Guerra v Urysia Limited (Cause 649 of 2017) [2024] KEELRC 488 (KLR)
The bottom line
#A Kenyan court voided a contract signed under pressure and awarded a fired executive over KShs. 13.5 million for unfair termination.
What this practically means
#Executive summary
#Key legal issues
#Validity of the contract dated 1st October 2016
The contract was executed under coercion and was invalid; the probationary clause had never been agreed in negotiations.
The Court applied the five-point duress criterion from Riskie v Sony of Canada Ltd and Pao On v Lau Yiu Long. The Claimant protested the unilateral insertion of unagreed terms by email, had no realistic alternative as a foreigner whose wife's immigration documents were held by the Respondent, had no opportunity for independent legal advice, and faced illegitimate pressure. The Respondent's witness admitted no email indicated a probationary period and that the contract was backdated to a date when the Claimant was not yet in Kenya.
Nature of the employment relationship
With the written contract voided, the employment was a month-to-month contract terminable by notice under Section 35 of the Employment Act.
Having invalidated the written contract, the Court held the relationship rested on no written contract and was governed by the statutory default of month-to-month service terminable by the notice contemplated in Section 35. The Claimant was therefore entitled to the full post-2007 statutory protections, which defeated the Respondent's reliance on the probationary clause.
Procedural fairness of the termination
The termination was procedurally unfair; the Respondent failed to prove compliance with Section 41.
The Respondent claimed the Claimant was invited to a meeting but stormed out; its own witness admitted there was no record of an invitation, no document showing his weaknesses had been pointed out, and the termination letter stated no reason. The probationary argument failed because the clause flowed from a voided contract. Non-adherence to the mandatory Section 41 procedure rendered the termination procedurally unfair.
Substantive justification for the termination
The termination lacked substantive justification; the Respondent proved no valid and fair reason.
The Respondent relied on poor performance during probation. Having found the Claimant was never on probation, no valid reason existed. Even assuming poor performance, the Respondent produced no evidence of an appraisal mechanism, set targets, notification of weaknesses, or persistence of poor performance, as required by the high standard of proof in Jane Samba Mukala and National Bank of Kenya v Mutonya.
Reliefs
Notice pay of one month and maximum compensation of twelve months' gross salary under Section 49(1)(c) awarded; salary for the remaining contract term refused.
The Court found the Respondent's conduct reflected impunity and lack of care: head-hunting the Claimant, ensuring no contract was executed until a day before termination, and treating the Claimant and family inhumanely. These circumstances justified the maximum compensatory award. The remainder-of-contract salary could not be granted because the contract was voided and the compensation was an alternative relief already granted.
Legal principles established
#- Coercion vitiates consent and automatically invalidates a contract, including an employment contract.
- Vitiating factors that invalidate ordinary contracts can equally vitiate an employment contract.
- An employer bears the burden of proving both procedural fairness under Section 41 and valid and fair reasons under Sections 43 and 45 of the Employment Act; termination without compliance is unfair.
- An employer alleging termination for poor performance must prove a performance evaluation policy and that the employee was appraised, notified of weaknesses, and given a chance to respond.
Court orders
#- 1.A declaration that the contract expressed to be dated 1st October 2016 was invalid.
- 2.A declaration that the employment relationship between the Claimant and the Respondent was month to month in nature terminable by a twenty eight days' notice under the provisions of Section 35 of the Employment Act.
- 3.A declaration that the termination of the Claimant's employment was both substantively and procedurally unfair.
- 4.One month's salary in lieu of notice, KShs. 1,041,300.00
- 5.Compensation pursuant to Section 49(1)(c) of the Employment Act, twelve months' gross salary, KShs. 12,495,600.
- 6.Interest on the sums awarded at court rates from the date of judgment till full payment.
- 7.Costs of the suit to the Claimant.
- Jurisdiction invoked
- Original jurisdiction of the Employment and Labour Relations Court under the Employment Act and the Employment and Labour Relations Court Act (specific enabling provision not cited in the judgment)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Guerra v Urysia Limited (Cause 649 of 2017) [2024] KEELRC 488 (KLR)", Case Analysis (2024). Cause No 649 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/488/eng@2024-02-23
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.