Njeru & another t/a Macharia -Mwangi & Njeru Advocates v Kimani (Appeal E043 of 2023) [2024] KEELRC 2828 (KLR)

The court adopted the contractual test from Western Excavating v Sharp as applied by the Court of Appeal in Coca-Cola v Ligaga. The trial court found the timelines imposed on the Respondent to procure land documents were unreasonable and the ultimatum to procure them or consider his employment terminated in less than 24 hours amounted to constructive dismissal. The court agreed and dismissed the appellants' ground. The appellants' poor-performance claim failed because their own witnesses described the Respondent as hardworking and no warning or show-cause letters or performance policy were exhibited.

Under section 35(1)(c) of the Employment Act, payment in lieu of notice, absent a contract to the contrary, is limited to one month. Since the parties did not produce their contract of employment to show three months' notice was contractually payable, and the court found the Respondent was terminated without notice, it awarded one month's notice based on his last gross salary of Kshs 50,908/=, substituting the trial court's award.

The court applied the principle that a maximum award must rest on sound judicial principles and that appellate interference with discretionary awards requires demonstration of misdirection. The trial court justified the maximum compensation on the Respondent's long service without evidence of prior disciplinary cases. The court concurred with those reasons and also held the parties bound by their pleadings, maintaining the Kshs 540,000/= awarded rather than the higher computation.

The court noted it was not disputed that NSSF deductions began in 2005 and there was no alternative gratuity arrangement for the earlier period. The claim, filed in December 2020 after termination in October 2020, fell within the 12-month period under section 90 of the Employment Act as a continuing injury. Service pay was computed at 15 days' pay per complete year of service, being the industry practice, amounting to Kshs 229,086/=.

Applying section 28(4) of the Employment Act, the court held in mandatory terms that the uninterrupted two weeks' leave must be taken within the leave-earning period and the balance within 18 months thereafter, failing which it lapses. Leave is therefore not a continuing injury claimable beyond the three-year limitation period. As no leave was approved for 2018-2020, the Respondent was awarded three years' untaken leave at Kshs 152,724/=.

The court held that termination of employment does not bar the employer from recovering what the employee owes. From the October payslip, the outstanding loan stood at Kshs 77,000/=, which the court allowed, setting it off against the total award, reducing the net sum due to the Respondent to Kshs 895,718/=.