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ELRCPartially AllowedStatement of Claim dated 27th October 2020· [2023] KEELRC 1318 (KLR)

Mwangi v Wells Fargo Limited (Cause E696 of 2020) [2023] KEELRC 1318 (KLR)

Employment and Labour Relations Court
23 May 2023
6,804 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~27 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court ruled that signing a discharge certificate does not stop you from suing over an unfair redundancy, though compensation was modest.

What this practically means

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Executive summary

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The Claimant, employed as Operations Manager-VIT under a written contract dated 19th September 2012, sued for unfair termination and breach of contract after his employment ended on account of redundancy effective 31st August 2020. He sought a declaration of unfair termination, 12 months' salary as damages, differences in severance, notice and leave pay, and Kshs 12,156,579 as unreviewed salary under Clause 4(a) of his contract. The Respondent maintained that the redundancy complied with Section 40 of the Employment Act, that the Claimant had attended a consultative meeting on 30th July 2020, and that the discharge certificate barred further claims. The court framed three issues: waiver, fairness of the redundancy, and reliefs. It held the discharge certificate, being confined to redundancy dues, did not bar a challenge to the fairness of the redundancy. The court found the minutes of the alleged meeting unreliable and the notice to the Labour Officer deficient in reasons and extent; notice also fell short of one month, and no meaningful consultations occurred. The redundancy was therefore unfair and unlawful. The salary review claim failed for want of evidence that review meant automatic increments, and the discharge certificate bound the Claimant on contract dues. Compensation was fixed at three months' gross salary under Section 49(1)(c). Judgment was entered for the Claimant with a declaration of unfair termination, three months' gross salary, costs, and interest at court rates from the date of judgment.

Key legal issues

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01

Effect of the discharge certificate signed by the Claimant

Holding

The certificate discharged only the redundancy dues payable and did not bar the Claimant from challenging the fairness of the redundancy

Reasoning

Relying on Thomas De La Rue, the court held that a discharge voucher cannot preclude enquiry into the fairness of termination. The certificate here made no reference to future claims and restricted itself to redundancy dues, so it did not discharge the Respondent from all liability.

p. 9
02

Procedural and substantive fairness of the redundancy under Section 40(1)

Holding

The redundancy was unfair: the notice lacked reasons and extent, notice was issued less than a month before effect, and no meaningful consultations took place

Reasoning

The notice to the Labour Officer gave no reasons or extent of redundancy; the unauthenticated organograms could not justify the redundancy; notice was issued on 1st August for redundancy effective 31st August; and the minutes of the alleged meeting of 30th July were found unreliable, so no meaningful consultations occurred.

p. 13
03

Reliability of the minutes of the meeting of 30th July 2020

Holding

The court found the minutes unreliable because they had no attendance list, captured no contributions by the Claimant or General Manager, and did not record what transpired after the alleged storming out

Reasoning

RWI's claim that the meeting was open and candid was not reflected in the minutes; no evidence of the call to attend was adduced; the General Manager was not called as a witness. The court thus found the Respondent failed to prove the Claimant attended the meeting.

p. 13
04

Entitlement to annual salary review under Clause 4(a)

Holding

The Claimant failed to prove the contract guaranteed annual increments; 'review' does not necessarily mean an increment

Reasoning

Dictionaries define review as assessment or re-examination, not necessarily change. The Claimant adduced no evidence of increments to other staff between 2016 and 2020 nor that he had raised the issue. Moreover, the discharge certificate bound him in respect of contract dues.

p. 14
05

Quantum of compensation for unfair termination

Holding

Compensation equivalent of 3 months gross salary under Section 49(1)(c), considering Section 49(4) factors

Reasoning

The court considered the 8-year tenure, the Claimant's lack of contribution to the termination, his failure to appeal or seek continued employment, and that the Respondent had paid severance, notice and leave dues, and fixed compensation at 3 months gross salary.

p. 15

Legal principles established

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  • A discharge voucher per se cannot absolve an employer from statutory obligation nor preclude the court from enquiring into the fairness of a termination, but the court must determine whether it was freely and willingly executed with full knowledge
  • A discharge certificate confined to dues payable on account of redundancy does not bar a claim challenging the fairness of the redundancy itself
  • Section 40(1) of the Employment Act imposes mandatory conditions on redundancy and places a heavy burden of proof on the employer
  • Meaningful pre-redundancy consultations are required notwithstanding that Section 40(1) does not expressly provide for them
  • The term 'review' in a salary clause does not necessarily signify an upward change or increment

Court orders

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  1. 1.Declaration that termination of the Claimant's employment on account of redundancy was unfair and unlawful
  2. 2.Equivalent of three (3) months gross salary
  3. 3.Costs of this suit to the Claimant
  4. 4.Interest at court rates from date of judgment till payment in full

Authorities

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Legislation

  • Employment ActSection 40(1), Section 2, Section 45(2), Section 49(1)(c), Section 49(4), Section 90
  • ConstitutionArticle 2(6), Article 41, Article 159(2)(d), Article 48
  • ILO Convention No 158 Termination of Employment Convention - 1982, Recommendation No 166Article 13
  • Civil Procedure RulesOrder 21 Rule 1
  • Civil Procedure ActSection 1B

Cases cited (15)

  • Kenya Airways Ltd V Aviation and Allied Workers Union Kenya & 3 others
    (2014) eKLR
  • Judy Gakii Njeru V Wananchi Group (K) Ltd
    (2021) eKLR
  • Onesmus Kinyua Magoiya V Prudential Life Assurance Kenya
    (2022) eKLR
  • KUDHEIHA V Nairobi Hospital
    (2022) eKLR
  • Coastal Bottlers Ltd V Kimathi Mithika
    (2018) eKLR
  • Joseph Chumba V Wells Fargo Ltd
  • Alfred Nzomo Kithusi V Hillcrest Investments Ltd
    (2021) eKLR
  • Thomas De La Rue (K) Ltd V David Opondo Omutelema
    (2013) eKLR
  • Damondar Jihabhai & Co. Ltd and another v Eustace Sisal Estate Ltd
    (1967) EA 153
  • Global Motors Inc & others v TRW Lucas Electrical Steering Ltd & others
  • Trinity Prime Investment Ltd v Lion of Kenya Insurance Co. Ltd
    (2015) eKLR
  • Freight-In Time Ltd v Rosebell Wambui Munene
    (2018) eKLR
  • Barclays Bank of Kenya Ltd & another v Gladys Muthoni & 2 others
    (2018) eKLR
  • Cammish V Parliamentary Service
    (1966) 1 ERNZ 404
  • Dorcas Kemunto Wainaina V IPAS
    (2018) eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (unfair termination and breach of employment contract)

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, "Mwangi v Wells Fargo Limited (Cause E696 of 2020) [2023] KEELRC 1318 (KLR)", Case Analysis (2023). Statement of Claim dated 27th October 2020. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/1318/eng@2023-05-23

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