Kothary v Rai Cement Company Limited (Employment and Labour Relations Cause E022 of 2022) [2024] KEELRC 1149 (KLR)
The bottom line
#A Kenyan court ruled that stopping an employee's salary without explanation counts as unfair dismissal, awarding the worker compensation and costs.
What this practically means
#Executive summary
#Key legal issues
#Whether stoppage of salary constituted termination
The claimant did not abscond; he was terminated by the respondent
The claimant's last day at work was 10th September 2021 when he was arrested and prosecuted. He received no termination letter and inferred termination from the stoppage of his salary and denial of access to the premises. The court held that the employer has a mandatory statutory duty to pay wages under section 17 of the Employment Act, and that unexplained stoppage of wages was a breach of that obligation capable of amounting to termination or dismissal, so the claimant was terminated rather than a voluntary absconder.
Whether the termination was fair and justified
The dismissal was unfair and unjustified
The respondent admitted it issued no termination letter and took the claimant through no disciplinary process. Delivery notes that would have substantiated the alleged loss were never produced in court, so the validity of the reasons for dismissal was not established. Section 41 of the Employment Act requires explanation and a hearing before termination on grounds of misconduct; neither occurred, and section 45(2) requirements were therefore not met.
Remedies
Compensation limited to 3 months' salary plus one month's notice pay, and a certificate of service
Although the termination was unfair, the court took into account that the claimant, as the sales manager responsible for corporate clients, had a duty to ensure payment for supplies which he failed to do. It therefore exercised discretion to award only 3 months' salary as compensation under section 49 of the framework, plus one month's salary in lieu of notice, less statutory deductions, and ordered issuance of a certificate of service and costs.
Legal principles established
#- Non-payment of an employee's salary or wages when due, without explanation, can amount to a termination or dismissal
- An employer must conduct a disciplinary process and establish valid reasons before dismissing an employee; absent both, the dismissal is unfair
Court orders
#- 1.Compensation of 3 months' salary for unfair termination (Kshs 73,000 x 3 = 231,000) less statutory deductions
- 2.One month's salary in lieu of notice (Kshs 73,000)
- 3.The claimant to be issued with a Certificate of Service
- 4.The respondent to pay the costs of the suit
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (unfair termination claim under sections 41, 43 and 45)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Kothary v Rai Cement Company Limited (Employment and Labour Relations Cause E022 of 2022) [2024] KEELRC 1149 (KLR)", Case Analysis (2024). ELRC Cause (Kericho), memorandum of claim dated 20th December 2022 (Criminal Case No. E3448 of 2021 referenced). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/1149/eng@2024-05-02
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.