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ELRCPartially AllowedELRC Cause No. E014 of 2022· [2024] KEELRC 44 (KLR)

Gitonga v Fep Sacco Society Limited also known as Unicom Sacco Society Limited (Cause E004 of 2022) [2024] KEELRC 44 (KLR)

Employment and Labour Relations Court
26 January 2024
OMONESMUS N MAKAU
2,265 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~9 min to read original · ~4 min brief

The bottom line

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A Kenyan court ruled that months of unpaid salary and forced unpaid leave forced an employee out, entitling him to over Kshs 1 million.

What this practically means

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Executive summary

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The claimant, employed by the respondent Sacco as Senior Regional Manager from 7th August 2019 at a gross salary of kshs.140,000, was promoted in February 2020 and later sent on three months' unpaid leave in April 2022 for failing to meet targets, with a requirement to re-apply for his position. He sued claiming constructive dismissal and various dues. The respondent admitted the employment relationship, admitted salary arrears of kshs.472,817.08 and accrued leave, but attributed the claimant's woes to poor performance and Covid-19 downsizing, and insisted the Sacco refund procedure had not been followed. The court framed two issues: constructive dismissal and whether the reliefs were merited. Relying on Coca Cola East & Central Africa Ltd v Maria Kagai Ligaga, Milton M. Isanya v Aga Khan Hospital Kisumu and Nathan Ogada Atiagaga v David Engineering Ltd, it held that six months' non-payment of salary followed by forced unpaid leave and a requirement to re-apply made the working conditions intolerable, amounting to a repudiatory breach and constructive dismissal. It distinguished Godfrey Allan Tolo where the employee had signed a separation agreement. The court awarded two months' gross salary (kshs.300,000) as compensation given the three months remaining on the contract, salary arrears of kshs.472,817.08, leave of kshs.155,167 and Sacco savings refund of kshs.158,200, totalling kshs.1,086,183.08 subject to statutory deductions. The housing allowance claim was declined as an afterthought, and kshs.10,000 share capital was excluded. Judgment total kshs.1,086,183.08 with costs, interest at court rates from judgment date, and a certificate of service.

Key legal issues

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01

Whether the claimant was constructively dismissed

Holding

Yes - constructive dismissal established on a balance of probability.

Reasoning

The employer withheld salary for six months, sent the claimant on three months' unpaid leave, required him to re-apply for his position, and produced no agreement before a clergy. The conduct was unreasonable and constituted a repudiatory breach entitling the employee to leave without notice.

p. 4
02

Compensation for unfair termination

Holding

Two months' gross salary (kshs.300,000.00) awarded given the three months remaining on the contract.

Reasoning

The constructive termination took effect in June 2022 when the claimant failed to report back, and his three-year contract would have lapsed on 2nd September 2022, leaving three months of expected service; the court therefore awarded two months' gross salary rather than the six months sought.

p. 5
03

Sacco savings refund

Holding

Refund of kshs.158,200.00 allowed; kshs.10,000.00 share capital excluded.

Reasoning

The respondent's closure of regional offices, relocation of its head office and change of name rendered the refund procedure impracticable, justifying the court's intervention. Only the savings per the employer's statement were awarded; share capital follows Sacco rules and statute.

p. 5
04

Housing allowance

Holding

Claim declined.

Reasoning

The contract provided a gross remuneration package of kshs.140,000.00 with specified benefits; any additional allowance required Board approval and none was proved. The claimant never claimed housing allowance before termination.

p. 5

Legal principles established

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  • Where an employer's conduct makes working conditions intolerable - such as denial of salary for months followed by forced unpaid leave and a requirement to re-apply for the same job - the employee is entitled to leave without notice and the resignation amounts to constructive dismissal.

Court orders

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  1. 1.Judgment entered for the claimant as follows: damages for unfair termination kshs.300,000.00; salary arrears kshs.472,817.08; leave kshs.155,167.00; refund of Sacco savings kshs.158,200.00; total kshs.1,086,183.08
  2. 2.Award subject to statutory deductions
  3. 3.Claimant awarded costs of the suit
  4. 4.Interest at court rates from the date of judgment
  5. 5.Claimant to be issued with a certificate of service
  6. 6.Claim for housing allowance declined

Authorities

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Legislation

  • Employment Actsection 31
  • Employment Actsection 28
  • ELRC Procedure RulesRule 28(3)

Cases cited (5)

  • Coca Cola East & Central Africa Ltd v Maria Kagai Ligaga
    (2015) eKLR
  • Godfrey Allan Tolo v Tobias O. Otieno & Another
    (2022) eKLR
  • Grain Pro Kenya Ltd v Andrew Waithaka Kiragu
    (2019) eKLR
  • Milton M. Isanya v Aga Khan Hospital Kisumu
    (2017) eKLR
  • Nathan Ogada Atiagaga v David Engineering Ltd
    (2015) eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act and ELRC Procedure Rules (employment dispute)

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, "Gitonga v Fep Sacco Society Limited also known as Unicom Sacco Society Limited (Cause E004 of 2022) [2024] KEELRC 44 (KLR)", Case Analysis (2024). ELRC Cause No. E014 of 2022. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/44/eng@2024-01-26

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