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ELRCDismissedConsolidation of Appeals No. 049/2021 (from CMELRC No. 4 of 2019) and Appeal No. E050/2021 (from Gatundu CMELRC No. 5 of 2019)· [2023] KEELRC 1001 (KLR)

H. Young & Co (E. Afica) Ltd & another v Mwangi & another (Appeal E049 & E050 of 2021 (Consolidated)) [2023] KEELRC 1001 (KLR)

Employment and Labour Relations Court
20 April 2023
2,643 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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What this practically means

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Executive summary

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The Employment and Labour Relations Court at Nairobi, Mwaure J, delivered one judgment in two consolidated appeals (from CMELRC No. 4 of 2019 and Gatundu CMELRC No. 5 of 2019) by H. Young & Co (EA) Ltd against awards to former employees John Mwaniki Mwangi and John Kimani, whose employment was terminated in July 2018. The appellant argued the trial magistrate erred in disregarding discharge vouchers signed by the respondents, in treating the termination as redundancy, and in awarding six months' salary as compensation plus service pay despite NSSF membership. The respondents maintained the termination was unprocedurally effected while the Gatundu project was ongoing and that the discharge vouchers could not bar statutory claims, invoking Article 41 of the Constitution and supporting authority. The court held that the termination letters gave no reason, that no fixed-term contract tied employment to the Gatundu project, and that sections 40 and 41 of the Employment Act were mandatory and flouted. It held a discharge voucher is a one-sided employer-generated document that will not bar an employee's claim where the employer breached employment laws in the termination. The trial court's determination on unlawful termination was upheld and the appeal dismissed, but the compensation was reduced from six to three months' salary (Kshs 98,343 for Mwangi and Kshs 105,909 for Kimani), with costs of the lower court and appeal awarded to the respondents on the basis of the reduced award.

Key legal issues

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01

Validity of the termination

Holding

The termination was without valid reason and without following the mandatory procedure; if the reason was expiry of the Gatundu project, redundancy procedure under section 40 should have been followed

Reasoning

The termination letters gave no reason, stating only that services were no longer needed. No fixed-term contract tied employment to the Gatundu project. No pre-termination discussions were shown, breaching section 41. If the true reason was project expiry or low business, section 40 redundancy procedure was mandatory and was not followed.

p. 4
02

Effect of the discharge vouchers

Holding

The discharge vouchers do not bar the respondents' claims

Reasoning

Discharge vouchers are employer-generated documents signed by employees under practical compulsion to receive terminal dues, lacking mutuality. Given conflicting authorities, the court treats each case on its circumstances and will not enforce a voucher where the employer flouted sections 40, 41 and 45 of the Employment Act in effecting the termination.

p. 5
03

Quantum of compensation under section 49 of the Employment Act

Holding

Six months' compensation was excessive given the roughly one year of service; reduced to three months' gross salary for each respondent

Reasoning

The court noted both respondents worked for about one year and, in the exercise of its discretion, found three months' salary sufficient compensation, setting aside the six-month awards of the trial court and substituting specific sums computed from uncontroverted salaries.

p. 5

Legal principles established

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  • Section 41 of the Employment Act mandatorily requires an employer to follow procedure before terminating an employee
  • Where the position has become redundant, the mandatory conditions in section 40 of the Employment Act must be observed
  • A discharge voucher generated unilaterally by the employer will not bar an employee's claim where the employer flouted employment laws in the termination

Court orders

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  1. 1.The appeal is found unmerited and is dismissed
  2. 2.The award of six months' compensation is set aside and replaced with three months' compensation: Kshs 98,343/- for John Mwaniki Mwangi
  3. 3.The award of six months' compensation (Kshs 154,866/-) is set aside and replaced with three months (Kshs 105,909/-) for John Kimani
  4. 4.Costs of the lower court and of the appeal awarded to the respondents, based on the award of this court

Authorities

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Legislation

  • Employment Actsection 35(6)
  • Employment Act 2007section 40
  • Employment Act 2007section 41
  • Employment Actsection 45
  • Employment Actsection 49
  • Constitution of Kenya 2010Article 41
  • Constitution of KenyaArticle 159(2)(d)
  • Constitution of KenyaArticle 48
  • Civil Procedure RulesOrder 21 Rule 1
  • Civil Procedure Act (Chapter 21, Laws of Kenya)Section 1B

Cases cited (4)

  • Thomas de La Rue (k) Limited vs David Opondo Omutulema
    (2013) eKLR
  • Coastal Bottlers Limited vs Kimathi Mithica
    (2018) eKLR
  • Jane Njeri Wanyoike & 23 Others v Pan Africa Insurance Company Ltd
    [2017] eKLR
  • Jane Khalei vs Oxford University Press EA Limited
    (2013) eKLR
On appeal from
Magistrates' Court (CMELRC)
CMELRC No. 4 of 2019 and Gatundu CMELRC No. 5 of 2019
Jurisdiction invoked
Appellate jurisdiction of the Employment and Labour Relations Court over appeals from the magistrates' courts (CMELRC matters)

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, "H. Young & Co (E. Afica) Ltd & another v Mwangi & another (Appeal E049 & E050 of 2021 (Consolidated)) [2023] KEELRC 1001 (KLR)", Case Analysis (2023). Consolidation of Appeals No. 049/2021 (from CMELRC No. 4 of 2019) and Appeal No. E050/2021 (from Gatundu CMELRC No. 5 of 2019). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/1001/eng@2023-04-20

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