Ngau v Nacico Co-operative Savings & Credit Society Ltd (Cause 1354 of 2018) [2023] KEELRC 1541 (KLR)
The bottom line
#A Kenyan court ruled that forcing an employee to sign a fixed-term contract under threat of dismissal is duress, making his subsequent non-renewal unfair termination.
What this practically means
#Executive summary
#Key legal issues
#Whether the two-year fixed term contract was signed voluntarily
The claimant was forced to sign the contract under duress after his request to remain in his substantive grade was declined with a threat of denial of continued service
The claimant had requested to continue in his former grade; the respondent replied that the Board declined and gave him a final opportunity to sign the fixed term contract by July 1, 2016 or lose his service. The court found this constituted duress, so he signed merely to protect his job, not of free will.
Whether non-renewal of the fixed term contract amounted to unfair termination
The termination was unfair in both procedure and substance
The respondent rejected renewal on age grounds (55 for management staff) instead of the agreed renewal clause premised on meeting targets, and no failure of targets was shown. The reasons deviated from the contract and did not relate to operational requirements, conduct, compatibility or capacity under section 45 of the Employment Act, 2007.
Appropriate remedies under section 49 of the Employment Act
Maximum compensation of 12 months' gross pay awarded; the claim for pay up to age 60 declined
The court considered section 49 factors: the respondent's highhanded and unlawful behaviour in forcing the claimant into the management cadre and failing to renew on extraneous grounds, and the claimant's long clean service, justified maximum compensation of Kshs. 155,036.21 x 12 months. Loss of future earnings to age 60 was not justified.
Legal principles established
#- A contract signed under threat of losing one's job is signed under duress and not of free will
- Termination that deviates from contractual renewal terms and does not relate to operational requirements or the employee's conduct, compatibility or capacity is unfair in substance and procedure under section 45 of the Employment Act
Court orders
#- 1.Payment of Kshs. 1,860,434.52 (less PAYE as of the date of the judgment) by September 1, 2023, failing interest at court rates from the date of judgment until full payment
- 2.The respondent to pay costs of the suit
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (sections 45 and 49 applied)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Ngau v Nacico Co-operative Savings & Credit Society Ltd (Cause 1354 of 2018) [2023] KEELRC 1541 (KLR)", Case Analysis (2023). Cause No 1354 of 2018. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/1541/eng@2023-06-22
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.