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ELRCPartially AllowedCause No 392 of 2019· [2023] KEELRC 913 (KLR)

Lewela v Oracle Technology Systems (Kenya) Limited (Cause 392 of 2019) [2023] KEELRC 913 (KLR)

Employment and Labour Relations Court
13 April 2023
3,338 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~13 min to read original · ~4 min brief

The bottom line

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What this practically means

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Executive summary

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The claimant, employed by the respondent on 15th October 2015 as a Senior Technology Sales Manager and later promoted to Cloud Platform Representative, resigned by letter dated 19th July 2018 effective 31st July 2018, serving one month's notice as garden leave. He claimed unpaid terminal dues, principally commissions of Kshs 6,431,427 which the respondent had paid but then clawed back on the ground that IEBC, the customer on a deal the claimant closed, had not paid the contract sum of over Kshs 166 million. The respondent relied on Clause 14 of its Sales Compensation Plan permitting recovery of commissions where a customer's account became past due or uncollectible, and Clause 20 terminating the ability to earn commissions on termination of employment. The court held that the claimant had already earned and been paid the commissions before his resignation; the respondent produced no evidence that the IEBC account had been deemed uncollectible and written off, and IEBC had acknowledged the debt and was willing to pay upon budgetary allocation. Clause 20 governed the ability to earn commissions, not the responsibility to pay commissions already earned. The clawback was therefore a breach of contract and the commissions were awarded. The court also awarded one month's basic salary of Kshs 666,666.67 for the garden leave period, which the respondent did not contradict. However, the claim for payment in lieu of untaken leave failed for want of evidence and because garden leave contradicted it, and general damages were refused since the breach, though established, did not rise to a violation of Articles 27 or 41 of the Constitution. Interest at court rates from 31st July 2018 and costs of the suit were awarded to the claimant.

Key legal issues

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01

Entitlement to clawed-back commissions of Kshs 6,431,427

Holding

Claimant had earned and been paid the commissions before resignation; the clawback was unjustified and constituted breach of contract; commission awarded

Reasoning

The contract and Clauses 14 and 20 of the Sales Compensation Plan permitted recovery only in limited circumstances, including where an account was deemed uncollectible and written off. IEBC had acknowledged the debt and was willing to pay upon budgetary allocation, so the account was not uncollectible. The claimant had fulfilled payment conditions for subsequent deals; the clawback was a unilateral act at resignation. Clause 20 governed ability to earn, not payment of commissions already earned.

p. 7
02

Notice pay for the garden leave period

Holding

Respondent owed one month's basic salary of Kshs 666,666.67 for the notice period served

Reasoning

The claimant tendered resignation effective 31st July 2018 and served one month's notice as garden leave under the contract. The claimant testified he served the notice period but was not paid salary for it, and the respondent did not contradict that evidence. The court therefore found the respondent bound to pay full salary for the garden leave period.

p. 7
03

Payment in lieu of untaken leave

Holding

Claim for leave pay failed for want of evidence

Reasoning

The claimant adduced no evidence of the number of untaken leave days owed at resignation. Further, the fact that he served one month of garden leave contradicted the claim for payment in lieu of untaken leave days. The court therefore declined to award any payment in lieu of leave.

p. 7
04

Claimed constitutional violations (Articles 27 and 41) and general damages

Holding

No constitutional violation established; general damages refused

Reasoning

The court characterized the claim as purely contractual. Although the failure to pay earned dues breached the contract, that breach did not amount to a violation of Articles 27(1) and (5) or 41(1) and 2(b) of the Constitution, so no general damages were awarded beyond the special damages proved and awarded.

p. 7

Legal principles established

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  • Where an employee has already earned and been paid commissions before resignation, an employer may not unilaterally claw back those commissions absent proof that the account was deemed uncollectible under the applicable compensation plan
  • A compensation plan clause on ability to earn commissions upon termination does not extinguish the employer's responsibility to pay commissions already earned

Court orders

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  1. 1.Kshs 666,666.67 being one month's basic salary for the notice period served
  2. 2.Kshs 6,431,427 being commission duly earned, paid and clawed back by the respondent
  3. 3.Interest at Court rates from the date of termination of contract on 31st July, 2018 till payment in full
  4. 4.Costs of the suit to the claimant

Authorities

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Legislation

  • Constitution of KenyaArticle 27(1) and (5)
  • Constitution of KenyaArticle 41(1) and 2(b)
  • Employment ActSections 35(5); 36; 40(1)(e)(f) & (g)

Cases cited (1)

  • National Bank of Kenya Limited -vs- Pipeplastic (K) Limited and Another
    [2001] eKLR
Jurisdiction invoked
Original jurisdiction of the Employment and Labour Relations Court over employment and labour relations disputes (claim based on contract of employment)

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, "Lewela v Oracle Technology Systems (Kenya) Limited (Cause 392 of 2019) [2023] KEELRC 913 (KLR)", Case Analysis (2023). Cause No 392 of 2019. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/913/eng@2023-04-13

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