Irungu v Kenya Pipeline Company Limited (Cause E950 of 2022) [2024] KEELRC 537 (KLR)
The bottom line
#A Kenyan State Corporation wrongly cancelled a Managing Director's extended contract without consulting him, winning him compensation but not his job back.
What this practically means
#Executive summary
#Key legal issues
#Mandate of the State Corporations Advisory Committee over State Corporations' human resource instruments
The SCAC had no mandate over the Respondent's human resource matters; the power to originate HR instruments vests in the Boards, subject to approval by the Public Service Commission under article 234 of the Constitution.
Section 26 of the State Corporations Act establishes the SCAC and section 27 purports to give it power over terms and conditions of service, but article 234 of the Constitution vests that power in the Public Service Commission. The Constitution prevails in the event of conflict. The court applied the Cofek and Manyara Muchui Anthony decisions. Consequently, the Respondent could not rely on purported SCAC advice to recall its own communication varying the Claimant's tenure.
Legitimate expectation of the extended five-year tenure
The Claimant legitimately expected to serve for five years since the Respondent's offer was clear, unambiguous, lawful and within its powers, subject only to Public Service Commission concurrence which was not shown to be withheld.
Applying the conditions in South African Veterinary Council v Szymanski as adopted in Onyancha, and the definition in Republic vs. Attorney General Ex Parte Waswa, the court found the Respondent's letter of 8th August 2021 constituted a clear, unambiguous representation altering the contract to five years. The Respondent never contended that the Public Service Commission declined to sanction the variation, and the successor Managing Director's four-year contract indicated the three-year tenure in the 2019 HR Manual had been revised upwards.
Regularity of the rescission of the extension and unfair labour practice
The unilateral rescission without consulting the Claimant breached his right to fair labour practice under article 41(1) of the Constitution and violated section 10(5) of the Employment Act, which requires consultation on changes to contractual particulars.
There was no evidence the Claimant was given an opportunity to comment before the decision to cancel the extension; his letter of 23rd December 2022 went unanswered while the Board declared his position vacant. Sections 9 and 10 of the Employment Act require contracts to be in writing with stated particulars, and section 10(5) requires consultation before changes. The failure to engage the Claimant smacked of unfair labour practice and violated his legitimate expectation.
Quantum of relief
Primary reliefs (reinstatement-type declaration and injunction) were refused because the position had been filled; compensation for the full balance of the five-year term was untenable given the termination clause; three months' gross salary was awarded as compensation.
The contract of 9th December 2019 contained a termination clause, so even a validly extended five-year term was not a guarantee of service for the entire period and remained amenable to lawful termination. The court assessed compensation equivalent to three months' gross salary (Ksh. 1,081,309.00 x 3 = Ksh. 3,243,972.00), considering the duration of the Claimant's service, subject to statutory deductions and with interest at court rates from the date of judgment.
Legal principles established
#- The constitutional mandate over terms and conditions of service in the public service vests in the Public Service Commission under article 234 of the Constitution; to the extent section 27 of the State Corporations Act conflicts with it, the Constitution prevails and the SCAC has no mandate over State Corporations' human resource matters.
- Where an employer has aroused a legitimate expectation of an extended contractual tenure, it may not withdraw that benefit without consulting the employee; failure to consult constitutes unfair labour practice contrary to article 41(1) of the Constitution and section 10(5) of the Employment Act.
Court orders
#- 1.Declaration that the Respondent's unilateral rescission of the extension to the Claimant's contract breached his right to fair labour practice and violated his legitimate expectation to serve five years
- 2.Decline of the primary reliefs sought in the Statement of Claim (declaration of entitlement to remain in office to 1st January 2025 and injunction)
- 3.Award of compensation equivalent to three months' gross salary, Ksh. 3,243,972.00
- 4.Award subject to applicable statutory deductions
- 5.Interest on the award at court rates from the date of judgment
- 6.Costs of the case to the Claimant
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction under the Employment and Labour Relations Court Act and article 41(1) of the Constitution of Kenya 2010 (fair labour practice)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Irungu v Kenya Pipeline Company Limited (Cause E950 of 2022) [2024] KEELRC 537 (KLR)", Case Analysis (2024). Cause No E950 of 2022. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/537/eng@2024-03-07
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.