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ELRCDismissedCause No 987 of 2018· [2024] KEELRC 809 (KLR)

Arodi v Kobian (Kenya) Limited (Cause 987 of 2018) [2024] KEELRC 809 (KLR)

Employment and Labour Relations Court
17 April 2024
5,016 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan employee lost his constructive dismissal case because he had no evidence; employers' counter-claims also failed without proper payroll controls.

What this practically means

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Executive summary

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The Claimant, formerly an Accounts Assistant in charge of the Respondent's payroll, sued alleging constructive dismissal, claiming a declaration of unfair dismissal, maximum compensation, salary in lieu of notice, withheld interest, unpaid service pay and withheld salary. The Respondent denied frustrating him, asserting he voluntarily resigned after being confronted with fraudulently self-authored salary increments, and counterclaimed Kshs.4,643,024.00 as unauthorised salary increments between 2011 and 2016. The court framed four issues: constructive dismissal, unlawful salary reduction, the counter-claim, and entitlement to reliefs. Applying the contractual test in Western Excavating v Sharp as domesticated in Coca Cola v Ligaga, the court held that the Claimant failed to prove constructive dismissal: his resignation letter gave no reason, he adduced no evidence of the alleged frustration or withheld salary, and no causal link was established. On the salary reduction from Kshs.179,250 to Kshs.22,500, the court found it was consented to in the Claimant's letter of 27th February 2017, in which he acknowledged payroll errors and proposed to forgo five months' salary; the Claimant's contradictory denials did not displace this. The counter-claim failed because all increments were approved by the Finance Director, Charan Patel, who admitted failing to verify the payroll; the Respondent had no salary policy and was estopped after accepting the Claimant's proposal. All prayers were dismissed, the counter-claim was disallowed, and each party was ordered to bear its own costs. Judgment was delivered virtually at Nairobi on 17th April 2024 by Dr. Jacob Gakeri, Judge.

Key legal issues

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01

Constructive dismissal

Holding

Not proved; the plea is unsustained

Reasoning

The resignation letter gave no reason and the Claimant admitted this. He tendered no evidence of the alleged frustration, withheld salary, its duration or amount, and made no complaint at the time. Without particulars of the repudiatory breach and a causal link between the employer's conduct and the resignation, constructive dismissal cannot be established.

p. 8
02

Unlawful reduction or withholding of salary

Holding

Not proved; any reduction was with the Claimant's express consent per his letter of 27th February 2017

Reasoning

The Claimant admitted writing the 27th February 2017 letter acknowledging payroll errors and proposing to forgo five months' salary, though he contradicted himself. He never challenged the signature or alleged forgery. On a balance of probabilities the salary reduction was consensual, a tacit admission of guilt, not an unlawful withholding.

p. 10
03

Respondent's counter-claim for unauthorised salary increments

Holding

Disallowed; not proved and Respondent estopped

Reasoning

All increments were approved by Charan Patel, the supervisor, who admitted failing to verify the payroll. There was no documented salary policy and the Claimant's increments were mostly below average. Having accepted the Claimant's proposal to forgo salary for five months, the Respondent was estopped from claiming any balance without evidence of an agreement.

p. 11
04

Entitlement to service pay

Holding

Dismissed; Claimant was an NSSF member and statutorily disqualified

Reasoning

Service pay is a statutory right under Section 35(5) of the Employment Act, 2007 but Section 35(6)(d) disqualifies NSSF members. The Claimant's payslips showed NSSF membership, so the submission that service pay was implied in his contract was unsustainable both factually and legally.

p. 8

Legal principles established

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  • An employee alleging constructive dismissal must prove a repudiatory breach of a fundamental term of the contract and a causal link between the employer's conduct and the resignation; the burden is on the employee
  • A member of the NSSF is disqualified from service pay under Section 35(6)(d) of the Employment Act, 2007

Court orders

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  1. 1.The Claimant's suit is dismissed
  2. 2.The Respondent's counter-claim is disallowed
  3. 3.Parties shall bear their own costs

Authorities

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Legislation

  • Employment Act, 2007Section 19
  • Employment Act, 2007Section 19(3)
  • Employment Act, 2007Sections 17 to 25 (Part IV)
  • Employment Act, 2007Section 35(5)
  • Employment Act, 2007Section 35(6)(d)
  • Constitution of Kenya, 2010Article 159(2)(d)
  • Constitution of Kenya, 2010Article 48
  • Civil Procedure RulesOrder 21 Rule 1
  • Civil Procedure Act (Chapter 21, Laws of Kenya)Section 1B

Cases cited (6)

  • Western Excavating (ECC) Ltd V Sharp
    (1978) ICR 221
  • Coca Cola East & Central Africa Ltd V Maria Kagai Ligaga
    (2015) eKLR
  • Peter Mbithi Mutia V Jubilee Insurance Co. Ltd
    (2020) eKLR
  • Kennedy Mutua Mwangangi V Madison Insurance Company (K) Ltd
    (2020) eKLR
  • Bakery Confectionary Food Manufacturing & Allied Workers Union (K) V Kenafric Industries Ltd
    (2021) eKLR
  • Naomi Sau Shako V Changamka Micro Insurance Ltd
    (2021) eKLR
Jurisdiction invoked
Original employment and labour relations jurisdiction of the Employment and Labour Relations Court; Employment Act, 2007

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (2)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Arodi v Kobian (Kenya) Limited (Cause 987 of 2018) [2024] KEELRC 809 (KLR)", Case Analysis (2024). Cause No 987 of 2018. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/809/eng@2024-04-17

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