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ELRCPartially AllowedNot stated in the judgment as provided· [2023] KEELRC 379 (KLR)

Mutyota v Horeca Kenya Limited (Cause 2477 of 2016) [2023] KEELRC 379 (KLR)

Employment and Labour Relations Court
10 February 2023
3,807 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court awarded a manager Kshs 1.6 million because his employer fired him for poor performance without targets, appraisal, or a hearing.

What this practically means

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Executive summary

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The claimant, employed as a Business Manager by the respondent vide a letter of offer dated 20th April 2016 at a monthly salary of Kshs 400,000.00, commenced work on 15th June 2016 and was terminated on 30th September 2016 for alleged poor performance. He sued for a declaration that his dismissal was unlawful, notice pay, unlawful salary deduction, compensatory damages, leave pay, house allowance, interest and costs. The respondent, which did not appear at trial nor call oral evidence, contended that the claimant was on probation, performed poorly, and was offered a demoted role before termination. The court framed four issues: probation status, substantive justification, procedural fairness, and reliefs. It found that the contract provided a three-month probation which had expired without extension, so the claimant was deemed a confirmed employee by operation of law under section 42 of the Employment Act; an unsigned six-month probation contract annexed by the respondent had no evidential value. On substantive fairness, the respondent led no evidence of performance targets, indicators or appraisals, and failed to discharge its burden under sections 43(1) and 45(2)(a) and (b). On procedure, the same-day termination without notice or a hearing breached sections 41 and 45(2)(c), rendering the termination procedurally unfair. The court awarded compensatory damages of three months' gross salary (Kshs 1,200,000.00), the balance of notice pay (Kshs 200,000.00), and withheld September 2016 salary (Kshs 200,000.00), totalling Kshs 1,600,000.00, with interest at court rates and costs of the suit. Claims for house allowance and leave pay were denied.

Key legal issues

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01

Whether the claimant was on probation at the time of termination

Holding

The claimant had served past his three-month probationary period with no evidence of extension, hence he was deemed a confirmed employee entitled to full statutory safeguards

Reasoning

The contract dated 20th April 2016 provided for a three-month probation under clause 7. The certificate of service and June 2016 pay slip confirmed commencement on 15th June 2016. By termination on 30th September 2016, the claimant had served three and a half months. No evidence of extension existed, so the contract was deemed confirmed by operation of law under section 42 of the Employment Act, following the Onaya-Odek decision. An unsigned contract dated 15th June 2016 purporting to provide six months' probation was not owned and had no evidential value.

p. 4
02

Whether the respondent had a justifiable reason for termination

Holding

The respondent failed to discharge its evidential burden under sections 43(1) and 45(2)(a) and (b); the termination was not substantively fair

Reasoning

The termination letter cited poor performance. However, the respondent, which did not tender any evidence at trial, proved no performance targets, indicators, appraisals or reports against which performance could be measured. Following Agnes Yahuma Digo v PJ Petroleum Equipment Limited, an employer who fails to manage performance lacks the moral authority to allege underperformance. Absent any performance assessment, the court concluded the respondent had not proved fair and valid reasons for termination.

p. 5
03

Whether the claimant was accorded procedural fairness prior to termination

Holding

The termination was procedurally unfair within the meaning of sections 45(2)(c) and 41 of the Employment Act

Reasoning

Section 41(1) requires an employer, before terminating on grounds of misconduct, poor performance or physical incapacity, to explain the reasons to the employee and allow representation. The claimant's testimony that he was not heard was uncontroverted as the respondent called no evidence. The termination letter took effect the same day, showing the termination was abrupt with no notice or opportunity to defend himself. The court adopted the reasoning in National Bank of Kenya v Samuel Nguru Mutonya and Naumy Jemutai Kirui v Unilever Tea Kenya Limited.

p. 7
04

Entitlement to reliefs

Holding

Compensatory damages of three months' gross salary, the balance of notice pay, and the September 2016 withheld salary were awarded; house allowance and leave pay claims were denied

