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ELRCPartially AllowedCause No 649 of 2017· [2024] KEELRC 488 (KLR)

Guerra v Urysia Limited (Cause 649 of 2017) [2024] KEELRC 488 (KLR)

Employment and Labour Relations Court of Kenya
23 February 2024
7,980 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~32 min to read original · ~4 min brief

The bottom line

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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

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Executive summary

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The Claimant, a Portuguese automobile engineering professional, was head-hunted by the Respondent in 2016 and began work in Kenya on 4th October 2016 as Head of Aftersales. He asserted that negotiated terms included a two-to-three-year fixed term, a net salary of 80,000 Euros per year and senior management benefits, but that the Respondent unilaterally altered terms, withheld a written contract for months, and procured his signature on a backdated contract dated 1st October 2016 (executed 29th March 2017) containing an unagreed probation clause, using pressure including control of his wife's immigration documents. The next day the Respondent terminated his employment for unsatisfactory performance during probation, then evicted him from company housing and demanded surrender of company property. The Court framed five issues. Applying Pao On v Lau Yiu Long and the five-point duress test in Riskie v Sony of Canada Ltd, it found the contract was executed under illegitimate pressure and coercion, vitiating consent, and declared it invalid. Consequently, the employment was a month-to-month contract terminable by notice under Section 35 of the Employment Act, conferring full statutory protection. On fairness, the Respondent failed to prove compliance with the mandatory Section 41 procedure (no evidence of invitation to the disciplinary meeting, and a termination letter silent on reasons) and failed to prove valid and fair reason under Sections 43 and 45, offering no appraisal mechanism or evidence of poor performance. The Court declared the contract invalid, the employment month-to-month, and the termination both procedurally and substantively unfair. It awarded one month's salary in lieu of notice (KShs. 1,041,300), maximum compensation of twelve months' gross salary (KShs. 12,495,600) under Section 49(1)(c), interest, and costs. Relief for salary for the remainder of the fixed term was refused because the contract had been voided and the compensation was an alternative remedy; injunctive reliefs were overtaken by events.

Key legal issues

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01

Validity of the contract dated 1st October 2016

Holding

The contract was executed under coercion and was invalid; the probationary clause had never been agreed in negotiations.

Reasoning

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.

p. 11
02

Nature of the employment relationship

Holding

With the written contract voided, the employment was a month-to-month contract terminable by notice under Section 35 of the Employment Act.

Reasoning

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.

p. 11
03

Procedural fairness of the termination

Holding

The termination was procedurally unfair; the Respondent failed to prove compliance with Section 41.

Reasoning

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.

p. 12
04

Substantive justification for the termination

Holding

The termination lacked substantive justification; the Respondent proved no valid and fair reason.

Reasoning

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.

p. 14
05

Reliefs

Holding

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.

Reasoning

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.

p. 14

Legal principles established

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  • 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

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  1. 1.A declaration that the contract expressed to be dated 1st October 2016 was invalid.
  2. 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. 3.A declaration that the termination of the Claimant's employment was both substantively and procedurally unfair.
  4. 4.One month's salary in lieu of notice, KShs. 1,041,300.00
  5. 5.Compensation pursuant to Section 49(1)(c) of the Employment Act, twelve months' gross salary, KShs. 12,495,600.
  6. 6.Interest on the sums awarded at court rates from the date of judgment till full payment.
  7. 7.Costs of the suit to the Claimant.

Authorities

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Legislation

  • Employment ActSection 35
  • Employment ActSection 41
  • Employment ActSection 42(1)
  • Employment ActSection 43
  • Employment ActSection 45
  • Employment ActSection 47(5)
  • Employment ActSection 49(1)(a)
  • Employment ActSection 49(1)(c)
  • Employment ActSection 49(4)
  • Employment ActSection 5(8)
  • Constitution of KenyaArticle 25
  • Constitution of KenyaArticle 159(2)(d)
  • Constitution of KenyaArticle 48
  • Land ActNot specified
  • Civil Procedure RulesOrder 21 Rule 1
  • Civil Procedure ActSection 1B

Cases cited (14)

  • Ahmed Mohammed Noor vs Abdi Aziz Osman
    [2019] eKLR
  • Monica Munira Kibuchi & 6 others vs Mount Kenya University
    [2021] eklr
  • National Bank of Kenya vs Samuel Nguru Mutonya
    [2019] eKLR
  • Joseph Mwaniki Nganga vs United Millers Limited
    [2022] eklr
  • Peter Kamau Mwaura & Another vs National Bank of Kenya
    [2020] eklr
  • Phanice Naliaka vs National Cereals and Produce Board
    [2022] eklr
  • Orsborn Obaigwa Nanga vs Gusii Water & Sanitation Company Limited
    [2022] eKLR
  • Minnie Mbue vs Jamii Bora Bank Limited
    [2017] eKLR
  • Samuel Kamau Macharia & Another vs Kenya Commercial Bank & 2 Others
    [2012] KLR
  • Pao On v Lau Yiu Long
    [1973] 3 WLR 435
  • Riskie V Sony of Canada Ltd
    [2015] ONSC 5859 [CanLII][SCJ
  • Pius Macha Isundu v Lavington Security Guards
    [2017] eKLR
  • Jane Samba Mukala vs Oltukai Lodge Limited
    [2010] eKLR, 225
  • Janet Nyandiko
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

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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, "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.