Ohana v Kenol Kobil PLC (Cause 601 of 2019) [2024] KEELRC 2184 (KLR)
The bottom line
#A Kenyan court found a Group CEO's dismissal for poor performance unfair because the employer had no appraisals, targets, or improvement plan, awarding USD 336,000 compensation.
What this practically means
#Executive summary
#Key legal issues
#Whether termination on account of poor performance was substantively and procedurally fair
The termination was unfair; the respondent failed to prove valid and fair reasons because no 2019 targets or strategic objectives were set, no formal appraisal was done, no performance improvement measures were taken, and the process appeared premeditated to install a Rubis-preferred MD.
The court applied the Jane Samba Mukala standard requiring employers to prove the measures and effort leading to a poor-performance dismissal. No formal appraisal, no rating, no targets for 2019, and no prior appraisals were produced. The chronology, including Bergeron's appointment as MD effective 1st June 2019 while the claimant still held the office, showed premeditation. Termination was therefore unfair under section 45(1) of the Employment Act.
Whether the clawback of the advance bonus of USD 250,000 and COLA was justified
The clawback of both was justified: the 2018 bonus was never board-approved and the claimant conceded the supporting documentation was unsigned and unauthenticable; the claimant was an expatriate not eligible for COLA.
The claimant conceded bonus was discretionary and produced no email or authentic memo evidencing approval; the purported memo was unsigned and not on letterhead. On COLA, a 2018 memo excluded international expatriates, and the claimant's salary was in USD. Deductions under clause 19 of the contract were therefore proper.
Whether the claimant was entitled to benefits under the 9th April 2019 Settlement Agreement
No; the settlement agreement applied to lower cadre non-management staff, negotiated by elected non-management representatives, and could not irregularly extend the claimant's fixed-term contract.
RW1 confirmed negotiations were conducted by non-management representatives with Rubis, and the claimant never participated. Including the Group CEO, on a fixed-term contract nearing expiry, in a two-year job-security guarantee would amount to an irregular extension of his contract.
Whether the respondent was entitled to judgment on the counterclaim
Yes, but only to the extent of USD 67,719.27 after setting off terminal dues, and this was set off against the compensation award for unfair termination, leaving USD 268,280.73 payable to the claimant.
Having found the advance bonus and COLA clawbacks justified, the respondent was owed USD 67,719.27 after deducting these from terminal dues. However, the unfair termination finding entitled the claimant to maximum compensation of twelve months' salary (USD 336,000), which was set off against the counterclaim sum.
The appropriate remedy
Maximum compensation of twelve months' salary under section 49(1)(c) of the Employment Act, awarded on the net salary of USD 28,000 per month, set off against the counterclaim, with interest and costs to the claimant.
The circumstances of the termination justified the maximum compensation under section 49(1)(c). The court computed twelve months at the contractual net salary of USD 28,000, giving USD 336,000, less the counterclaim balance of USD 67,719.27, yielding USD 268,280.73, subject to statutory deductions and interest at court rates from judgment.
Legal principles established
#- Where poor performance is the reason for termination, the employer bears a high level of proof and must show the performance measurement policy in place, the assessment conducted, and the measures taken to address poor performance before termination.
- The court does not undertake a merit review of an employer's decision to dismiss, but applies the band of reasonableness test, with some measure of merit review to assess the reasonableness of the decision.
- A termination is unfair under section 45(1) of the Employment Act where the employer fails to prove that the reason for termination is valid and fair.
- Discretionary bonus and COLA entitlements are construed strictly according to the contract and applicable policy; an employee must prove board approval or eligibility for such payments.
Court orders
#- 1.Respondent to pay the claimant maximum compensation of twelve months' salary under Section 49(1)(c) of the Employment Act, being USD 336,000
- 2.The award of USD 336,000 is set off against USD 67,719.27 due to the respondent on the counterclaim, leaving a net sum of USD 268,280.73
- 3.The award is subject to taxes and statutory deductions where applicable and attracts interest at court rates from the date of judgment until payment in full
- 4.Claimant to have costs of the suit
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction under the Employment Act, 2007
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Ohana v Kenol Kobil PLC (Cause 601 of 2019) [2024] KEELRC 2184 (KLR)", Case Analysis (2024). Memorandum of Claim dated 6th September, 2019. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/2184/eng@2024-09-06
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.