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ELRCAllowedMCELRC/E940 of 2020 (Appeal)

Ochieng v Edge & Motion Group Limited (Appeal E058 of 2023) [2024] KEELRC 2322 (KLR)

Employment and Labour Relations Court
25 September 2024
2,536 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~10 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court ruled that an employer who unilaterally downgrades a permanent job to contract terms without a hearing commits unfair termination and must compensate the employee.

What this practically means

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Executive summary

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This is a first appeal to the Employment and Labour Relations Court against the judgment of a Senior Resident Magistrate delivered on 31st May 2022 in MCELRC No. E940 of 2020, which dismissed the Appellant's claim for unfair termination and unpaid salary arrears. The appeal was canvassed by written submissions; the Respondent filed none. The court applied the retrial principles in Selle v Associated Motor Boat Company Ltd and framed the principal issue as whether the trial magistrate reached a wrong conclusion. On burden of proof, the court held that employment claims are civil and proof is on a balance of probabilities under sections 43, 45 and 47(5) of the Employment Act: the employee must first prove the occurrence of unfair termination, whereupon the burden shifts to the employer to justify the dismissal. The Respondent's email of 17th June 2020 terminated all permanent contracts with effect from 19th June 2020, citing tough economic times, without consultation or hearing. The court found this was a disguised termination of the change of contractual terms; the proper course would have been a lawful redundancy. The Respondent produced no financial documents, such as audited accounts, to substantiate its Covid-19 financial-difficulty justification. The trial magistrate therefore erred in holding that the Appellant had not discharged his burden of proof and in relying on the Respondent's evidence-free submissions. The termination was found procedurally unfair and in violation of sections 41, 43 and 45. The appeal was allowed, the dismissal judgment set aside, and judgment entered for the Appellant: one month's salary in lieu of notice (Kshs. 50,726), admitted salary arrears (Kshs. 210,600), and four months' salary as compensation (Kshs. 202,904), totalling Kshs. 456,534, with costs of the suit, subject to taxes and statutory deductions and interest at court rates from the date of judgment.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the trial learned Magistrate arrived at the wrong conclusion when he dismissed the appellant's claim before the trial Court
  2. 2.Whether the burden and standard of proof in a claim for unfair termination were properly applied by the trial court
  3. 3.Whether the Appellant was entitled to the reliefs sought

Key legal issues

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01

Whether the Appellant discharged the burden of proving unfair termination

Holding

The Appellant discharged the burden of proof when the Respondent changed his contractual terms; the burden then shifted to the Respondent, which failed to justify the change or produce financial evidence supporting its stated reason.

Reasoning

Employment claims are civil, proof being on a balance of probabilities under sections 43, 45 and 47(5) of the Employment Act. The email of 17th June 2020 showed the Respondent terminating permanent contracts on two days' notice citing financial difficulties, without consultation or hearing. The court viewed this as a disguised termination; the Respondent produced no financial documents to justify it, so the trial magistrate erred in finding the burden not discharged.

p. 5
02

Whether the termination followed a fair procedure

Holding

The termination was without notice, without consultation and violated sections 41, 43 and 45 of the Employment Act.

Reasoning

The Respondent's email communicated termination of permanent contracts effective 19th June 2020, only two days after the email of 17th June 2020, with no consultation or hearing. The court held that a fair procedure under section 41 was not followed, and the lack of substantiated reasons contravened sections 43 and 45, rendering the termination unfair.

p. 5
03

Whether the Appellant was entitled to the reliefs sought

Holding

The Appellant was awarded one month's salary in lieu of notice, admitted salary arrears of Kshs. 210,600, and compensation of four months' salary under section 49(1)(c).

Reasoning

Compensation was assessed under section 49(1)(c) as read with section 49(4), considering the three years of service, expectation of continued employment, lack of notice and absence of contribution by the Appellant. The salary arrears were awarded because the Respondent expressly admitted the modalities of payment of the arrears in its email correspondence, and the trial court erred in failing to award the admitted amount.

p. 5

Legal principles established

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  • In a claim for unfair termination, the burden of proof is first on the employee to prove the occurrence of unfair termination, and upon discharge of that burden it shifts to the employer to justify the reasons for dismissal.
  • A change to an employee's contractual terms without consultation or hearing amounts to a disguised termination which is procedurally unfair; an employer facing financial difficulty should follow the redundancy procedure laid down in law.
  • An employer alleging financial difficulty as justification for termination must produce evidence such as audited financial statements to substantiate it.

Court orders

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  1. 1.The Appellant's Appeal is allowed by setting aside the judgment of the lower court dismissing the appellant's claim and substituting therefor judgment in favour of the appellant
  2. 2.One Month's salary in lieu of notice of Kshs. 50,726
  3. 3.Salary arrears of Kshs. 210,600
  4. 4.Four months' salary as compensation for unfair termination of Kshs. 202,904
  5. 5.Total award of Kshs. 456,534 plus costs of the suit
  6. 6.Items (a), (b) and (c) shall be subject to taxes and statutory deductions but shall attract interest at Court rates from the date of Judgment until payment in full

The bench

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One judgment of the whole court — no separate or dissenting opinions.

Wrote the judgment

On appeal from
Senior Resident Magistrate's Court (Employment and Labour Relations)
MCELRC No. E940 of 2020
Jurisdiction invoked
Appellate jurisdiction of the Employment and Labour Relations Court over appeals from the subordinate court in employment and labour relations matters

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

In conclusion the Appellant's Appeal is hereby allowed by setting aside the judgment of the lower court dismissing the appellant's claim and substituting therewith judgment in favour of the appellant
p. 5Final orders - appeal allowed and judgment substituted
Thus in the first instance the burden of proof is on the employee to prove occurrence of unfair termination or wrongful dismissal. It is upon discharge of that burden that the burden shifts to the employer to justify the reasons of the dismissal.
p. 4Burden of proof in unfair termination claims
In the Court's view, this was a disguised termination in the name of change of permanent jobs to contractual basis without the Appellant being heard on the same.
p. 4Disguised termination without hearing
Items (a), (b) and ( c) shall be subject to taxes and statutory deductions but shall attract interest at Court rates from the date of Judgment until payment in full.
p. 6Taxes, deductions and interest on the award

Issues in the judgment

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minor

Internal inconsistency in the quantum awarded: the court states it awards three months' salary as compensation but then awards four months (Kshs. 202,904).

minor

The judgment is dated 24th September 2024 but delivered 25th September 2024.

minor

The rank of the trial magistrate is inconsistently stated as 'Senior Resident Magistrate' in paragraph 1 but 'Senior Principal Magistrate' in paragraph 4.

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, "Ochieng v Edge & Motion Group Limited (Appeal E058 of 2023) [2024] KEELRC 2322 (KLR)", Case Analysis (2024). MCELRC/E940 of 2020 (Appeal). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/2322/eng@2024-09-25

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