Reasoning

Having found both substantive and procedural unfairness, the court awarded compensatory damages equivalent to three months' gross salary, factoring in the short length of employment. Since only half a month's salary (Kshs 200,000.00) was paid in lieu of notice, the balance of Kshs 200,000.00 was awarded. The respondent gave no justification for paying only half salary for September 2016, so the balance was awarded. The house allowance claim failed because gross salary was presumed to include allowances, and the leave claim failed because leave dues had been paid and the extent of any shortfall was not demonstrated.

p. 7

Legal principles established

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  • Where an employee continues working past the contractual probationary period without an extension, the contract is deemed confirmed by operation of law under section 42 of the Employment Act
  • An employer alleging termination for poor performance must prove a performance assessment mechanism with measurable targets agreed in advance, and that the employee's performance fell below them
  • Termination without prior notice of the reasons and an opportunity to be heard offends sections 41 and 45(2)(c) of the Employment Act and is procedurally unfair

Court orders

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  1. 1.Judgment entered in favour of the claimant against the respondent
  2. 2.Compensatory damages of Kshs 1,200,000.00 being equivalent to three months of gross salary
  3. 3.Half a month's salary in lieu of notice being Kshs 200,000.00
  4. 4.Withheld salary for September, 2016 being Kshs 200,000.00
  5. 5.Total award of Kshs 1,600,000.00
  6. 6.Interest on the total award at court rates from the date of judgment until payment in full
  7. 7.The claimant to have the costs of the suit

Authorities

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Legislation

  • Employment Actsection 42
  • Employment Actsection 35, 40, 44 (as referenced in Onaya-Odek quotation)
  • Employment Actsection 43(1)
  • Employment Actsection 45(2)(a) and (b)
  • Employment Actsection 45(2)(c)
  • Employment Actsection 41(1)
  • Employment Actsection 43(2) (as referenced in Kirui quotation)
  • Civil Procedure RulesOrder 21 Rule 1
  • Civil Procedure ActSection 1B
  • Constitution of KenyaArticle 159(2)(d)
  • Constitution of KenyaArticle 48

Cases cited (15)

  • Gladys Chelimo Bii vs Kenya Power and Lighting Company Limited
    (2021) eKLR
  • David Araka vs Uchumi Supermarkets Limited
    (2021) eKLR
  • Francis Aboge Aduk vs Hasbah Kenya Limited
  • Christine Juma Were vs Kenafric Industries Ltd
  • Dennis Asenji vs the Standard Group Limited
    (2022) eKLR
  • Bernard Ogari vs Freight in Time Limited
    (2021) eKLR
  • Agakhan Hospital Kisumu vs Erick Wanjohi
    (2020) eKLR
  • Elton Barasa vs One Acre Fund
    (2018) eKLR
  • Seth O. Onchari vs Shah Lalji Nangpar Academy
    (2020) eKLR
  • Narry Philemons Onaya-Odek v Technical University of Kenya [Formerly, the Kenya Polytechnic University College)
    [2017] eKLR
  • Agnes Yahuma Digo vs PJ Petroleum Equipment Limited
    (2013) eKLR
  • National Bank of Kenya vs Samuel Nguru Mutonya
    [2019] eKLR
  • Jane Samba Mukala v Ol Tukai Lodge Limited
    Industrial Cause Number 823 of 2010; (2010) LLR 255 (ICK)
  • Naumy Jemutai Kirui vs Unilever Tea Kenya Limited
    [2020] eKLR
  • Joseph Sani Orina vs Hiprora Business Solution (EA) Limited
    [2017] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (sections 35, 41, 42, 43, 44, 45) in a first-instance unfair termination claim

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, "Mutyota v Horeca Kenya Limited (Cause 2477 of 2016) [2023] KEELRC 379 (KLR)", Case Analysis (2023). Not stated in the judgment as provided. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/379/eng@2023-02-10

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