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ELRCPartially AllowedELRC Cause No. E 373 of 2022· [2024] KEELRC 1124 (KLR)

Kainika v Lucent Insurance Brokers Limited (Cause E373 of 2022) [2024] KEELRC 1124 (KLR)

Employment and Labour Relations Court
2 May 2024
2,596 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court ruled that probation can't be quietly extended and firing for poor performance requires a proper hearing, but a signed settlement voucher blocked compensation.

What this practically means

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Executive summary

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The Claimant was employed by the Respondent as Head of Business Development on 3rd May 2021 at a monthly salary of Ksh. 350,000, on a contract with a six-month probationary period. She proceeded on three months' maternity leave from 4th August 2021, partway through probation. After her self-assessment was submitted late, her performance was reviewed and her probationary term was purportedly extended by a further three months. Following further evaluation, her contract was terminated on 9th March 2022 on grounds of poor performance. She later signed a 'Final Dues' voucher on 23rd March 2022 acknowledging Ksh. 258,986 as full settlement. The court framed four issues: whether the probationary period was validly extended; whether termination was legitimate; whether the payment voucher discharged the Respondent; and entitlement to reliefs. The court held that since the contract was silent on extension and no written addendum was executed, the purported extension was ineffective and the contract was constructively confirmed after 15th November 2021. It further held that termination for poor performance requires the procedural safeguards in section 41 of the Employment Act, including notice and a hearing, and that the ordinary performance meeting of 9th March 2022 did not qualify; no performance improvement plan or assistance was offered. The termination was therefore unfair. However, the release voucher was held voluntarily executed - the Claimant pleaded no particulars of coercion and did not call the attesting witness - so it discharged the Respondent from further compensation. The claim succeeded on the declarations of constructive confirmation and unfair termination but compensation was declined, with no order as to costs.

Key legal issues

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01

Extension of probationary period

Holding

The purported extension of the probationary period was ineffective; the contract was constructively confirmed after the lapse of six months

Reasoning

Section 42 of the Employment Act permits extension of probation only once by up to six months and with the employee's concurrence. The contract fixed probation at six months without an express extension clause. A written contract cannot be varied orally or by parol evidence; no addendum was executed. Consequently, the extension was of no effect and the contract was confirmed on lapse of the six months.

p. 3
02

Validity of termination for poor performance

Holding

The termination was flawed both in reasons and procedure

Reasoning

Section 41 requires that an employee facing termination, including for poor performance, be informed of the reasons and given a hearing with representation. The meeting of 9th March 2022 was an ordinary performance evaluation session, not a hearing; the Claimant was not warned termination would be considered nor offered representation. No performance improvement plan or assistance was offered. The termination failed on both substance and process.

p. 4
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Effect of the final dues release voucher

Holding

The voucher was voluntarily signed and discharged the Respondent from further compensation claims

Reasoning

The signed release voucher is a binding contract. Allegations of coercion vitiate a transaction only if particularised and proved to a standard above a balance of probabilities. The Claimant pleaded no particulars and did not call the attesting witness to the instrument. The assertion of coercion therefore failed, and the court cannot reopen compensation between the parties.

p. 5

Legal principles established

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  • A probationary period limited to six months cannot be extended orally or unilaterally; extension requires a written instrument signed by the parties, failing which the contract is constructively confirmed
  • Termination for poor performance attracts the same procedural safeguards under section 41 of the Employment Act as termination for misconduct, including notice and a hearing
  • Where an employee fails performance targets, the employer should offer assistance such as a performance improvement plan before termination
  • A settlement/release voucher voluntarily executed is binding and precludes reopening compensation; allegations of coercion require particulars and proof above the balance of probabilities

Court orders

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  1. 1.Declaration that the Claimant's contract of service was constructively confirmed after 15th November 2021 when her probationary term lapsed
  2. 2.Declaration that the Claimant's contract was unfairly terminated
  3. 3.Decline to make orders for compensation for unfair termination because the parties signed a release voucher which closed the issue of further compensation
  4. 4.There is no order as to costs

Authorities

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Legislation

  • Employment Actsection 42
  • Employment Actsection 29
  • Employment Actsection 41
  • ELRC (Procedure) RulesRule 28(3)

Cases cited (6)

  • National Bank of Kenya v Samuel Nguru Mutonya
    [2019] eKLR
  • Jane Samba Mukala v Ol Tukai Lodge Limited
    [2013] eKLR
  • Saimon Ntasikoi Noonkanas v Resolution Insurance Limited
    [2021] eKLR
  • Patel & another v MJC & another (Suing as the guardians of PJP)
    Civil Appeal 182 of 2019 [2022] KECA 364 (KLR)
  • Thomas De La Rue (K) Ltd v David Opondo Omutelema
    (2013) eKLR
  • Coastal Bottles Limited v Kimathi Mithika
    (2018) eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over employment disputes (ELRC Act)

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, "Kainika v Lucent Insurance Brokers Limited (Cause E373 of 2022) [2024] KEELRC 1124 (KLR)", Case Analysis (2024). ELRC Cause No. E 373 of 2022. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/1124/eng@2024-05-02

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