Mbugua v CMC Motors Limited & another (Cause 2307 of 2017) [2024] KEELRC 717 (KLR)
The bottom line
#A Kenyan court awarded an employee the maximum 12 months' salary for unfair termination over poor performance, but he lost claims for Kshs 65 million in commissions and severance pay.
What this practically means
#Executive summary
#Key legal issues
#Whether termination on grounds of poor performance was substantively justified
Not justified - no valid and fair reason was proved
Poor performance is a valid ground under section 44(4)(g) but must be proved under sections 43 and 47(5). The Respondents produced no annual performance appraisals as required by their own manual. The Claimant had served 22 years with sterling performance, the Respondents' witness admitted he was a good employee, and a redundancy notice issued a month after termination showed the company itself was struggling. The court held there was no valid and fair reason.
Whether the termination was procedurally fair
Procedurally flawed and unfair under section 45
Section 41 requires explanation of reasons and an opportunity to make representations. The PIP was communicated after its purported start date, the commencement date contradicted the parties' agreement, and although the PIP was extended for 30 days to 30th June 2017, the Claimant was terminated the next day, 13th June 2017. No show cause letter or disciplinary hearing was given. Payment in lieu of notice could not cure the flawed process.
Whether the Claimant proved entitlement to commissions of Kshs 65,230,200
Not proved
The Claimant acknowledged that government sales were house deals not attracting individual commission, that Pewin Motors Ltd was the appointed agent and was paid the commission, and that he was not in charge of government sales. His list lacked figures and invoices and he produced no agreement entitling him to the commission. Under section 108 of the Evidence Act and the strict-proof rule for special damages, the claim failed.
Whether the Claimant was entitled to severance pay
Not entitled
Severance pay under section 40 of the Employment Act is payable on redundancy. The Claimant was terminated on 13th June 2017 on grounds of poor performance; the redundancy notice came later, in July 2017, after termination. He was accordingly not entitled to severance pay.
What compensation was appropriate for the unfair termination
Maximum 12 months' salary, Kshs 2,760,000
Considering the Claimant's 22 years of service, his sterling performance on the Volkswagen brand, and the hurried manner in which he was pushed out without his views being heard, the court found this a proper case for the maximum award of twelve months' gross salary under section 49 of the Employment Act, noting he had already received one month's salary in lieu of notice among his terminal dues.
Legal principles established
#- Where poor performance is the reason for termination, the employer bears a high level of proof and must show a policy or practice for measuring performance
- Termination for poor performance while the employee is still on an extended performance improvement plan, without a show cause letter or disciplinary hearing, is procedurally flawed and unfair under section 45 of the Employment Act
- A claimant alleging entitlement to commission must specifically plead and strictly prove it, the burden lying on him under section 108 of the Evidence Act
Court orders
#- 1.Unpaid commission claim rejected
- 2.Severance pay claim rejected
- 3.Respondent to pay 12 months' salary as compensation for unfair termination at Kshs 230,000 per month, totalling Kshs 2,760,000
- 4.Award subject to statutory deductions but to attract interest at court rates from date of judgment until payment in full
- 5.Costs of the suit to the Claimant
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (first-instance employment claim)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Mbugua v CMC Motors Limited & another (Cause 2307 of 2017) [2024] KEELRC 717 (KLR)", Case Analysis (2024). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/717/eng@2024-03-14
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.