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ELRCPartially AllowedCause No E021 of 2022· [2024] KEELRC 2641 (KLR)

Kagai v Kenga Equatorial Hotels Limited t/a Mombasa Continental Resort (Cause E021 of 2022) [2024] KEELRC 2641 (KLR)

Employment and Labour Relations Court
25 October 2024
ANAGNES KITIKU NZEI
3,812 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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What this practically means

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Executive summary

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The Claimant, employed as Purchasing Manager by the Respondent at a gross monthly salary of Kshs.250,000/= from 14th September 2021, was terminated by letter dated 21st February 2022 which invoked Clause 18 of the contract, paid one month's salary in lieu of notice, and gave no reason. He sued for 12 months' compensation, costs, interest and a certificate of service, alleging a hostile campaign by directors and managers culminating in accusations of fraudulent procurement of hotel linen. The Respondent denied the claim, asserting freedom of enterprise, an alleged character defect, breach of Clause 5 of the contract, and reliance on the rule in Nabro Properties Limited v Sky Structures Ltd. The court framed two issues: whether the termination was unfair, and whether the reliefs were merited. Applying Walter Ogal Anuro, Kenfreight (E.A) Limited and Janet Nyandiko, the court held that the termination letter's silence on reasons defeated substantive justification under Sections 43 and 45(2)(a), and that reasons could not be introduced at trial. Procedurally, the Respondent failed to comply with Section 41; no hearing or representations were demonstrated. The court found the termination procedurally and substantively unfair. On relief, although the Claimant served only five months, the court adopted the decision in Samuel G. Momanyi (as adopted by Ndolo J in Benson Muriithi Kagai) declaring Section 45(3)'s 13-month threshold unconstitutional, and awarded five months' salary, Kshs.1,250,000/=, subject to statutory deductions, plus costs, interest and a certificate of service within thirty days. The 12-month compensation claim thus only partially succeeded.

Key legal issues

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01

Substantive fairness of the termination

Holding

The termination was substantively unfair because the termination letter stated no reason, and the Respondent could not raise new reasons (breach of Clause 5, character defect) at trial

Reasoning

Under Section 43 of the Employment Act, the employer must prove the reason for termination; under Section 45(2)(a) termination is unfair if no valid reason is proved. The termination letter invoked Clause 18 and paid one month's salary in lieu of notice but gave no reason. Reasons advanced at trial (unauthorised commitment of Kshs.500,000/=, incompatibility) came too late and were contradicted by RW-1's admission that the Purchase Orders and payment documents were appropriately approved and signed.

p. 6
02

Procedural fairness of the termination

Holding

The termination was procedurally unfair as the Respondent did not comply with Section 41 of the Employment Act

Reasoning

Section 41 mandatorily requires the employer to explain the reasons for contemplated termination to the employee in a language he understands, in the presence of a fellow employee or union representative, and to hear and consider representations. The Respondent demonstrated no hearing, no communication of reasons prior to termination, and exhibited no proceedings of any hearing, hence failing the justice and equity standard in Section 45(4).

p. 7
03

Entitlement to compensation despite employment of less than 13 months

Holding

The 13-month threshold in Section 45(3) does not bar the claim, having been declared unconstitutional, and 5 months' salary was awarded

Reasoning

The Claimant worked only five months. Following the High Court decision in Samuel G. Momanyi (adopted by Ndolo J in Benson Muriithi Kagai), Section 45(3)'s 13-month minimum was declared unconstitutional, so the Claimant could complain of unfair termination. Balancing the short employment period and the manner of termination, the court exercised discretion under Section 49 to award five months' gross salary of Kshs.250,000/=.

p. 8

Legal principles established

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  • Both substantive justification and procedural fairness are required for a fair termination of employment
  • The reasons for termination must be stated in the termination letter; an employer cannot invent reasons after a claim is filed
  • Section 45(3) of the Employment Act's 13-month minimum employment requirement was declared unconstitutional

Court orders

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  1. 1.Award of compensation equivalent to five (5) months' salary for unfair termination, being Kshs.1,250,000/=, subject to statutory deductions pursuant to Section 49(2) of the Employment Act
  2. 2.The Claimant is awarded costs of the suit and interest at court rates from the date of the Judgment
  3. 3.The Respondent shall issue the Claimant with a Certificate of Service pursuant to Section 51(1) of the Employment Act within thirty days of the Judgment

Authorities

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Legislation

  • Constitution of Kenya, 2010Article 19(3)(b)
  • Employment Act, 2007Section 41
  • Employment Act, 2007Section 42(1)
  • Employment Act, 2007Section 43
  • Employment Act, 2007Section 44(3) and (4)
  • Employment Act, 2007Section 45(2)(a), (2)(c), (3), (4)(b)
  • Employment Act, 2007Section 49(2)
  • Employment Act, 2007Section 51(1)

Cases cited (7)

  • Walter Ogal Anuro – vs – Teachers Service Commission
    (2013) eKLR
  • Kenfreight (E.A) Limited – vs – Benson K. Nguti
    (2016) eKLR
  • Janet Nyandiko – vs – Kenya Commercial Bank Limited
    (2017) eKLR
  • Benson Muriithi Kagai – vs – Kenga Equatorial Hotels Limited t/a Mombasa Continental Resort
    (2018) eKLR
  • Samuel G. Momanyi – vs – Attorney General & Another
    (2012) eKLR
  • Nabro Properties Limited – vs – Sky Structures Ltd
    (2002)
  • Mombasa Employment and Labour Relations Court Cause No. 635 of 2017 (prior judgment involving the same parties)
Jurisdiction invoked
Original employment and labour relations jurisdiction under the Employment Act, 2007 (first-instance claim for unfair termination)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (2)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Kagai v Kenga Equatorial Hotels Limited t/a Mombasa Continental Resort (Cause E021 of 2022) [2024] KEELRC 2641 (KLR)", Case Analysis (2024). Cause No E021 of 2022. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/2641/eng@2024-10-25

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