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ELRCPartially AllowedCause No E500 of 2023· [2024] KEELRC 1645 (KLR)

Were v Krishna Chemists (Cause E500 of 2023) [2024] KEELRC 1645 (KLR)

Employment and Labour Relations Court
25 June 2024
2,556 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan employer that let a fixed-term employee keep working after expiry owed her notice, and terminating a pregnant worker amounted to unlawful discrimination costing over Kshs. 1.3 million.

What this practically means

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Executive summary

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The Claimant, a Medical Representative employed on a fixed-term contract that was stated to lapse on 31st January 2023, sued the Respondent after receiving on 14th April 2023 a letter dated 1st April 2023 stating her employment had terminated on expiry of the contract. She claimed unfair termination, discrimination on account of her visible pregnancy, notice pay, house allowance, damages for inability to service a car loan, a certificate of service, interest and costs. The Respondent admitted it could not renew the contract and contended the Kshs. 60,000/- cheque was payment in lieu of notice, asserting the Claimant had been warned for underperformance before disclosing her pregnancy and that she refused to collect her dues. The Respondent filed no submissions. The Court found that since the Claimant continued working past the alleged lapse date while remaining on the payroll with assignments and sale targets, the contract was automatically extended, and the purported expiry could not lawfully ground the termination. The Court further found the Respondent discriminated against the Claimant on account of her pregnancy, as a member of a protected class entitled to better treatment, while declining to award the aggravated damages granted in GMV v Bank of Africa. Applying Ayanna Yonemura, the Court awarded housing allowance at 15% of basic pay for one year as a continuing wrong, one month's notice pay of Kshs. 89,254.95, and 12 months' compensation of Kshs. 1,071,059.40, plus a certificate of service, interest, and costs. The claims for aggravated damages and loan-servicing damages were not granted in the final orders.

Key legal issues

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01

Effect of holding over after expiry of a fixed-term contract

Holding

The contract was automatically extended upon continued service; termination on the basis that it had expired was invalid and notice pay was due.

Reasoning

The termination letter dated 1st April 2023 stated the contract had lapsed on 31st January 2023, yet the Respondent kept the Claimant on its payroll, assigned her work and sale targets beyond that date. The Court treated the continued service as an automatic extension, so the purported expiry could not be the true reason for termination and reasonable notice was required.

p. 4
02

Pregnancy discrimination

Holding

The Respondent discriminated against the Claimant on account of her pregnancy, attracting damages, though not the aggravated damages awarded in GMV.

Reasoning

The Court noted the Respondent was aware of the Claimant's pregnancy status and that as a member of a protected class she was entitled to better treatment. The Claimant had furnished emails notifying the Respondent of her pregnancy, which were not disputed, and the Respondent produced no appraisals evidencing underperformance, supporting the inference that pregnancy motivated the termination.

p. 4
03

Housing allowance

Holding

The Claimant was entitled to housing allowance at 15% of basic pay for 12 months, absent a contractual provision for consolidated salary.

Reasoning

The Claimant's payslips showed basic pay of Kshs. 77,613/- without any housing allowance, and the contract did not state that the salary was consolidated. Following Ayanna Yonemura v Liwa Kenya Trust, the Court computed housing allowance at 15% of basic pay (Kshs. 11,641.95 monthly) but limited the award to one year as a continuing wrong that should have been pursued promptly.

p. 4

Legal principles established

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  • Where an employee continues to offer service past the alleged lapse date of a fixed-term contract, the contract is deemed automatically extended and cannot be terminated on the ground of expiry without notice.
  • An employer who retains an employee in its payroll past contract expiry cannot rely on the lapsed contract as the reason for termination.

Court orders

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  1. 1.Kshs. 89,254.95 as one month's salary as notice
  2. 2.Kshs. 139,703.40 being unpaid house allowance for 12 months
  3. 3.12 months' salary as compensation – Kshs. 1,071,059.40
  4. 4.Certificate of service
  5. 5.Interest at court rates on the notice pay from the date of filing suit till payment in full
  6. 6.Interest at court rates on the house allowance and compensation from the date of judgment till payment in full
  7. 7.Costs of the suit

Authorities

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Legislation

  • Constitution of Kenya, 2010Article 27
  • Employment Act, 2007section 5(3)
  • Employment Act, 2007section 44(4)
  • Employment Act, 2007section 46
  • Employment Act, 2007section 31(1) and (2)
  • Employment Act, 2007section 49(1) and (4)(a), (b), (e), (i) and (j)
  • Employment Act, 2007section 51

Cases cited (7)

  • Kenfreight (E.A.) Limited v Benson K Nguti
    [2016] eKLR
  • Caroline Kwamboka Kinyulusi v National Environment Trust Fund
    [2020] eKLR
  • Thomas Mugambi Nthiga v County Government of Embu & another
    [2020] eKLR
  • Duncan Hasting Liech v Sameer Agricultural & Livestock (K) Ltd (now) Devyan Food Industries (K) Ltd
    [2022] KEELRC 24 (KLR)
  • GMV v Bank of Africa Kenya Limited
    [2013] eKLR
  • Ayanna Yonemura v Liwa Kenya Trust
    [2014] eKLR
  • D K Njagi Marete v Teachers Service Commission
    [2020] eKLR
Jurisdiction invoked
Original jurisdiction of the Employment and Labour Relations Court 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, "Were v Krishna Chemists (Cause E500 of 2023) [2024] KEELRC 1645 (KLR)", Case Analysis (2024). Cause No E500 of 2023. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/1645/eng@2024-06-25

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