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ELRCDismissedNot stated in the judgment (Notice of Motion dated November 6, 2023)· [2024] KEELRC 121 (KLR)

Hotel Online Kenya Limited & 2 others v Kamau & another (Cause E932 of 2023) [2024] KEELRC 121 (KLR)

Employment and Labour Relations Court
2 February 2024
NMNzioki Wa Makau
2,806 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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Kenya's Employment Court refused to stop a former employee from competing, holding that non-compete clauses are generally unenforceable and disputed contracts cannot justify urgent injunctions.

What this practically means

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Executive summary

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This is a ruling of the Employment and Labour Relations Court at Nairobi (Nzioki Wa Makau J) delivered on February 2, 2024 on the claimants'/applicants' notice of motion dated November 6, 2023, brought under section 12(3)(i) of the Employment and Labour Relations Act and rule 17 of the ELRC (Procedure) Rules. The Claimant, whose former employee (1st Respondent) had served as Head of Revenue Management from December 2019 until resigning in October 2023, sought interim injunctions restraining the Respondents from soliciting the Claimant's clients and from disclosing confidential information and trade secrets, invoking a surviving one-year non-compete and confidentiality clause in a written employment contract dated December 15, 2019. The Claimant alleged the 1st Respondent incorporated Rev Connecta (2nd Respondent) to conduct a directly competing business using the Claimant's client base. The 1st Respondent denied ever executing the written contract, asserting his electronic signature was used without consent, that his engagement was oral and contained no non-compete term, and that KRA records showed a materially different salary. The court held that the authenticity of the disputed contract could only be determined at a full trial, making it too tenuous to found a restraint, and that non-compete clauses are restraints of trade, generally unenforceable where they hinder the right to survival, applying Credit Reference Bureau Holdings Limited v Steven Kunyiha. The motion was dismissed with no order as to costs.

Key legal issues

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01

Enforceability of a non-compete clause in an employment contract

Holding

Non-compete clauses are generally unenforceable, being restraints of trade invalid unless reasonable between the parties and not injurious to the public interest; the Employment Act has no express provisions on non-compete clauses, so common law and precedent apply

Reasoning

The court noted the Employment Act is silent on non-compete clauses and adopted the reasoning in Credit Reference Bureau Holdings Limited v Steven Kunyiha, that business competition is the essence of free markets and employees should not be shackled from employment with competitors, with restraint enforceable only over uniquely secret employer information.

p. 5
02

Whether the disputed written contract could support interlocutory injunctive relief

Holding

No - the authenticity of the contract was contested (denied signature, disputed chronology and salary figures), and that dispute can only be resolved at a full trial, making the contract too tenuous to found a restraint

Reasoning

The 1st Respondent denied executing the written contract, asserting his electronic signature was used without consent and that his engagement was oral, with inconsistent KRA salary figures. The court held such contested provenance required in-depth analysis at trial, not resolution on a motion, and declined interim injunctive relief.

p. 5

Legal principles established

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  • Non-compete clauses are contracts in restraint of trade, invalid unless reasonable as between the parties and not injurious to the public interest, and are generally not enforced where they hinder the right to survival
  • A contract whose authenticity is disputed cannot found an interlocutory restraint; its provenance must be determined at a full trial

Court orders

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  1. 1.The claimants'/applicants' notice of motion dated November 6, 2023 is dismissed
  2. 2.No order as to costs

Authorities

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Legislation

  • Employment and Labour Relations Actsection 12(3)(i)
  • Employment and Labour Relations Court (Procedure) Rulesrules 17(1), 17(3), 17(5)
  • Employment Actnot specified (noted as silent on non-compete)

Cases cited (2)

  • Craft Silicon Limited v Niladri Sekhar Roy
    [2018] eKLR (Nairobi ELRC Cause No. 770 of 2018)
  • Credit Reference Bureau Holdings Limited v Steven Kunyiha
    [2017] eKLR
Jurisdiction invoked
Section 12(3)(i) of the Employment and Labour Relations Act and rules 17(1), 17(3) and 17(5) of the Employment and Labour Relations Court (Procedure) Rules

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, "Hotel Online Kenya Limited & 2 others v Kamau & another (Cause E932 of 2023) [2024] KEELRC 121 (KLR)", Case Analysis (2024). Not stated in the judgment (Notice of Motion dated November 6, 2023). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/121/eng@2024-02-02

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