Kazungu v Kenya Marine and Fisheries Research Institute (Cause 55 of 2020) [2022] KEELRC 1522 (KLR)
The bottom line
#A Kenyan court ordered a state employer to pay over Ksh 23 million in salary arrears after it unlawfully cut a former CEO's pay using a circular that couldn't apply backwards.
What this practically means
#Executive summary
#Key legal issues
#Effect of the Board resolution that a reverting CEO would 'retain salaries personal to themselves'
'Salary' in the Board resolution means gross salary - basic pay plus allowances - so the claimant was entitled to retain the CEO's full monthly remuneration personal to himself
The resolution did not say 'basic salary' and the claimant's interpretation was unchallenged. Relying on the Court of Appeal in Postal Corporation of Kenya v Andrew K. Tanui, the Court adopted the construction that gross salary includes allowances forming part of the regular contractual remuneration. The Acting Director therefore acted outside the Board resolution in pegging allowances to the CRO position.
Retrospective application of circular ref no OP/SCAC.1/12(11) dated 14.05.2015
The circular could not apply retrospectively to defeat the claimant's accrued CEO terms effective 01.07.2014
Following Wasilwa J in the Magoha judicial review and the Attorney General's advisory opinion of 25.06.2019, the Court held the circular was a policy instrument applicable to prospective employment relations only; the claimant's exit package was an accrued right crystallised in a binding contract, varifiable only by mutual agreement, and its unilateral withdrawal breached sections 10(5) and 26(2) of the Employment Act.
Legal effect of the two documents signed on 31.10.2019
The first document was avoidable at the claimant's instance except to the extent it partly settled owed salary; the second document was void for fundamental common mistake blended with economic duress
Both documents were signed under the parties' common mistake that a contract running 01.07.2014–31.10.2019 existed and had lapsed, when in fact the contract was continuing. The claimant showed economic duress arising from financial pressure and deteriorating health. There was no Board resolution supporting the purported re-emplacement at Job Group RI.14, rendering those terms fictitious.
Whether there was unfair constructive termination
No constructive termination: the claimant never resigned and his continued employment amounted to affirmation of the contract
Adopting the ingredients in Coca Cola East & Central Africa Ltd v Maria Kagai Ligaga and Western Excavating ECC Ltd v Sharp, the Court found the claimant remained in employment through to the hearing, so the breach was affirmed and no constructive termination was established. However, the continuing relationship founded a declaration of entitlement to continued payment of the due CEO remuneration.
Constitutional violations
The respondent violated the claimant's rights to fair administrative action (Article 47), fair labour practices and fair remuneration (Article 41), dignity (Article 28) and access to information (Article 35(1)(b)), without justification under Article 24(1)
Salary revision in 2015 and the forced signing on 31.10.2019 occurred without hearing or written reasons; the intolerable conduct degraded the claimant's dignity; remuneration was withheld contrary to Article 41(2)(a); and no payment statement was provided. The violations were aggravated because the respondent persisted despite the Magoha decision and the Attorney General's advisory, and withheld medical cover from a cancer patient.
Validity of the severe warning dated 12.11.2020
The severe warning was unlawfully and unfairly imposed and is null
The claimant had notified the respondent of his genuine ill-health and requested sick/convalescent leave with medical support. His absence had a valid reason, and under section 46(h) of the Employment Act initiation of a disciplinary penalty against an employee who has raised a responsible grievance is not a fair reason. The warning therefore could not stand.
Availability of judicial review order of prohibition in ELRC proceedings
Prohibition is available under Article 23(3)(a) of the Constitution to arrest the continuing injury of salary reduction based on the impugned circular
The Court reasoned that the parties remained in an employment relationship and the continued withholding or cutting of the CEO exit salary under the impugned circular was a continuing injury which an order of prohibition would efficaciously arrest.
Legal principles established
#- Gross monthly salary under the Employment Act includes basic salary plus allowances that form part of the regular contractual remuneration, excluding only privileges dependent on actual performance of the contract
- A government circular cannot operate retrospectively to take away accrued and vested terms and conditions of service; it applies only prospectively
- Where an administrative action adversely affects a person's rights, written reasons must be given and the person heard, per Article 47 of the Constitution
- Upon finding a violation of rights under Article 23 of the Constitution, a court must frame appropriate reliefs to vindicate the infringed rights, not limited to the reliefs in Article 23(3)(a)-(e)
Court orders
#- 1.Declaration that the respondent's actions violated the claimant's constitutional rights under Articles 24(1), 28, 41 and 47(1) amounting to unfair labour practice and breach of the Employment Act, 2007
- 2.Declaration that the respondent had no justification to downscale the claimant's CEO exit salary of ksh 486,490.00 pm as approved by the Board's 71st session of 08.12.2011
- 3.Declaration that at the time of change to Chief Research Officer the claimant was Director/CEO earning ksh 486,490.00 monthly
- 4.Declaration that the Board had no basis for offering ksh 8,928,672.00 as salary arrears for 01.07.2014 to 31.10.2019
- 5.Declaration that by the Board meeting of 31.10.2019 the respondent acknowledged indebtedness but failed to meet it properly
- 6.Order that the claimant is entitled to balance of salary arrears of ksh 23,132,244.00 with interest at court rates from filing to payment in full
- 7.Order of prohibition restraining the respondent from reducing, cutting or slashing the claimant's salary and allowances on the basis of circular ref no OP/SCAC.1/12(II)
- 8.Declaration that the severe reprimand in the letter dated 12.11.2020 is unprocedural, unwarranted, unjustified and null
- 9.Order for resumption of payment of the claimant's CEO exit salary (basic ksh 320,000; house ksh 80,000; medical ksh 2,490; commuter ksh 24,000; other allowances ksh 60,000) effective 01.07.2014 to June 2019 with access to the Group Medical Insurance Cover
- 10.Declaration that the claimant is entitled to continued payment of his due CEO monthly remuneration at ksh 579,488.00 (as adjusted by SRC effective 01.07.2020), less due PAYE and statutory/contractual deductions, from January 2021 until retirement, with outstanding amounts computed into the final decree
- 11.Compensation of 12 months' gross monthly remuneration, ksh 5,837,880.00, under Article 23(3)(e) of the Constitution
- 12.Respondent to pay sums awarded by 01.09.2022 failing which interest at court rates from date of judgment until full payment
- 13.Respondent to pay the claimant's costs of the suit
- Jurisdiction invoked
- Article 162(2) of the Constitution (employment and labour relations jurisdiction); reliefs granted under Article 23(3) of the Constitution
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Kazungu v Kenya Marine and Fisheries Research Institute (Cause 55 of 2020) [2022] KEELRC 1522 (KLR)", Case Analysis (2022). (not stated in judgment). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2022/1522/eng@2022-06-17
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.