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ELRCPartially AllowedNot stated in judgment· [2024] KEELRC 1556 (KLR)

Bernd v Bahari Dhow Limited & another (Cause E123 of 2023) [2024] KEELRC 1556 (KLR)

Employment and Labour Relations Court
13 June 2024
4,543 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 a hotel manager's dismissal for poor performance was unfair because his employer never warned him formally or gave him a chance to improve.

What this practically means

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Executive summary

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The claimant, employed as general manager by a family-owned group of companies from 29 October 2018 on a two-year fixed-term contract and posted to the 1st respondent's Diani hotel in August 2019, was terminated on 5 July 2023 for poor performance following a management visit. He claimed notice pay, July salary, 369.25 untaken leave days, service pay, 12 months' compensation and a certificate of service, contending he was never heard before termination. The respondents maintained the contract was performance-based, warnings were issued, and the claimant was informed of his poor performance and paid his dues, but he withheld a company laptop. The court found the employment continued beyond the expired fixed term without records from the employer, attracting Section 37 protection. Relying on Jane Wairimu Machira and Francis Ndeke Kyalo, the court held that termination for poor performance required pointing out shortcomings, an opportunity to improve over 2-3 months, and a properly notified hearing under Section 41; none occurred, rendering the termination unfair under Section 45. Service pay was refused as the claimant was a pension scheme beneficiary; house allowance was refused as he was housed; leave was capped at 18 months' accumulation (33 days). Compensation of 3 months' gross salary (Ksh. 397,020), notice pay of Ksh. 132,340 and leave pay of Ksh. 145,574 were awarded, less Ksh. 227,000 for the withheld laptop, with a certificate of service to issue and each party bearing its own costs.

Key legal issues

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01

Whether termination for poor performance was procedurally fair

Holding

Termination was unfair under Sections 41, 43 and 45 of the Employment Act

Reasoning

Poor performance terminations require the employer to explain the reasons, hold a disciplinary hearing with notice, and allow the employee an opportunity to improve over a reasonable period of 2-3 months. The meeting on 4 July 2023 was not notified as a disciplinary hearing and no chance to improve was given, so neither procedural validity nor valid reasons were established.

p. 8
02

Status of employment after expiry of the 2-year fixed-term contract

Holding

Continuous engagement after lapse of the written contract converted the claimant to an employee protected under Section 37

Reasoning

The written contract lapsed on 28 October 2020 but the claimant worked continuously until July 2023. The respondents, bearing the statutory duty under Section 10(6) and (7) to keep records, filed none showing renewal, so the 32-month period is protected under Section 37.

p. 8
03

Entitlement to service pay

Holding

Service pay refused because the claimant was covered by a pension scheme under the contract

Reasoning

Section 35(6) excludes employees who are members of registered pension schemes or NSSF from service pay. Clause 8 of the contract secured the claimant under pension and medical schemes, removing him from service pay entitlement despite the respondents' failure to remit NSSF.

p. 7
04

Quantification of leave pay

Holding

Leave accrual limited to 18 months under Section 28(4), yielding 33 days at Ksh. 145,574

Reasoning

Unlimited accumulation of leave is not permitted; absent employer permission, leave must be taken when due and only 18 months of accrued leave can be claimed. With 21 days per year for 18 months the claimant earned 33 leave days.

p. 9
05

Withheld company laptop

Holding

Ksh. 227,000 deducted from terminal dues for the unreturned computer

Reasoning

The claimant admitted withholding the respondent's laptop and offered to return it after over a year, which the court found unjustified. In the absence of a receipt, the earlier pleaded value of Ksh. 227,000 was applied and set off under Section 19 of the Act.

p. 9

Legal principles established

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  • Termination for poor performance requires the employer to point out shortcomings and give the employee an opportunity to improve over a reasonable time, and to conduct a hearing under Section 41
  • Statutory deductions cannot be circumvented by private agreement between employer and employee; absence of remittance to NSSF entitles the employee to service pay
  • Where an employer fails to file work records and the employee serves continuously beyond an expired fixed-term contract, the employee is deemed protected under Section 37

Court orders

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  1. 1.Compensation Ksh. 397,020
  2. 2.Notice pay Ksh. 132,340
  3. 3.Leave pay Ksh. 145,574
  4. 4.Certificate of service to be issued under Section 51 of the Employment Act, 2007
  5. 5.Dues (a), (b) and (c) to be paid less Ksh. 227,000 value for the computer withheld by the claimant
  6. 6.Each party bears its costs

Authorities

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Legislation

  • Employment Act, 2007Section 41
  • Employment Act, 2007Section 43
  • Employment Act, 2007Section 45
  • Employment Act, 2007Section 45(5)
  • Employment Act, 2007Section 28
  • Employment Act, 2007Section 28(4)
  • Employment Act, 2007Section 35(5) and (6)
  • Employment Act, 2007Section 37
  • Employment Act, 2007Section 10(6) and (7)
  • Employment Act, 2007Section 20
  • Employment Act, 2007Section 51
  • Employment Act, 2007Section 19
  • Employment Act, 2007Section 89
  • Retirement Benefits Act(referenced in Section 35(6))

Cases cited (9)

  • Peter Otabong Ekisa v County Government of Busia
    [2017] eKLR
  • Jane Samba Mkala v Ol Tukai Lodge Limited
    [2013] eKLR
  • Shatora v Orange Garage for World Navi Co. Ltd
    [2024] eKLR
  • Mary Rhobi v Annah Bhamania
    [2014] eKLR
  • Cecilia Karuru v Barclays Bank of Kenya & another
    HCCC No. 17 of 2014
  • Joseph Mwaniki Nganga v United Millers Limited
    Cause No. 59 of 2019
  • Jane Wairimu Machira v Mugo Waweru & Associates
    [2012] eKLR
  • Francis Ndeke Kyalo v Cosmos Limited
    [2021] eKLR
  • Jacob Osoro Manyisa v Lavington Security Limited
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (first-instance employment claim)

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, "Bernd v Bahari Dhow Limited & another (Cause E123 of 2023) [2024] KEELRC 1556 (KLR)", Case Analysis (2024). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/1556/eng@2024-06-13

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