Section 40(1)(g). The Kenyan Union of Domestic Workers case was distinguished because those grievants were union members.

p. 9
03

Whether payment of a lesser sum (15 vs 21 days) could discharge the alleged greater obligation

Holding

Normally payment of a lesser sum cannot discharge a greater debt (Pinnel's case; Foakes v Beer), but execution of a deed of release is an exception

Reasoning

The court acknowledged the rule in Pinnel's case and Foakes v Beer but noted exceptions, including a deed of release. Since all Claimants voluntarily executed a deed of release with full knowledge of the circumstances and effect of the discharge letter, the exception applied and the payment at 15 days was a full discharge. No plea of undue influence or unconscionability per Lloyds Bank v Bundy was made.

p. 8

Legal principles established

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  • Whether a discharge voucher or letter bars further claims depends on the circumstances of each case, including whether it was voluntarily executed
  • Section 40(1)(d) of the Employment Act applies to unionisable employees and does not extend to non-unionisable management staff
  • A voluntarily executed discharge agreement, with full knowledge of its effect, constitutes a deed of release that extinguishes claims notwithstanding payment of a lesser sum
  • A party who by words or conduct induces another to act on a belief is estopped from averring a different state of affairs

Court orders

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  1. 1.The suit is hereby dismissed
  2. 2.Parties shall bear their own costs

Authorities

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Legislation

  • Employment ActSection 40(1)(d)
  • Employment ActSection 40(1)(g)
  • Employment ActSection 5(3)
  • Labour Relations ActSection 49
  • Evidence ActSection 107(1)
  • Constitution of Kenya 2010Article 41
  • Constitution of Kenya 2010Article 159(2)(d)
  • Constitution of Kenya 2010Article 48
  • Civil Procedure RulesOrder 21 Rule 1
  • Civil Procedure ActSection 1B

Cases cited (20)

  • Kenya Union of Domestic, Hotels, Educational Institutions & Hospital Workers v North Coast Beach Hotel
    [2017] eKLR
  • Lillian Nyambura Nduati v Highlands Mineral Water Company Limited
    [2016] eKLR
  • Charles Nyangi Nyamohanga v Action Aid International
    [2015] eKLR
  • Simon Muguku Gichigi v Taifa Sacco Society Limited
    [2012] eKLR
  • D&C Builders v Rees
    (1965) ALL ER VOL 3857
  • Lloyds Bank Ltd v Bundy
    [1974] ALL ER
  • Lee v Showmen's Guild of Great Britain
    [1952] ALI ER
  • Caroline Atieno Osweta v Bake & Bite Mombasa Limited
    [2016] eKLR
  • Charles Kambo Wamai v Bamburi Cement Limited
    [2013] eKLR
  • Fredrick Ngari Muchira, Howard Kipkoech Korir & 98 Others v Pyrethrum Board of Kenya
    [2013] eKLR
  • Coastal Bottlers Ltd v Kimathi Mithika
    [2018] eKLR
  • Trinity Prime Investment v Lion of Kenya Insurance Company Ltd
    [2015] eKLR
  • Krystalline Salt Limited v Kwekwe Mwakele & 67 others
    [2017] eKLR
  • Pinnel's case
    (1602) 5 Co Rep 117a
  • Foakes v Beer
    [1884] App. Cas. 605
  • Century Automobiles Ltd v Hutchings Biemer Ltd
    [1965] E.A. 304
  • Pickard v Sears
    [1837] 6 Ad. & El. 469
  • Combe v Combe
    [1951] 2 KB 215
  • Damondar Jihabhai & Co Ltd & Another v Eustace Sisal Estates Ltd
    1967 EA 153
  • Globe Motors Inc & Others v TRW Lucas Electric Steering Ltd & Others
Jurisdiction invoked
Employment and labour relations jurisdiction under Article 162(2) of the Constitution (Employment and Labour Relations Court); claim filed by memorandum of claim

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (3)

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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, "Amos Kioko Musyoka & 7 others v Cmc Motors Group Limited [2022] KEELRC 1088 (KLR)", Case Analysis (2022). Cause No 1953 of 2016. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2022/1088/eng@2022-01-03

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