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ELRCPartially AllowedEmployment Cause (unspecified number on record)· [2023] KEELRC 1491 (KLR)

Kaume v Madison Insurance Company (K ) Ltd & another (Cause 363 of 2018) [2023] KEELRC 1491 (KLR)

Employment and Labour Relations Court
16 June 2023
3,675 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Employment Court ruled that firing someone for poor performance requires documented targets and an improvement plan—not just warning letters.

What this practically means

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Executive summary

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The claimant, formerly Marketing Services Manager of the 1st Respondent earning a gross salary of Kshs 377,143.23, sued for unfair and wrongful termination following the termination of his employment on 19th October 2017 on grounds of poor performance and misconduct. He sought 12 months' salary compensation of Kshs 9,525,716, costs and interest. The Respondents maintained that the termination was procedural and based on the claimant's poor performance, evidenced by extended probation, warning letters and a below-average 2017 appraisal; the 2nd Respondent denied personal liability as a mere agent of the 1st Respondent. The court framed two issues: whether there were valid grounds for termination, and the remedies due. Applying sections 41, 45 and 49(1)(c) of the Employment Act and the authorities in Jane Samba Mukala v Ol Tukai Lodge and Jane Wairimu Machira v Mugo Waweru & Associates, the court held that poor performance is a valid ground but the employer must prove it through documented performance targets and a performance improvement plan. The Respondent's own HR manual required agreed annual targets, half-yearly reviews and documented corrective action, none of which was complied with; the manual forms part of the employment contract. Although section 41 procedure (a hearing with a right to a witness) was followed, the substantive requirements were not, and the disciplinary minutes did not address the poor performance cited in the termination letter. The court found the termination unfair and wrongful by the 1st Respondent, awarded three months' salary (Kshs 1,131,429) as compensation, declined judgment against the 2nd Respondent, found no proof of discrimination, and awarded the claimant costs plus interest from the date of judgment until full payment. Judgment was delivered virtually at Nairobi on 16th June 2023 by Anna Ngibuini Mwaure, Judge.

Key legal issues

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01

Whether there were valid grounds to terminate the claimant

Holding

No. Although poor performance is a valid ground under section 41, the Respondent failed to prove a valid and fair reason because it did not follow its own HR manual's performance management process, did not set agreed targets, and had no performance improvement plan.

Reasoning

The Respondent's manual required annual performance targets agreed with the employee, half-yearly reviews and documented corrective action. There was evidence of dissatisfaction (probation extension, warning letters, MD's letter of 29 May 2017) but no documented performance targets or improvement plan. Section 45(2) places the burden on the employer to prove validity and fairness of the reason. The minutes of the disciplinary hearing dealt with matters satisfactorily explained by the claimant, and poor performance was not specifically handled per the minutes yet featured in the termination letter.

p. 6
02

Whether the termination procedure was fair

Holding

Formal procedural compliance with section 41 was met (hearing with right to a witness), but the employer's own manual procedures and the standards in the authorities on underperformance were not adhered to.

Reasoning

Even though the respondent invited the claimant to a disciplinary hearing in the presence of a witness, the procedure in the respondent's HR manual for performance management was not followed, nor were the requirements in the authorities (Jane Wairimu Machira; Jane Samba Mukala) requiring evaluation measures, sharing of explanations and opportunity to improve. The termination letter also introduced poor performance not specifically handled in the hearing minutes.

p. 7
03

Liability of the 2nd Respondent

Holding

The 2nd Respondent, as agent/employee of the 1st Respondent, is not liable and judgment is not entered against him.

Reasoning

The court found the 2nd Respondent acted as an agent/employee of the 1st Respondent and was never the claimant's employer; personal liability does not arise.

p. 7

Legal principles established

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  • Poor performance as a ground for termination requires the employer to demonstrate a performance measurement policy, set agreed targets, and put in place a performance improvement plan before termination.
  • The proper procedure once poor performance is noted is to point out the shortcomings and give the employee an opportunity to improve over a reasonable length of time (2-3 months).
  • The Human Resource Manual is part of the employment contract and must be complied with where not contradicted by the contract.

Court orders

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  1. 1.Declaration that the 1st Respondent unfairly and wrongfully terminated the claimant's employment
  2. 2.Award of 3 months' salary as compensation under section 49(1)(c) of the Employment Act, Kshs 377,143.23 x 3 = Kshs 1,131,429/-
  3. 3.Refusal of judgment against the 2nd Respondent, who was an agent/employee of the 1st Respondent
  4. 4.Costs of the suit awarded to the claimant
  5. 5.Interest at court rates from date of judgment until full payment

Authorities

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Legislation

  • Employment Act, 2007section 45(1) and (2)
  • Employment Act, 2007section 41
  • Employment Act, 2007section 49(1)(c)
  • Employment Act, 2007section 8
  • Civil Procedure RulesOrder 21 Rule 1
  • Civil Procedure ActSection 1B
  • Constitution of Kenya, 2010Article 159(2)(d)
  • Constitution of Kenya, 2010Article 48

Cases cited (5)

  • National Bank of Kenya v Samuel Nguru Mutonya
    2019 eKLR
  • Jane Samba Mukala v Ol Tukai Lodge Limited
    Industrial Cause Number 823 of 2010 LLR 255 (ICK)
  • Daniel Kiplagat Kipkeibut v Smep Deposit Taking Microfinance Limited
    2016 eKLR
  • Nicholas Muasya Kyula v Farmchem Limited
    Industrial Cause Number 1992 of 2011 LLR 235 (ICK)
  • Jane Wairimu Machira v Mugo Waweru & Associates
    (2012) eKLR
Jurisdiction invoked
Employment Act, sections 41, 45 and 49(1)(c)

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, "Kaume v Madison Insurance Company (K ) Ltd & another (Cause 363 of 2018) [2023] KEELRC 1491 (KLR)", Case Analysis (2023). Employment Cause (unspecified number on record). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/1491/eng@2023-06-16

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