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ELRCPartially AllowedCause No 350 of 2019· [2023] KEELRC 1540 (KLR)

Onyango v National Oil Corporation of Kenya (Cause 350 of 2019) [2023] KEELRC 1540 (KLR)

Employment and Labour Relations Court
22 June 2023
BOByram Ongaya
1,711 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 forcing an employee onto a fixed-term contract and exiting them without redundancy procedure was unfair, awarding compensation.

What this practically means

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Executive summary

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The claimant, employed in March 2013 as a Safety Health Environment and Quality Manager on permanent and pensionable terms, sued after his services were terminated effective January 31, 2019 when he declined conversion to a three-year fixed term contract following a reorganisation that merged his role with the Security Manager position. He sought declarations of violation of Articles 41 and 47, compensation to retirement age, twelve months' salary, leave dues, notice pay, acting allowance arrears, general damages, retirement benefits and a certificate of service. The respondent admitted the employment, explained the reorganisation and harmonisation of salaries, and counterclaimed for a Kshs 212,667.00 per diem balance advanced for ministry assignments. The court held the exit was in substance a redundancy and that the respondent failed to follow the section 40 Employment Act procedure of notice and consultation; imposing fixed term terms on an employee on permanent and pensionable terms without concurrence was also substantively unfair under section 45. Considering section 49 factors, including the claimant's contribution by accepting the exit package, the court awarded two months' gross salary, Kshs 900,000.00 less PAYE. Discrimination was not established, pay differences being due to differing roles and a service-wide grading issue, and the claim for pay to retirement age was declined as unjust; the acting allowance claim was time barred under section 90. The counterclaim failed as the per diem arrangement was with the parent ministry. Judgment was entered for the claimant with a declaration of unfair termination, the award, a certificate of service, dismissal of the counterclaim, and costs of both suit and counterclaim against the respondent.

Key legal issues

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01

Fairness of termination

Holding

The termination was unfair both in procedure and merits

Reasoning

The reorganisation exit was in substance a redundancy; the respondent failed to issue the notices to the claimant and area labour officer required by section 40 of the Employment Act. It also unilaterally imposed fixed term terms on an employee on permanent and pensionable terms, and dismissed him upon rejection, an unfair reason under section 45. Section 49 factors were weighed, including the claimant's contribution by accepting the package.

p. 3
02

Compensation

Holding

Two months' gross salary awarded as compensation under section 49

Reasoning

The court considered section 49 factors: clean record, desire to continue in employment, aggravating factors of non-compliance with section 40 and unilateral imposition of the contract, but also the claimant's substantial contribution to his termination by signing for the exit package.

p. 3
03

Discrimination in pay

Holding

Not established

Reasoning

The pay discrepancy arose from differing contracts, job roles, qualifications and experience, and was a service-wide problem following a 2016 harmonisation after job evaluation. No acts attributable to the respondent evidenced discrimination.

04

Counterclaim for per diem balance

Holding

Counterclaim dismissed

Reasoning

The per diem arrangement was between the respondent and its parent Ministry, the respondent knew of it, and it was not raised as an issue at separation; hence the claimant was not liable for the Kshs 212,667.00 balance.

p. 4

Legal principles established

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  • Where employees decline conversion to fixed term contracts during a reorganisation, the resulting exit amounts to a redundancy which must follow the notice and consultation procedure in section 40 of the Employment Act
  • Imposing fixed term terms on an employee already on permanent and pensionable service without concurrence renders the reason for termination unfair under section 45 of the Employment Act

Court orders

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  1. 1.Declaration that the termination was unfair and unlawful
  2. 2.Respondent to pay the claimant Kshs 900,000.00 by September 01, 2023 failing which interest at court rates
  3. 3.Respondent to deliver the certificate of service forthwith
  4. 4.Dismissal of the counterclaim
  5. 5.Respondent to pay costs of the suit and counterclaim

Authorities

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Legislation

  • Constitution of Kenya 2010Article 41(1)
  • Constitution of Kenya 2010Article 47(1)
  • Constitution of Kenya 2010Article 23(3)
  • Industrial Court Actsection 12(3)(iv), (v), (vi)
  • Employment Act, 2007section 49(1)(c)
  • Employment Act, 2007section 51(1)
  • Employment Act, 2007section 40
  • Employment Act, 2007section 45
  • Employment Act, 2007section 90
Jurisdiction invoked
Industrial Court Act section 12 (employment and labour relations jurisdiction) and Article 41 of the Constitution of Kenya 2010

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, "Onyango v National Oil Corporation of Kenya (Cause 350 of 2019) [2023] KEELRC 1540 (KLR)", Case Analysis (2023). Cause No 350 of 2019. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/1540/eng@2023-06-22

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