Onyango v Tribe Hotel Ltd (Cause 417 of 2016) [2024] KEELRC 1144 (KLR)
The bottom line
#A Nairobi court ruled a hotel unfairly made an employee redundant, awarding him Kshs 2.29 million because the employer could not prove its reasons.
What this practically means
#Executive summary
#Key legal issues
#Whether the fixed-term contract lapsed by effluxion of time
The contract did not lapse; by the Respondent's conduct (continued employment, letter to NIC Bank indicating permanent employment, backdated renewal contract) it was impliedly extended and became open-ended, running month to month.
The five-year contract ended on 31st March 2015 but the Claimant continued working. The Respondent took no steps to renew at expiry, later wrote to NIC Bank stating the Claimant was employed on a permanent basis, and attempted to backdate a renewal contract, which the court held could not revive a lapsed fixed term. The Respondent was estopped from alleging lapse. The contract therefore ran month to month and was terminable under Section 35(1)(c) on 28 days' notice.
Substantive justification of the redundancy
The termination on account of redundancy was substantively unfair because the Respondent failed to prove the validity of the reasons (purchase of Beverage Control Software and restructuring).
The employer asserted that it had purchased a Beverage Control Software and restructured the role, but led no evidence of procurement of the software or of the organisational structure before and after restructuring. Although business strategy is for the employer to determine, it was duty bound to prove the redundancy was genuine and justified to the requisite standard. Having failed to do so, the termination was substantively unfair within Section 45(2)(b)(ii).
Procedural fairness of the redundancy
The Respondent substantially complied with Section 40(1) of the Employment Act: notice was given and copied to the Ministry of Labour, selection criteria did not apply as the Claimant was the sole employee in his position, and the statutory payments were offered.
The redundancy notice dated 30th June 2016 was to take effect on 1st August 2016 and was transmitted to the Ministry of Labour. The Claimant was the only Assistant Food and Beverage Controller, so selection criteria under Section 40(1)(c) were inapplicable. The redundancy dues cheque of Kshs 262,001.50 covered notice pay and 15 days' severance per year served, and the Claimant did not challenge the computation. Procedural compliance was thus established.
Whether the Respondent proved its Counterclaim for refund of Kshs 1,305,662.14
The Counterclaim failed; the Respondent did not prove the Claimant had absconded and secured other employment, nor that it asked him to resume duty.
The employment contract and cheque from Premier Best Western were only marked for identification, not produced, so had little evidential value. RW2's oral testimony on employment at Hotel Rio lacked documentary support. Further, there was no evidence the Claimant was ever asked to resume duty or given notice to show cause for failure to resume. The counterclaim therefore failed to meet the requisite standard of proof.
Reliefs: compensatory damages, service charge and Certificate of Service
Six months' gross salary awarded as compensatory damages; the service charge claim succeeded as the Respondent did not disprove entitlement; a Certificate of Service ordered under Section 51(1); 18 years' anticipated salary refused.
Given the finding of substantive unfairness, compensatory damages equivalent to six months' gross salary were awarded, factoring the length of employment and circumstances of termination. The confirmation letter of 10th September 2010 entitled the Claimant to service charge, and the Respondent led no evidence of payment or variation. Anticipatory earnings to retirement were declined on the authority of D K Njagi Marete v Teachers Service Commission.
Legal principles established
#- Where a fixed-term contract expires but the employee continues working and the employer continues assigning work and paying salary, the contract is impliedly renewed and becomes open-ended, terminable only by notice under Section 35(1)(c) of the Employment Act.
- An employer bears the burden of proving that a redundancy is substantively justified and procedurally fair; failure to adduce evidence of operational reasons renders the termination substantively unfair under Section 45(2)(b)(ii).
- A document marked for identification but not formally produced has little, if any, evidential value.
- Anticipatory earnings to date of retirement are not awardable as damages for unfair termination.
Court orders
#- 1.A declaration that the Claimant was unfairly terminated from employment
- 2.Compensatory damages of Kshs 490,998.00 being six months' gross salary
- 3.Unpaid service charge of Kshs 1,800,303.00
- 4.Total award of Kshs 2,291,301.00 with interest at court rates from the date of Judgment until payment in full
- 5.The Counterclaim is dismissed with no orders as to costs
- 6.The Claimant shall have the costs of the Claim
- 7.The Claimant is at liberty to collect his dues with regards to the redundancy
- 8.The Respondent shall issue the Claimant with a Certificate of Service within 30 days from the date of the Judgment
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction under the Employment Act, 2007
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Onyango v Tribe Hotel Ltd (Cause 417 of 2016) [2024] KEELRC 1144 (KLR)", Case Analysis (2024). Cause No 417 of 2016. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/1144/eng@2024-05-17
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.