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ELRCPartially AllowedCause No E433 of 2021· [2024] KEELRC 1975 (KLR)

Kariamburi v Bins (Nairobi) Services Ltd (Cause E433 of 2021) [2024] KEELRC 1975 (KLR)

Employment and Labour Relations Court
22 July 2024
7,832 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~31 min to read original · ~4 min brief

The bottom line

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A Kenyan court ruled that pushing an employee onto unpaid leave and replacing him was constructive dismissal, awarding over Ksh. 5 million.

What this practically means

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Executive summary

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This Employment and Labour Relations Court judgment by B. O. M. Manani, J. decided a claim by a former General Manager who alleged constructive dismissal. The parties had a three-year fixed term contract from 1st December 2011 which was never expressly renewed in writing, though the Claimant continued in service until resigning on 12th October 2020. The court held that the contract was renewed by conduct, becoming an indefinite term contract, rejecting the Respondent's month-to-month theory since the Employment Act recognizes no such contract. On constructive dismissal, the court found the Respondent had sent the Claimant on indefinite unpaid leave in April 2020 without consultation, replaced him substantively with Mr. Aloo Muga, discontinued his benefits, demanded return of work equipment while he remained employed, and ignored his grievances when he resigned. This conduct amounted to a repudiatory breach constituting constructive dismissal. The court awarded withheld salary of Ksh. 1,567,350.00 for May to October 2020, a shortfall of Ksh. 66,389.00 for April 2020's unilateral salary reduction, compensation of ten months' gross salary (Ksh. 2,902,500.00) for unfair termination, and Ksh. 580,500.00 in lieu of notice, plus interest, a Certificate of Service and costs. Claims for accrued leave, paid holidays, service pay, and general, aggravated and exemplary damages were declined. The Claimant was ordered to return the bank token, office keys and laptop as part of clearing.

Key legal issues

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01

Nature of the employment contract after expiry of the fixed term

Holding

The contract was renewed by conduct and became an indefinite term contract from 1st December 2014 to 12th October 2020; the Respondent's month-to-month theory has no legal basis

Reasoning

The initial three-year fixed term contract contemplated written renewal under clause 2.1, but although no written renewal was endorsed, the parties continued the relationship on the same terms, including the same gross salary. The Employment Act recognizes only fixed term, indefinite term, piece rate and casual contracts; there is no provision for month-to-month contracts. The renewed contract therefore ran on similar terms as the expired contract unless inconsistent with the Employment Act.

p. 4
02

Constructive dismissal versus voluntary resignation

Holding

The Claimant was constructively dismissed; the Respondent's conduct amounted to a repudiatory breach that drove him to resign

Reasoning

The Respondent sent the Claimant on indefinite unpaid leave without indication of resumption, replaced him substantively with Mr. Aloo Muga, demanded return of work equipment while he was still employed, and discontinued his medical insurance and statutory remittances. When he resigned, the Respondent accepted without addressing his grievances. Viewed objectively, this conduct demonstrated an intention not to be bound by the contract, constituting repudiatory breach and constructive dismissal.

p. 6
03

Unilateral salary reduction and unpaid leave

Holding

Both the 25% salary reduction and the unpaid leave were unilateral breaches entitling the Claimant to recover the withheld and shortfall amounts

Reasoning

Salary is a protected statutory right under Part IV of the Employment Act. The Respondent produced no minutes or resolutions of the purported management meeting, and even if a board decision existed, individual consultation and concurrence of the affected employee was required since contracts of service are individual. The schedule of employees on leave did not list the Claimant or show unpaid leave.

p. 9
04

Compensation for unfair termination

Holding

Ten months' gross salary awarded under section 49(1)(c) as read with section 50 of the Employment Act

Reasoning

The court considered the section 49(4) factors: the parties had an approximately eight-year relationship, the Claimant's conduct did not contribute to the termination, and the Respondent's own witness vouched for his exemplary conduct. Compensation equivalent to ten months' gross salary (Ksh. 2,902,500.00) was appropriate.

p. 12

Legal principles established

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  • Where parties continue an employment relationship after expiry of a fixed term contract without written renewal, they renew it by conduct, resulting in an indefinite term contract
  • Unpaid leave has no statutory foundation and cannot be unilaterally imposed by an employer; it requires consultation and concurrence of the employee
  • Employment contracts are individual, not communal; an employer cannot vary individual contracts through a collective management decision without individual consent
  • Where an employer waives the notice period on acceptance of a resignation, it becomes obligated to pay salary in lieu of notice

Court orders

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  1. 1.Declaration that the parties had an indefinite term contract of service from 1st December 2014 until 12th October 2020
  2. 2.Declaration that the Respondent unfairly terminated the contract of service through constructive dismissal of the Claimant
  3. 3.Award of Ksh. 1,567,350.00 being salary for the period between 1st May 2020 and 12th October 2020
  4. 4.Award of Ksh. 66,389.00 being underpayment of salary for April 2020
  5. 5.Award of Ksh. 2,902,500.00 being compensation for unfair termination equivalent to ten months' gross salary
  6. 6.Award of Ksh. 580,500.00 as pay in lieu of notice
  7. 7.The award is subject to applicable statutory deductions under section 49(2) of the Employment Act
  8. 8.Interest on the sums awarded at court rates from the date of the decision
  9. 9.The Respondent to issue the Claimant with a Certificate of Service under section 51 of the Employment Act
  10. 10.The Claimant to return to the Respondent the bank token, office keys and one laptop computer
  11. 11.The Respondent to permit the Claimant to collect his personal belongings from its premises
  12. 12.The Claimant awarded costs of the case

Authorities

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Legislation

  • Employment ActPart IV
  • Employment Actsection 28, 28(3), 28(4)
  • Employment Actsection 35(5), 35(6)
  • Employment Actsection 36
  • Employment Actsection 38
  • Employment Actsection 49(1)(c), 49(2), 49(4), 50, 51
  • ELRC Procedure RulesRule 28(3)

Cases cited (9)

  • Eunice Mwikali Munyao v Elys Chemical Industries Limited
    [2017] eKLR
  • Duncan Murunyu Mungai v Slopes Media House Limited
    [2021] eKLR
  • Coca Cola East & Central Africa Limited v Maria Kagai Ligaga
    [2015] eKLR
  • Joaqim Mbithi Mulinge v Transoceanic Projects & Development [K] Limited
    [2017] eKLR
  • Gichaba v Lexis Investment Limited
    (Civil Appeal 131 of 2019) [2024] KEHC 479 (KLR)
  • Pedersen v Camden London Borough Council
    [1981] ICR 674
  • Office v Roberts
    (1980) IRLR 347
  • Jones v F. Sirl & Son (Furnishers) Ltd.
    [1997] IRLR 493
  • Walker v Josiah Wedgwood & Sons Ltd.
    [1978] IRLR 105
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act (ELRC Procedure Rules referenced)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (2)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Kariamburi v Bins (Nairobi) Services Ltd (Cause E433 of 2021) [2024] KEELRC 1975 (KLR)", Case Analysis (2024). Cause No E433 of 2021. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/1975/eng@2024-07-22

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