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ELRCPartially AllowedNot stated in judgment· [2023] KEELRC 1482 (KLR)

Nyandiago & 3 others v Sibo Water & Sanitation Co Ltd (Cause 57 of 2020) [2023] KEELRC 1482 (KLR)

Employment and Labour Relations Court
21 June 2023
1,470 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
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The bottom line

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A Kenyan court awarded four water company employees compensation because their sudden dismissal ignored their contracts and gave them no chance to be heard.

What this practically means

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Executive summary

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Four former employees of Sibo Water & Sanitation Co Ltd sued for wrongful and unfair termination after identical letters dated August 22, 2017 released them from employment with immediate effect, citing a hostile working environment, concerns for their security and external political interference. The Respondent alleged misconduct and poor performance in Court, but the Court found these contentions unsupported by any evidence or the termination letters. Because the real grounds did not fall within section 41 of the Employment Act, the Court tested the terminations against the individual contracts and the rules of natural justice. It found that no written notice or pay in lieu was given as the contracts required, and that none of the Claimants was heard before termination. The Court declared the terminations wrongful and in breach of contract. Each Claimant received pay in lieu of notice, three months' gross salary as compensation under section 49, and earned wages for August 2017. The 1st Claimant additionally received Kshs 2,340,000/- in lost income for the unexpired three-year contract and gratuity of Kshs 736,560/-, his contract having provided for gratuity at 31% of annual basic salary. The 2nd to 4th Claimants, on permanent terms, were denied gratuity. The Respondent was ordered to issue Certificates of Service within 30 days; awards attract interest at court rates if unpaid within 60 days. The Claimants obtained costs.

Key legal issues

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01

Whether the termination of the Claimants' employment was wrongful and in breach of contract

Holding

The termination was wrongful and in breach of contract because no written notice or pay in lieu was given and no hearing was afforded

Reasoning

The Respondent's real reasons were a hostile working environment, security concerns and external interference, none of which fall within section 41 of the Employment Act. The contracts required written notice or pay in lieu, which was not given, and the Claimants were not heard. The termination also fell outside the contractual termination clause.

p. 3
02

Whether each Claimant was entitled to pay in lieu of notice, compensation and earned wages

Holding

Each Claimant entitled to pay in lieu of notice, 3 months' gross salary as compensation and earned salaries for August 2017

Reasoning

For wrongful termination each Claimant is entitled to the equivalent of salary for the notice period. Section 49 allows compensation irrespective of the nature of separation, and the Court allowed 3 months' gross salary. Earned wages for August 2017 were due as of right and not disputed.

p. 3
03

Entitlement to gratuity/service pay

Holding

Only the 1st Claimant was entitled to gratuity; the others were on permanent terms

Reasoning

The 1st and 2nd Claimants' contracts provided for gratuity at 31% of annual basic salary, but the 2nd Claimant's contract was converted to permanent terms from 1 November 2014, as were the 3rd and 4th Claimants' terms. Under the HR Manual, gratuity for permanent management staff was discretionary and permanent staff were eligible for the pension scheme instead.

p. 4

Legal principles established

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  • Where the reasons for termination are not misconduct or poor performance, the Court looks outside the procedural confines of section 41 of the Employment Act and tests the termination against the contract and natural justice
  • Section 49 of the Employment Act permits compensation regardless of whether the separation is unfair or wrongful termination in breach of contract

Court orders

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  1. 1.Declaration that the termination of the Claimants' contracts was wrongful and in breach of contract
  2. 2.Pay in lieu of notice to each Claimant (1st: Kshs 198,000/-; 2nd: Kshs 186,750/-; 3rd: Kshs 85,350/-; 4th: Kshs 51,000/-)
  3. 3.Compensation equivalent to 3 months' gross salary to each Claimant (1st: Kshs 390,000/-; 2nd: Kshs 186,750/-; 3rd: Kshs 85,350/-; 4th: Kshs 51,000/-)
  4. 4.Lost income of Kshs 2,340,000/- to the 1st Claimant
  5. 5.Earned wages for August 2017 to each Claimant (1st: Kshs 110,000/-; 2nd: Kshs 52,673/-; 3rd: Kshs 24,073/-; 4th: Kshs 14,384/-)
  6. 6.Gratuity of Kshs 736,560/- to the 1st Claimant only
  7. 7.Awards to attract interest at court rates from date of judgment if not paid within 60 days
  8. 8.Respondent to issue Certificates of Service to each Claimant within 30 days
  9. 9.Claimants to have costs

Authorities

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Legislation

  • Employment Act, 2007section 41
  • Employment Act, 2007section 49
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (first-instance employment cause)

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, "Nyandiago & 3 others v Sibo Water & Sanitation Co Ltd (Cause 57 of 2020) [2023] KEELRC 1482 (KLR)", Case Analysis (2023). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/1482/eng@2023-06-21

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