Ndegwa v National Environmental Trust Fund (NETFUND) (Cause 649 of 2019) [2024] KEELRC 1288 (KLR)
The bottom line
#A Kenyan court enforced a mutual separation agreement, awarding a former state corporation CEO over Kshs.5.5 million in unpaid exit payments.
What this practically means
#Executive summary
#Key legal issues
#Jurisdiction despite arbitration clause
The ELRC had jurisdiction to determine the suit notwithstanding the arbitration clause in the employment contract.
Claimant's counsel relied on Samuel Kamau Macharia and Kennedy Amuhaya Wanyonyi to establish jurisdiction; the court proceeded to determine the suit without any jurisdictional objection upheld.
Validity of the contract of employment dated 12th October 2016
The lawfulness of the contract was not an issue for determination as it was unpleaded; the Respondent was bound by its pleadings admitting a valid contract.
The Respondent never pleaded that the contract was unlawful; it only raised the point in submissions. Submissions are neither pleadings nor evidence. The Reply acknowledged a valid contract as the foundation of the employment relationship, so the issue fell by the wayside.
Validity of the Separation Agreement dated 28th February 2018
The Separation Agreement was valid, legally binding and enforceable; the Respondent failed to prove illegality, fraud or vitiation on a preponderance of probabilities.
The agreement was drafted by the Respondent's advocates, signed by four trustees including the Chairperson, and executed at the Board's instance following a strategic change of direction. RWI admitted no fraud or undue influence. No evidence showed any approval by National Treasury, SCAC, Parent Ministry or SRC was legally required. Whatever is created by agreement may be dissolved by agreement.
Termination clause and supersession clause arguments
Clause 28 provided only for unilateral termination by notice, whereas the separation was mutual; Clause 29 was backward-looking and could not supersede the later Separation Agreement.
A notice by either party is unilateral and non-negotiable, unlike the bilateral Separation Agreement. Clause 29 referred to agreements hitherto entered into, i.e. prior arrangements, and could not fetter future freedom to contract.
Reliefs
The payments under Clause 3 of the Separation Agreement were awarded as prayed, totaling Kshs.5,559,252.10.
Clause 3 of the Deed provided for 12 months gross salary, ex-gratia of 3 months basic pay and gratuity; these were awarded as the agreement was held valid.
Legal principles established
#- Parties are bound by their pleadings; an unpleaded issue cannot be raised for the first time in submissions.
- Whatever is created by agreement may be extinguished by agreement (eodem modo quo oritur eodem modo dissolvitor).
- An entire-agreement/supersession clause operates prospectively, not to defeat later agreements.
- Boards of state corporations are the employer and no National Treasury, SCAC or SRC approval of a separation agreement is required unless the law so provides.
Court orders
#- 1.Judgment entered in favour of the Claimant against the Respondent for 12 months gross salary Kshs.4,350,128.40
- 2.One year gratuity Kshs.121,600.60
- 3.3 months ex-gratia payment Kshs.1,087,523.10
- 4.Total award of Kshs.5,559,252.10
- 5.Each party to bear its own costs
- Jurisdiction invoked
- Article 162(2) of the Constitution – Employment and Labour Relations Court; jurisdiction sustained notwithstanding the arbitration clause in the employment contract
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Ndegwa v National Environmental Trust Fund (NETFUND) (Cause 649 of 2019) [2024] KEELRC 1288 (KLR)", Case Analysis (2024). Nairobi ELRC Cause No. 649 of 2019. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/1288/eng@2024-05-27
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.