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ELRCPartially AllowedNot stated in the judgment as provided· [2024] KEELRC 95 (KLR)

Mugo v Farmers Choice Limited (Cause 242 of 2019) [2024] KEELRC 95 (KLR)

Employment and Labour Relations Court
31 January 2024
JRJames Rika
2,695 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~11 min to read original · ~4 min brief

The bottom line

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A Kenyan court ruled a manager's dismissal for poor performance was unfair because the employer had no appraisals, improvement plan, or proper hearing — awarding three months' salary.

What this practically means

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Executive summary

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The Claimant, employed by the Respondent as Export Administration Manager on 14th November 2016 at a monthly salary rising to Kshs. 370,000, was summarily dismissed on 26th July 2018 on allegations of inefficiency and poor performance. She claimed a declaration that refusal to pay full terminal dues was unlawful, salary for July 2018, three months' notice pay, pro-rata leave and twelve months' compensation, totaling Kshs. 5,337,580 after crediting Kshs. 1,151,650 paid through negotiated settlement. The Respondent asserted she had a history of poor performance, was warned, declined a disciplinary hearing, and that the payments settled the Claim in full. The Court found theRespondent produced no letter to show cause, and the alleged 'Notification and Hearing Nomination Form' was completely blank, bearing no charges, date or venue, and thus had no evidential value. There were no minutes of any disciplinary hearing, and no evidence the warning letter was served. No structured performance appraisal or Performance Improvement Plan was ever conducted across three employment episodes, all ended for alleged poor performance. Applying Peter Kamau Mwaura, the Court held termination failed the standards of Sections 41, 43 and 45 of the Employment Act and was unfair both substantively and procedurally. The Court found the Advocates' negotiated payments covered substantial ground but did not amount to full and final settlement. It awarded the equivalent of three months' salary, Kshs. 1,110,000, as compensation — far below the twelve months sought — made no order on costs, and allowed interest at court rate from the date of judgment until payment in full.

Key legal issues

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01

Valid ground for termination

Holding

Valid ground was not established; no performance appraisal, targets or PIP were in place despite poor performance being the ground

Reasoning

The Respondent thrice employed the Claimant and thrice terminated her for poor performance without ever conducting a structured appraisal or a Performance Improvement Plan. There was not a single appraisal form on record. Following Peter Kamau Mwaura, a high level of proof is required where poor performance is cited, and the Respondent discharged none of it.

p. 5
02

Fair procedure under Section 41

Holding

Procedure was defective: no letter to show cause was issued; the alleged hearing notification form was blank with no evidential value and no minutes of any hearing existed

Reasoning

The Respondent did not issue a letter to show cause detailing charges. The 'Notification and Hearing Nomination Form' produced was completely blank, bearing neither the Claimant's details nor any charges, date or venue, and its unsigned handwritten annotations had no evidential value. No minutes of any disciplinary hearing existed, so the minimum statutory standards under Sections 41, 43 and 45 were not met.

p. 4
03

Whether the negotiated payments constituted full and final settlement

Holding

The payments covered substantial ground but did not amount to full settlement; the Claim remains partially payable

Reasoning

The Parties' Advocates negotiated voluntary settlement and the Claimant received salary for days worked, annual leave, notice pay and Kshs. 95,000 in costs. However, there was no evidence the sums were in full and final settlement; the amounts were received without prejudice and negotiations over compensation continued, though they did not cross the line to full settlement.

p. 6

Legal principles established

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  • Where poor performance is cited as justification for termination, the employer must show a performance assessment policy or practice and measures to address poor performance, such as a Performance Improvement Plan
  • Termination for poor performance should follow failure of a Performance Improvement Plan (PIP)

Court orders

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  1. 1.It is declared that termination was unfair
  2. 2.The Respondent shall pay to the Claimant equivalent of 3 months' salary in compensation for unfair termination, at Kshs. 1,110,000
  3. 3.No order on the costs
  4. 4.Interest allowed at court rate, from the date of Judgment, till payment is made in full
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (Sections 41, 43, 44[4][c], 45 cited)

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, "Mugo v Farmers Choice Limited (Cause 242 of 2019) [2024] KEELRC 95 (KLR)", Case Analysis (2024). Not stated in the judgment as provided. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/95/eng@2024-01-31

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