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ELRCPartially AllowedCause E381 of 2022· [2024] KEELRC 139 (KLR)

Njuguna v Entreplat Insurance Brokers Ltd (Cause E192 of 2022) [2024] KEELRC 139 (KLR)

Employment and Labour Relations Court
7 February 2024
2,839 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Employment Court confirmed employers cannot cut pay or change contract terms without consulting the employee first, or resignations count as constructive dismissal.

What this practically means

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Executive summary

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The Claimant, employed on 3rd August 2020 as Business Development Manager at a monthly retainer of Kshs 96,000/=, sued the Respondent alleging constructive dismissal. She claimed that in October/November 2021 the Respondent unilaterally changed her terms of employment from salary to commission-based pay (retainer of Kshs 20,000/=), without consultation, nullifying her appointment letter with immediate effect, prompting her resignation on 26th November 2021. The Respondent admitted the employment but denied constructive dismissal, contending that the change was communicated vide a letter dated 1st October 2021, that the Claimant accepted and worked under the new terms, and that her resignation was voluntary and actuated by poor performance. The court framed two issues: whether the Claimant was constructively dismissed, and whether she was entitled to the reliefs sought. Applying the contractual approach test of constructive dismissal (Western Excavating v Sharp; Coca Cola v Ligaga), the court found the letter of 1st October 2021 was conclusive and final, with no prior consultation as required by Section 10(5) of the Employment Act, 2007. The unilateral variation was held unlawful, amounting to repudiation and breach. The court held the Claimant proved her case on a balance of probabilities and that her resignation, actuated by the unlawful variation, amounted to constructive dismissal. On reliefs, the declaration of constructive dismissal was granted, and compensation of the equivalent of 2 months' salary (Kshs 192,000/=) was awarded under Section 49(1)(c), taking into account the short duration of employment, absence of misconduct, and the Claimant's contribution to the dismissal through poor performance. The prayers for terminal dues and compensatory damages of Kshs 192,000/=, and the alternative compensation claim, were dismissed for lack of evidence and particulars. Costs were awarded to the Claimant with interest at court rates from the date of judgment until payment in full.

Key legal issues

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01

Whether the Claimant was constructively dismissed by the Respondent

Holding

Yes - the unilateral variation of the employment contract without consultation was a breach that actuated the resignation, amounting to constructive dismissal.

Reasoning

The court applied the contractual approach test from Western Excavating v Sharp and Coca Cola v Ligaga. The Respondent changed the Claimant's terms from salary to commission-based pay without consultation, nullifying her appointment letter with immediate effect. Section 10(5) of the Employment Act required consultation before varying terms. The Claimant was presented with a fait accompli and resigned reasonably. The Claimant's case was proved on a balance of probabilities.

p. 6
02

Whether the Claimant is entitled to the reliefs sought

Holding

Partially - declaration granted, 2 months' salary as compensation under Section 49(1)(c) awarded, but terminal dues/compensatory damages of Kshs 192,000 and the alternative prayer dismissed for lack of evidence and particulars.

Reasoning

Under Section 49(1)(c) the court considered the short duration of employment (1 year 3 months), absence of recorded misconduct, non-appeal of the decision, and the Claimant's own contribution to the dismissal through poor performance. Two months' salary (Kshs 192,000) was deemed fair compensation. Other heads failed for want of proof and particulars.

p. 7

Legal principles established

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  • An employer cannot unilaterally vary a written contract of employment without consultation with the employee as required by Section 10(5) of the Employment Act; unilateral variation amounts to repudiation and breach of contract.
  • The contractual approach test of constructive dismissal applies: significant breach going to the root of the contract, causal link between resignation and employer's conduct, resignation within reasonable time, and absence of acquiescence, waiver or estoppel.

Court orders

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  1. 1.Declaration that the Respondent constructively dismissed the Claimant from employment.
  2. 2.Equivalent of 2 months' salary, Kshs 192,000/=.
  3. 3.Costs of this suit plus interest at court rates from the date hereof till payment in full.

Authorities

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Legislation

  • Constitution of Kenya, 2010Article 27(1)
  • Constitution of Kenya, 2010Articles 41(1) and (2)
  • Constitution of Kenya, 2010Article 159(2)(d)
  • Constitution of Kenya, 2010Article 48
  • Employment Act, 2007Section 10(5)
  • Employment Act, 2007Section 47(5)
  • Employment Act, 2007Section 49(1)(c)
  • Civil Procedure ActSection 1B
  • Civil Procedure RulesOrder 21 Rule 1

Cases cited (11)

  • Nathan Ogada Atiagaga v David Engineering Ltd
    (2015) eKLR
  • Coca Cola East & Central Africa Ltd v Maria Kagai Ligaga
    (2018) eKLR
  • Milton M. Isinya v Aga Khan Hospital Kisumu
    (2017) eKLR
  • Godfrey Allan Tolo v Tobias O. Otieno & another
    (2022) eKLR
  • D.K. Njagi Marete v Teachers Service Commission
    (2013) eKLR
  • Pius Kimaiyo Langat v Co-operative Bank of Kenya
    (2017) eKLR
  • Kenya Petroleum Oil Workers Union v Kenya Petroleum Refineries Ltd
    (2015) eKLR
  • Herbert Wafula Waswa v Kenya Wildlife Services
    (2020) eKLR
  • Josephine M. Ndungu & others v Plan International Inc.
    (2019) eKLR
  • Western Excavating (ECC) Ltd v Sharp
    (1978) ICR 221
  • Kenya County Government Workers Union v Wajir County Government & another
    (2020) eKLR
Jurisdiction invoked
Articles 162(2)(a) and 165(5)(b) of the Constitution of Kenya, 2010

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, "Njuguna v Entreplat Insurance Brokers Ltd (Cause E192 of 2022) [2024] KEELRC 139 (KLR)", Case Analysis (2024). Cause E381 of 2022. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/139/eng@2024-02-07

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