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ELRCPartially AllowedCause No 1297 of 2016· [2024] KEELRC 2402 (KLR)

Obuya & 2 others v Valuepak Foods Limited (Cause 1297 of 2016) [2024] KEELRC 2402 (KLR)

Employment and Labour Relations Court
2 October 2024
4,448 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~18 min to read original · ~4 min brief

The bottom line

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What this practically means

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Executive summary

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In this first-instance employment claim, three named Claimants sued for themselves and 45 other former employees of a Respondent placed under receivership, seeking declarations and monetary reliefs arising from non-payment of salaries from October 2015 to February 2016 and the subsequent unnotified closure of the Respondent's business. The Respondent filed a Response admitting non-payment in paragraph 6 but called no evidence; its counsel ceased acting in February 2021. The matter proceeded ex parte evidentially, with the Claimants calling three witnesses and filing written submissions. The Court framed two issues: whether the Claimants were constructively dismissed and whether they were entitled to the reliefs sought. Applying the Coca-Cola v Maria Kagai Ligaga factors and its own decision in Stephen Michuki v East African Safari Air Express Limited, the Court held that five months' non-payment of salaries, coupled with removal of machinery and failure to supply work, constituted a repudiatory, fundamental breach amounting to constructive dismissal. It cautioned that an undefended response does not relieve a claimant of the burden of proof, but found the burden discharged. The Court awarded unpaid salaries for the five months, one month's pay in lieu of notice under sections 35(1) and 36 of the Employment Act, and discretionary compensation under section 49(1)(c) scaled at 3 to 10 months' gross salary depending on length of service, particularised in a schedule for each employee. Compensation for 21 leave days for 2016 was declined as unearned, and severance pay and a certificate of service were not granted. Judgment was entered for the Claimants with interest at court rates and costs, with instructions fee computed on the total award.

Key legal issues

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01

Whether the Claimants were constructively dismissed

Holding

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.

Reasoning

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.

p. 5
02

Whether the Claimants are entitled to the reliefs sought

Holding

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.

Reasoning

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.

p. 5

Legal principles established

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  • 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

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  1. 1.A declaration that the Claimants were unfairly constructively dismissed from employment
  2. 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. 3.Interest on the sums awarded at court rates from the date of Judgment until payment in full
  4. 4.Costs of the suit, with instructions fee to be computed on the basis of the total amount awarded to the Claimants

Authorities

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Legislation

  • Employment ActSection 49 (including 49(1)(c))
  • Employment ActSection 28
  • Employment ActSection 35(1)
  • Employment ActSection 36
  • Civil Procedure RulesOrder 21 Rule 1
  • Constitution of KenyaArticle 159(2)(d)
  • Constitution of KenyaArticle 48
  • Civil Procedure Act (Chapter 21, Laws of Kenya)Section 1B

Cases cited (3)

  • Coca-Cola East & Central Africa Limited vs Maria Ligaga
    [2015] eKLR
  • Joose v- Transnet
    [1995] 5 BLLR 1 [LAC]
  • Stephen Michuki v East African Safari Air Express Limited & another
    [2022] eKLR
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

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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, "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.