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ELRCPartially AllowedCause No E177 of 2022· [2024] KEELRC 1125 (KLR)

Mtana v Sopa Lodges (Cause E177 of 2022) [2024] KEELRC 1125 (KLR)

Employment and Labour Relations Court
2 May 2024
4,482 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~18 min to read original · ~4 min brief

The bottom line

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A signed Kenyan job contract with a future start date is binding, and even COVID-19 could not let the employer walk away without following termination procedures.

What this practically means

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Executive summary

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The Claimant and the Respondent executed an employment contract on 14th February 2020 for the position of Human Resource Manager, with commencement fixed for 15th April 2020. Before the effective date, the COVID-19 pandemic struck, and by emails of 21st March 2020 the Respondent postponed the engagement, which the Claimant acknowledged without objection. The engagement was never revived; the Respondent later contended the relation lapsed on 15th April 2020 by effluxion of time, arguing no employment relation existed amenable to the Employment Act, while the Claimant alleged breach. The court framed three issues: whether an employment relation existed as at 21st March 2020; whether it was frustrated or unfairly terminated; and entitlement to reliefs. Holding that the contract was complete on execution with all terms agreed, the court found the Respondent conflated inchoate contracts with contracts having both an execution and an effective date; the latter are valid and enforceable from the execution date. Relying on Keith Wright v Kentegra Biotechnology, Tom Omondi Ngoko v Bank of Africa and South African authorities, the court held a binding employment relation existed from 14th February 2020. The contract was, however, frustrated by the pandemic. Still, following Five Forty Aviation Limited v Erwan Lanoe, the Respondent ought to have closed the relation through the notice clause or sections 41, 43 and 45 of the Employment Act. Section 45(3) could not assist the Respondent, having been declared unconstitutional in Samuel G. Momanyi. Because the parties parted during probation, clause V applied, and the court awarded the Claimant one month's salary of Ksh. 500,000.00 with interest and costs, deeming all other reliefs declined.

Key legal issues

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01

Existence of an employment relation before the effective date

Holding

A contract with both an execution date and an effective date is a valid, enforceable employment contract from the execution date; it is not an inchoate contract

Reasoning

The parties signed a complete contract on 14th February 2020 with all terms agreed, including a commencement date of 15th April 2020. All elements of a valid contract (offer, consideration, unconditional acceptance) were present. The Respondent conflated inchoate contracts (still under negotiation) with complete contracts having a future effective date. Such contracts are enforceable and give rise to legitimate expectation of implementation on the effective date.

p. 5
02

Frustration by COVID-19 versus unfair termination

Holding

The contract was frustrated by the COVID-19 pandemic, but the Respondent was nonetheless obliged to disengage lawfully

Reasoning

The pandemic rendered commencement of the employment relation impracticable, discharging the parties from the obligation to perform. However, frustration did not permit the employer simply to let the relation lapse; it was required to invoke the notice clause in the contract or the procedure under sections 41, 43 and 45 of the Employment Act. Failure to do so entitled the Claimant to notice-period damages.

p. 7
03

Applicability of section 45(3) of the Employment Act

Holding

The thirteen-month continuous-service threshold in section 45(3) cannot assist the Respondent because it was declared unconstitutional

Reasoning

The Respondent relied on section 45(3) to bar the claim for unfair termination compensation. The court noted this provision was declared invalid in Samuel G. Momanyi v. The Hon. Attorney General and Another [2012] eKLR and therefore could not assist the Respondent. In any event, the court limited relief to notice pay given that the Claimant never reported to work owing to events beyond the Respondent's control.

p. 8
04

Quantum of relief

Holding

Claimant awarded one month's salary (Ksh. 500,000.00) as notice pay under the probation clause, not clause VII

Reasoning

The general notice clause (clause VII) was inapplicable because the parties parted ways during the probationary period. Under clause V, either party could terminate during probation by one month's notice or salary in lieu. Since the Respondent failed to invoke either avenue, the Claimant was awarded salary for one month, Ksh. 500,000.00, with interest and costs.

p. 8

Legal principles established

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  • Once parties execute an employment contract signifying offer and acceptance, it is valid and enforceable notwithstanding postponement of the implementation date
  • Where performance of an employment contract is frustrated by supervening events, the parties must close it by invoking the notice clause or the Employment Act procedure (sections 41, 43 and 45), failing which the release is unfair

Court orders

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  1. 1.Declaration that the parties had a valid employment contract from 14th February 2020, implementation postponed to 15th April 2020
  2. 2.Finding that the contract was frustrated by unforeseen events outside the parties' control
  3. 3.Respondent to pay the Claimant damages equivalent to the notice period under clause V of the contract, Ksh. 500,000.00
  4. 4.Interest on the aforesaid sum at court rates from the date of the decision
  5. 5.Claimant awarded costs of the case
  6. 6.All other reliefs sought but not expressly granted deemed declined

Authorities

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Legislation

  • Employment Actsections 5(8)(a), 9(9), 41, 43, 45, 45(3)
  • Employment and Labour Relations Court (Procedure) RulesRule 28(3)

Cases cited (8)

  • Keith Wright v Kentegra Biotechnology (Epz) Ltd
    [2021] eKLR
  • Tom Omondi Ngoko v Bank of Africa
    [2015] eKLR
  • Wyeth SA (Pty) Ltd Vs Manqele and Others
    (JA 50/03)[2005] ZALAC 1 (23 March 2005)
  • Du Preez v South African Local Government Bargaining Council (SALGBC) and Others
    (C147/15) [2017] ZALCCT 11 (29 March 2017)
  • Teachers Service Commission (TSC) v Kenya Union of Teachers (KNUT) & 3 Others
    [2015] eKLR
  • Five Forty Aviation Limited v Erwan Lanoe
    [2019] eKLR
  • Samuel G. Momanyi v. The Hon. Attorney General and Another
    [2012] eKLR
  • Helen Mary Aluoch Ilavonga v Spire Properties Kenya Ltd t/a Diani Reef Beach Resort & SPA
    [2022] eKLR
Jurisdiction invoked
Original employment and labour relations jurisdiction under the Employment and Labour Relations Court Act (Employment Act reliefs)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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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, "Mtana v Sopa Lodges (Cause E177 of 2022) [2024] KEELRC 1125 (KLR)", Case Analysis (2024). Cause No E177 of 2022. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/1125/eng@2024-05-02

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