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ELRCPartially AllowedNot stated in the judgment (Employment and Labour Relations Court Cause)· [2023] KEELRC 3232 (KLR)

Mungai v Bullworks Design Factory Limited (Cause E359 of 2020) [2023] KEELRC 3232 (KLR)

Employment and Labour Relations Court
8 December 2023
1,507 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court confirmed that silent probation expiry makes employment permanent, and employers cannot claw back vested bonuses without proving misconduct.

What this practically means

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Executive summary

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This undefended claim, filed on 6th August 2020 and proved formally under Rule 21 of the E&LRC (Procedure) Rules, 2016, was decided by James Rika, Judge, at Nairobi on 8th December 2023. The Claimant, employed as a Product Designer from 9th March 2020 on a one-year contract with a two-month probation, salary of Kshs. 170,000 (later reduced by addendum to Kshs. 156,110 net), was paid only once, Kshs. 81,000. The Court found that probation expired on 9th May 2020 without extension, so employment stood confirmed; the letter of 15th June 2020 purporting to terminate 'probation' was therefore wrong, and termination without reason or hearing was unfair. The Court awarded salary arrears as pleaded at Kshs. 461,580, airtime and internet expenses of Kshs. 6,332, house allowance at 15% of basic salary (Kshs. 81,387) under Section 31 of the Employment Act, notice pay of Kshs. 179,526, and the USD 1,000 bonus (Kshs. 153,200) withdrawn irregularly, applying the principle that vested benefits cannot be clawed back absent violation of law or breach of contract. The claim for eight months' salary for the unexpired contract term was refused as disproportionate, compensation for unfair termination being awarded at two months' gross salary (Kshs. 353,052) under Section 49(4), considering the short length of service. Total award: Kshs. 1,235,077, with costs to the Claimant and interest at court rate from judgment until payment in full.

Key legal issues

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01

Status of employment on expiry of probation

Holding

Employment was confirmed on 9th May 2020 when probation ended without extension; purporting to terminate 'probation' on 15th June 2020 was wrong

Reasoning

The contract provided a 2-month probation ending 9th May 2020. The Respondent issued no letter extending probation and terminated over a month later by reference to the probation period. In the absence of an extension, the Claimant reasonably considered his employment confirmed, so statutory protections for confirmed employees applied.

p. 2
02

Withdrawal of accrued bonus

Holding

The withdrawal of the USD 1,000 bonus was irregular; the bonus is awarded at Kshs. 153,200

Reasoning

The Respondent withdrew the bonus by email on the basis that the Claimant was already earning a salary for the project work. No violation of law or breach of contract by the Claimant was established. Following Sunil Kumar and Peter Gachenga Kimuhu, a vested benefit cannot be clawed back on that basis.

p. 3
03

Remedy for unfair termination

Holding

Compensation awarded at 2 months' gross salary (Kshs. 353,052); claim for 8 months' salary for the unexpired contract term refused

Reasoning

Under Section 49(4) of the Employment Act, the remaining 8 months of the contract is one factor, considered alongside the very short length of service of about 2 months. Proportionality governs: anticipated salaries are not the prescribed compensation, and granting them would enrich the Claimant unjustly for work never performed.

p. 4
04

House allowance

Holding

House allowance at 15% of basic salary awarded for March–June 2020 at Kshs. 81,387

Reasoning

The contract specified the basic salary and listed allowances (health insurance, airtime, internet, transport) but made no mention of house allowance, which Section 31 of the Employment Act requires. The Claimant's computation at 15% of basic salary was held well-founded in law and fact and allowed as pleaded.

p. 3

Legal principles established

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  • An employer may not claw back a vested benefit from an employee except where the employee obtained it through violation of law or breach of contract
  • Where probation is not extended by letter on expiry, employment stands confirmed and termination must accord with the law on confirmed employees
  • Employment remedies must be proportionate to the economic injury sustained and are not facilitators of unjust enrichment

Court orders

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  1. 1.Respondent to pay the Claimant arrears of salary at Kshs. 461,580
  2. 2.Respondent to pay airtime and internet allowances at Kshs. 6,332
  3. 3.Respondent to pay house allowance at Kshs. 81,387
  4. 4.Respondent to pay bonus at Kshs. 153,200
  5. 5.Respondent to pay notice at Kshs. 179,526
  6. 6.Respondent to pay compensation for unfair termination, equivalent of 2 months' salary, at Kshs. 353,052, total Kshs. 1,235,077
  7. 7.Costs to the Claimant
  8. 8.Interest at court rate from the date of Judgment till payment in full

Authorities

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Legislation

  • Employment and Labour Relations Court (Procedure) Rules, 2016Rule 21
  • Employment ActSection 31
  • Employment ActSection 49(4)

Cases cited (3)

  • Sunil Kumar v. G4S Security Services Limited
    [2013] e-KLR (Industrial Court Cause Number 1530 of 2011)
  • Peter Gachenga Kimuhu v. Kenol Kobil Limited
    [2014] e-KLR
  • Elizabeth Wakanyi Kibe v. Telkom Kenya Limited
    [2014] e-KLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act and E&LRC (Procedure) Rules, 2016 (Rule 21 formal proof)

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, "Mungai v Bullworks Design Factory Limited (Cause E359 of 2020) [2023] KEELRC 3232 (KLR)", Case Analysis (2023). Not stated in the judgment (Employment and Labour Relations Court Cause). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/3232/eng@2023-12-08

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