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ELRCPartially AllowedCause No 852 of 2018· [2023] KEELRC 2953 (KLR)

Ogutu v Undugu Society of Kenya (Cause 852 of 2018) [2023] KEELRC 2953 (KLR)

Employment and Labour Relations Court
20 November 2023
4,270 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~17 min to read original · ~4 min brief

The bottom line

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A Kenyan court ruled a CEO's resignation was a mutual separation, awarding only unpaid leave days and rejecting multi-million-shilling claims for future pay, pension and defamation.

What this practically means

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Executive summary

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The claimant, formerly Executive Director/CEO of the respondent, sued for Kshs.24,612,403 being pay for the unexpired portion of a contract renewed to run from 01.01.2017 to 31.12.2019, general and exemplary damages for defamation based on board minutes of 06.07.2017, damages for unfair constructive termination, pension and allowances, the value of an official car, post-service medical cover, a certificate of service and costs. She alleged she was coerced by the board into resigning on 28.07.2017 after the board resolved to separate with her amid declining donor funding. The respondent maintained that she resigned voluntarily, was paid her dues, and that funding constraints justified the separation. The court held that the contract ended by mutual agreement: the claimant's letter of notice of termination and the respondent's conditional acceptance amounted to a meeting of minds, and the claimant failed to prove force, coercion or a fundamental breach, so unfair constructive termination was not established. The defamation claim failed because the minutes were prepared by the respondent's staff in the ordinary course of duty with no publication to a third party, and the board's deliberations were within the employer's prerogative. Claims for the unexpired contract period, CDI responsibility allowance, pension for the unserved period, the car's value and post-service medical cover were all declined as not contractual or not established. The court awarded the undisputed 33 leave days at Kshs.669,012.00, ordered delivery of a certificate of service within 30 days, and awarded the claimant the costs of the suit.

Key legal issues

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01

Whether the termination of the claimant's contract was unfair or constructive

Holding

The termination was voluntary and mutually agreed; the claimant failed to prove coercion or a fundamental breach

Reasoning

The agreement to separate was manifested in the claimant's notice of termination dated 28.07.2017 and the respondent's conditional acceptance of 02.08.2017. The court found no material evidence of force or coercion and no fundamental breach rendering continued employment untenable. Only the terms of the separation dues were in dispute, not the fact of separation.

p. 7
02

Entitlement to pay for the unexpired contractual period

Holding

Declined because unfair termination was not established and lost future earnings were not proved

Reasoning

The court held that even if unfair termination had been shown, recovery of lost future earnings requires proof that the employer's conduct completely diminished the claimant's capacity for future gainful engagement, which was not demonstrated.

p. 8
03

Defamation claim based on board minutes

Holding

Not established - no publication to third parties and the deliberations were within the employer's prerogative

Reasoning

The minutes were prepared by the respondent's staff in the ordinary course of duty; they were employees or agents of the respondent, so the element of publication to a third party was absent. The board was entitled to deliberate on the claimant's performance, including adverse matters.

p. 8
04

Claim for 33 outstanding leave days

Holding

Awarded at Kshs.669,012.00 as prayed, the entitlement being undisputed

Reasoning

The respondent's witness confirmed the days were outstanding and payment had been withheld pending recovery of alleged salary advances owed by the claimant. The court awarded the amount without the set-off condition.

p. 8

Legal principles established

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  • A claim for lost future earnings after termination fails unless the claimant shows that her capacity to gainfully engage after termination was completely diminished for a reason attributable to the employer.
  • Post-termination benefits such as contributory pension cease on termination of the contract unless agreed by the parties or provided in the contract.
  • Internal board minutes prepared by an employer's staff in the ordinary course of duty do not constitute publication to a third party for purposes of defamation.

Court orders

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  1. 1.Payment of Kshs.669,012.00 by 31.12.2023 failing which interest at Court rates from the date of filing the suit till full payment
  2. 2.The respondent to deliver the certificate of service within 30 days
  3. 3.The respondent to pay the claimant's costs of the suit

Authorities

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Legislation

  • Employment Actsection 51
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over employment and labour relations disputes (Employment Act, 2007; Labour Institutions Act) - not expressly cited in the excerpt

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, "Ogutu v Undugu Society of Kenya (Cause 852 of 2018) [2023] KEELRC 2953 (KLR)", Case Analysis (2023). Cause No 852 of 2018. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/2953/eng@2023-11-20

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