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ELRCPartially AllowedNot stated in judgment· [2023] KEELRC 3453 (KLR)

Pathenol v Indian Ocean Forwaders and Logistics Company (K) Ltd (Cause E068 of 2023) [2023] KEELRC 3453 (KLR)

Employment and Labour Relations Court
23 November 2023
MMM. Mbarũ
712 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 failing to pay salaries forces a resignation to count as unfair constructive dismissal, entitling the employee to compensation.

What this practically means

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Executive summary

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This was an ex parte employment claim before the Employment and Labour Relations Court at Mombasa, the respondent having been served but failing to enter appearance or respond. The claimant, employed on 21 March 2023 as a transport manager at a gross salary of Kshs. 80,500 (Kshs. 70,000 basic plus house allowance of Kshs. 10,500), resigned by one month's notice effective 4 July 2023 owing to non-payment of salaries from March 2023. He sought a declaration of constructive dismissal, 12 months' compensation, notice pay, unpaid March and other salaries, house allowances, July days worked, NSSF remittances, a certificate of service and costs. The court held that non-payment of salary is a fundamental breach of the employment relationship, reducing the employee to dehumanising conditions amounting to prohibited servitude; the resignation in that context properly constituted constructive dismissal. Compensation was limited to four months' gross salary (Kshs. 280,000) reflecting the four months of service, rather than the 12 months claimed. Notice pay of Kshs. 70,000 was awarded, but the house allowance claim was declined because the written contract was not a minimum wage to which house allowance provisions applied, and the NSSF remittance claim failed as statutory remittances were not due directly to the employee. Unpaid salaries of Kshs. 214,673.08 were awarded. Judgment was entered for the claimant with a declaration of constructive dismissal, compensation, arrears, notice pay, a certificate of service under Section 51 of the Employment Act, and costs of the suit.

Key legal issues

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01

Constructive dismissal through non-payment of salaries

Holding

Non-payment of salaries for long periods rendered continued employment intolerable, entitling the claimant to resign and treat the contract as breached; constructive dismissal was established

Reasoning

The court found that without a salary for days worked an employee is reduced to begging, which is dehumanising and constitutes servitude prohibited under the Constitution and the Employment Act. The claimant's resignation in the context of prolonged non-payment without response was a legitimate termination in response to fundamental breach, properly characterised as constructive dismissal.

p. 2
02

Quantum of compensation

Holding

Compensation equivalent to four months' gross salary (Kshs. 70,000 x 4 = Kshs. 280,000) awarded given claimant's 4 months of service

Reasoning

The claimant worked for a total of 4 months under a written contract with an agreed salary of Kshs. 70,000 per month. The court held compensation equivalent to 4 months' gross salary appropriate, rather than the 12 months claimed.

p. 2
03

House allowance claim

Holding

Declined because the written contract fixed salary at Kshs. 70,000 and house allowance provisions tied to minimum wage did not apply

Reasoning

The claimant sought house allowance of Kshs. 31,500 on top of the agreed salary. The court held that the agreed salary under a written contract was not a minimum wage, so statutory house allowance provisions were not triggered.

p. 2

Legal principles established

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  • Non-payment of salary is a fundamental breach of the employment relationship justifying constructive dismissal

Court orders

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  1. 1.Declaration that employment terminated through constructive dismissal
  2. 2.Compensation of Kshs. 280,000
  3. 3.Unpaid salaries of Kshs. 214,673.08
  4. 4.Notice pay of Kshs. 70,000
  5. 5.Certificate of service to issue in terms of Section 51 of the Employment Act, 2007
  6. 6.Costs of the suit to the claimant

Authorities

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Legislation

  • Employment Act, 2007Section 51
  • Constitution of KenyaProhibition of servitude (general reference)

Cases cited (2)

  • Jonathan Spangler v Centre for African Family Studies (CAFS)
    [2017] eKLR
  • Kusow Billow Issack v Ministry of Interior and Coordination of National Government & 3 others
    [2021] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over employment claims (Employment Act, 2007)

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, "Pathenol v Indian Ocean Forwaders and Logistics Company (K) Ltd (Cause E068 of 2023) [2023] KEELRC 3453 (KLR)", Case Analysis (2023). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/3453/eng@2023-11-23

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