Obuya & 2 others v Valuepak Foods Limited (Cause 1297 of 2016) [2024] KEELRC 2402 (KLR)
The bottom line
#What this practically means
#Executive summary
#Key legal issues
#Whether the Claimants were constructively dismissed
Yes. The Respondent's failure to pay salaries for five months and its closure of the business without notice, depriving employees of work, amounted to a fundamental breach entitling them to treat the contracts as discharged.
The Court adopted the Coca-Cola v Ligaga factors: identification of essential terms, repudiatory breach going to the root of the contract, objective test, causation, and no waiver or acquiescence. Remuneration is a most important term of the employment contract; unilateral non-payment for five months, coupled with removal of machinery and failure to supply work, was a substantial breach demonstrating that the employer no longer intended to be bound. The burden on the employees, unchallenged by evidence, was discharged.
Whether the Claimants are entitled to the reliefs sought
Partly. Unpaid salaries for October 2015-February 2016, compensatory awards under section 49(1)(c) (varying from 3 to 10 months' gross salary based on length of service), and one month's notice pay were granted; leave compensation was refused.
The unpaid salary claim was admitted in paragraph 6 of the Response and unchallenged. Contracts were terminable by twenty-eight days' notice under section 35(1); since termination was constructive, no notice was issued, warranting payment in lieu under section 36. The section 49(1) compensatory award is discretionary; the abrupt manner of termination and length of service justified awards of 3-10 months. The leave claim failed because dismissal occurred in February 2016, so 2016 leave was not earned.
Legal principles established
#- A respondent that files a statement of response but calls no evidence cannot rely on it; it has no evidential value.
- The absence of a respondent's evidence does not automatically entitle a claimant to judgment; the claimant must still prove the case to the requisite standard.
- Constructive dismissal is a question of fact with no fixed rule of law defining qualifying circumstances.
- Unilateral non-payment of salary as and when it falls due amounts to a repudiatory breach justifying constructive dismissal.
Court orders
#- 1.A declaration that the Claimants were unfairly constructively dismissed from employment
- 2.The Respondent to pay each Claimant individually salary for the five months October 2015-February 2016, compensation pursuant to section 49(1)(c) of the Employment Act, and notice pay, as set out in the schedule (computation varying per employee based on salary and length of service)
- 3.Interest on the sums awarded at court rates from the date of Judgment until payment in full
- 4.Costs of the suit, with instructions fee to be computed on the basis of the total amount awarded to the Claimants
- Jurisdiction invoked
- Original employment and labour relations jurisdiction under the Employment Act, 2007 (Sections 28, 35, 36, 49) of the Employment and Labour Relations Court
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Obuya & 2 others v Valuepak Foods Limited (Cause 1297 of 2016) [2024] KEELRC 2402 (KLR)", Case Analysis (2024). Cause No 1297 of 2016. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/2402/eng@2024-10-02
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.