Muli v African Banking Corporation Ltd (Cause 1609 of 2018) [2023] KEELRC 1135 (KLR)
The bottom line
#A Kenyan court confirmed that forcing an employee out through unfair transfers and baseless performance plans amounts to constructive dismissal, entitling them to compensation.
What this practically means
#Executive summary
#Key legal issues
#Whether the Claimant was constructively dismissed
Yes. The Respondent's consistent course of conduct - an unprocedural Performance Improvement Plan without agreed KPIs or appraisal, additional duties, and a transfer amounting to a demotion made without consultation - was a repudiatory breach that was the proximate cause of the resignation.
Applying the contractual test from Western Excavating and Coca Cola v Ligaga, the court found the employer placed the Claimant on a PIP without documented targets or appraisal while he still performed duties he had handed over, and transferred him to a branch as Reliever-Customer Service Representative against his stated preferences without explanation. The GCEO's failure to address his complaint was the last straw, making the employer's conduct the proxima causa of the resignation.
Whether the Claimant was entitled to reinstatement
No. The remedy is discretionary and barred by the 3-year limit in Section 12(3)(vii) of the ELRC Act.
The Claimant resigned in January 2018, more than 5 years before judgment. Section 12(3)(vii) permits reinstatement only within 3 years of dismissal, so the remedy was unavailable as a matter of law.
Quantum of compensation and notice pay
One month's notice pay (Kshs 101,175.00) and the equivalent of 2 months' salary as compensation (Kshs 202,350.00); claims for 3 months' notice and gratuity declined.
The contract provided for termination by one month's notice, not three. Gratuity was neither contractual nor a matter of employer practice. Compensation under Section 49 was assessed at 2 months after considering the Claimant's long, diligent service and non-contribution to the dismissal, but also his failure to reciprocate the Respondent's peace offering and unavailability after resignation.
The Respondent's Counter-claim for one month's notice pay
Dismissed, because the constructive dismissal finding meant the resignation was not voluntary.
The Respondent claimed notice pay on the basis that the Claimant resigned with immediate effect contrary to contract. Since the court held the resignation resulted from the Respondent's repudiatory conduct, the Claimant was treated as constructively dismissed and not liable for notice pay.
Legal principles established
#- Constructive dismissal requires employer conduct amounting to a repudiatory breach of the contract of employment (contractual test).
- For constructive dismissal, the employee must resign within a reasonable time of the employer's conduct or hostile working conditions.
- Reinstatement is discretionary and time-limited to 3 years from dismissal under Section 12(3)(vii) of the ELRC Act.
- Gratuity is a gratuitous payment dependent on contract or employer practice, not a statutory entitlement.
Court orders
#- 1.Declaration that the Claimant's resignation on January 12, 2018 amounted to constructive dismissal.
- 2.One (1) month's salary in lieu of notice, Kshs 101,175.00.
- 3.Equivalent of 2 months' salary as compensation, Kshs 202,350.00.
- 4.Total award of Kshs 303,525.00 plus costs of the suit and interest at court rates from date of judgment till payment in full.
- 5.Respondent's Counter-claim for one month's salary in lieu of notice dismissed.
- Jurisdiction invoked
- Employment Act, 2007 and Employment and Labour Relations Court Act, 2011 (Section 12(3)(vii))
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Muli v African Banking Corporation Ltd (Cause 1609 of 2018) [2023] KEELRC 1135 (KLR)", Case Analysis (2023). Cause No 1609 of 2018. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/1135/eng@2023-05-11
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.