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ELRCPartially AllowedCause No E052 of 2023· [2024] KEELRC 2077 (KLR)

Mkombola v Directline Assurance Company Limited (Cause E052 of 2023) [2024] KEELRC 2077 (KLR)

Employment and Labour Relations Court
30 July 2024
1,951 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 that pressuring a long-serving employee to sign a worse renewal contract and ejecting him immediately was unfair termination, awarding him over Kshs 1.2 million.

What this practically means

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Executive summary

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The Claimant, an IT Manager employed by the Respondent on a three-year fixed-term contract running from 8th April 2019 to 7th April 2022, claimed that the Respondent's Board had resolved that staff completing a successful three-year contract would be entitled to an Open Contract on permanent and pensionable terms, a resolution communicated by the CEO at a town-hall meeting and by a Memo on 18th February 2022. Instead of an Open Contract, he was offered a six-month extension returning him to probation. When he asked for time to consult a lawyer, the Respondent demanded he hand over, revoked his access and ejected him from the premises without written reasons or an opportunity to hand over. He sought declarations of legitimate expectation and unfair termination, 12 months' compensation (Kshs 3,600,000), general damages, costs and interest. The Respondent maintained that the contract had expired, that the Claimant never applied for renewal under clause 2A(b), and that no employer-employee relationship subsisted. After a partly compressed analysis, the Court found the Claimant was dismissed after declining to sign a renewal contract under duress and without the legal safeguards, and that he had a legitimate expectation of renewal on permanent and pensionable terms. Judgment was entered for the Claimant with a declaration to that effect, one month's notice pay of Kshs 300,000, compensation of three months (Kshs 900,000), costs of the suit and interest on the monetary awards from the date of judgment. The claim only partially succeeded as the 12 months' compensation sought was reduced on account of the Claimant's employability in the ICT field.

Key legal issues

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01

Legitimate expectation of renewal on permanent and pensionable terms

Holding

The Court found the Claimant had a legitimate and reasonable expectation that his contract would be renewed on permanent and pensionable terms, based on the Board's resolution communicated on 18th February 2022 and corroborating evidence including the UN Sacco letter

Reasoning

The Claimant pleaded and testified that the Respondent's Board resolved that staff completing a successful three-year contract would be entitled to an Open Contract, communicated by the CEO at a town-hall meeting and followed by a Memo on 18th February 2022. The Respondent did not rebut the testimony that the HR Manager verbally confirmed renewal would not be a problem and issued a UN Sacco letter indicating conversion to permanent and pensionable terms. The Court accepted this evidence and made the declaration sought.

p. 1
02

Whether the manner of the separation amounted to unfair termination

Holding

The Court found the Claimant was dismissed without being afforded the safeguards under the law after he sought time to review the renewal contract and was bundled out of the premises

Reasoning

The Claimant was offered a six-month renewal placing him back on probation after three years of unblemished service. He asked for time to consult a lawyer; the request was denied and he was denied access to his office and escorted out by security without an opportunity to hand over. The Respondent called no witnesses or documents to rebut the particulars of harassment. The Court treated this as a dismissal without due process and awarded notice pay and compensation.

p. 4
03

Quantum of compensation

Holding

Although 12 months' compensation was sought, the Court awarded 3 months' compensation plus one month's notice pay

Reasoning

The Court considered the Claimant's employability, noting that he worked in the vibrant ICT field and could obtain alternative employment. It therefore exercised discretion to reduce compensation from the 12 months sought to 3 months, and separately awarded one month's notice pay of Kshs 300,000, with interest from the date of judgment.

p. 4

Legal principles established

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  • An employee who is offered a renewal on less favourable terms and declines to sign it under pressure, and is ejected from the premises, is unfairly terminated despite the fixed-term expiry
  • A long-serving contract employee who had legitimate expectation of conversion to permanent and pensionable terms and who was denied a fair process is entitled to notice pay and compensation

Court orders

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  1. 1.A declaration that the Claimant had a legitimate and reasonable expectation that his contract would be renewed on permanent and pensionable terms
  2. 2.One month's notice – Kshs 300,000/-
  3. 3.Compensation for 3 months – Kshs 900,000/-
  4. 4.Costs of the suit to the Claimant
  5. 5.Interest at court rates on the sums in (b) and (c) from the date of judgment till payment in full

Authorities

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Cases cited (9)

  • Nabro Properties Ltd v Sky Structures & another
    [2002] 2 KLR 299
  • Jane Kiongo & 15 others v Laikipia University & 6 others
    [2019] eKLR
  • John Nduba v Africa Medical and Research Foundation (AMREF Health Africa)
    [2020] eKLR
  • Republic v Communications Authority of Kenya Ex parte Airtel Networks Kenya Limited
    [2017] eKLR
  • Transparency International Kenya v Omondi
    (Civil Appeal 81 of 2018) [2023] KECA 174 (KLR) (17 February 2023)
  • National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & another
    [2001] eKLR
  • Alfred Nyungu Kimungi v Bomas of Kenya
    [2013] eKLR
  • Rebecca Anne Maina & 2 others v Jomo Kenyatta University of Agriculture and Technology
    [2014] eKLR
  • Godfrey Allan Tolo v Tobias O. Otieno & another
    [2022] eKLR
Jurisdiction invoked
Original employment and labour relations jurisdiction of the Employment and Labour Relations Court (the Claimant earlier filed HCCOMM/E497/2022 after noting the arbitration clause was vague, then filed this 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, "Mkombola v Directline Assurance Company Limited (Cause E052 of 2023) [2024] KEELRC 2077 (KLR)", Case Analysis (2024). Cause No E052 of 2023. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/2077/eng@2024-07-30

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