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ELRCPartially AllowedELRCA Appeal No. E039 of 2023 (consolidated with ELRCA Appeal No. E045 of 2023)

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

Employment and Labour Relations Court
14 November 2024
6,498 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~26 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court confirmed that pressuring an employee with unreasonable demands and a 24-hour ultimatum counts as unfair constructive dismissal, awarding the worker nearly Sh900,000.

What this practically means

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Executive summary

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This was an appeal and cross-appeal from the judgment of H.M Ng'ang'a (Magistrate) delivered on 9th March 2023, in which the Respondent employee was found to have been constructively dismissed and unfairly terminated, awarded three months' notice pay of Kshs 135,000 and 12 months' compensation of Kshs 540,000, but denied service pay and unpaid leave, and the employers' counterclaim was not addressed. The appellants contended the Respondent voluntarily resigned by a WhatsApp message of 29th October 2020 and had absconded; the Respondent maintained the 1st Appellant made unreasonable demands regarding land registration documents, giving him an ultimatum to procure them within 24 hours or lose his job. The court, exercising first appellate jurisdiction, re-evaluated the evidence and upheld the finding of constructive dismissal, noting the appellants' own witnesses described the Respondent as hardworking and no performance policy or warning letters were produced. The notice pay award was reduced to one month (Kshs 50,908) as no contract established three months' notice. The 12 months' compensation was maintained as justifiably explained. On the cross-appeal, the court awarded 9 years' service pay (Kshs 229,086) since NSSF remissions only began in 2005, and Kshs 152,724 for three years' untaken leave, holding that leave not taken within statutory timelines lapses. The counterclaim for Kshs 77,000 outstanding loan was allowed and set off. The net award was Kshs 895,718. Each party was ordered to bear their own costs. Judgment delivered virtually at Nairobi on 14th November 2024 by Abuodha Nelson Jorum, J.

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 erred in finding that the Respondent was constructively dismissed hence unfairly terminated
  2. 2.Whether the trial learned Magistrate erred in awarding just some of the reliefs sought by the Respondent and further whether the trial Court erred in failing to allow the Appellant's counterclaim

Key legal issues

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01

Whether the Respondent was constructively dismissed

Holding

The finding of constructive dismissal was upheld; the unreasonable demands and 24-hour ultimatum amounted to a repudiation of the employment contract

Reasoning

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.

p. 9
02

Whether the award of three months' salary in lieu of notice was justified

Holding

The award was reduced to one month's salary as no contract proving a three-month notice entitlement was produced

Reasoning

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.

p. 10
03

Whether the maximum 12 months' compensation for unfair termination should stand

Holding

The award was maintained as the trial court gave justifiable reasons based on the Respondent's long service and absence of prior disciplinary record

Reasoning

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.

p. 10
04

Whether the Respondent was entitled to service pay for 1996 to 2005

Holding

The cross-appeal succeeded; the Respondent was awarded 9 years' service pay as NSSF remissions only started in 2005 and there was no alternative gratuity arrangement

Reasoning

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/=.

p. 11
05

Whether the claim for unpaid leave days was statute barred

Holding

Leave not taken within the statutory timelines lapses; only three years' untaken leave was awarded (Kshs 152,724/=)

Reasoning

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/=.

p. 11
06

Whether the trial court erred in disregarding the Appellants' counterclaim

Holding

The counterclaim for the outstanding loan of Kshs 77,000/= was allowed and set off against the award

Reasoning

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/=.

p. 12

Legal principles established

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  • On a first appeal, the court must re-evaluate the evidence and reach its own conclusions while allowing for the trial court's advantage of seeing and hearing witnesses
  • Constructive dismissal occurs where the employer's conduct is a significant breach going to the root of the contract, entitling the employee to treat himself as discharged
  • An employer alleging termination for poor performance must show it had an employment policy or practice for measuring performance
  • A maximum award of 12 months' compensation must be justified on sound judicial principles
  • Leave not taken within the statutory timelines under section 28(4) of the Employment Act lapses and is not a continuing injury
  • An appellate court should not interfere with the exercise of judicial discretion unless it is shown the trial court misdirected itself and thereby arrived at a wrong decision

Court orders

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  1. 1.Substituted the trial court's award of three months' salary in lieu of notice with one month's salary in lieu of notice at Kshs 50,908/=
  2. 2.Awarded payment in lieu of untaken leave for three years at Kshs 152,724/=
  3. 3.Maintained the trial court's award of 12 months' salary as compensation for unfair termination at Kshs 540,000/=
  4. 4.Awarded 9 years' service pay at Kshs 229,086/=
  5. 5.Allowed the Appellants' counterclaim for the outstanding loan of Kshs 77,000/= and set it off against the award
  6. 6.Ordered that each party bear their own costs
  7. 7.Dismissed the ground of appeal challenging the finding of constructive dismissal and the ground challenging the 12 months' compensation

The bench

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

Wrote the judgment

On appeal from
ELRC (Magistrates' Court)
not stated
Jurisdiction invoked
First appellate jurisdiction over the trial court's judgment (Court of Appeal for East Africa standard in Peters v Sunday Post Limited [1958] EA 424 applied)
Consolidated with
ELRCA Appeal No. E045 of 2023 (Memorandum of Cross Appeal dated 31st March, 2023)

Relief refused

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Respondent's claim for compensation for the full 462 unpaid leave days

Leave not taken within the statutory timelines lapses; the court limited the award to three years of untaken leave

p. 11

Appellants' challenge to the finding of constructive dismissal

The demands on the Respondent were unreasonable and the ultimatum amounted to constructive dismissal; ground dismissed

p. 9

Appellants' challenge to the maximum 12 months' compensation

The trial court gave sound reasons for the maximum award

p. 10

Costs

Considering that the appeal and cross-appeal have partially succeeded, each party shall bear their own costs.

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 the upshot the Appeal and the cross appeal partially succeed as follows.
p. 12disposition
Considering that the appeal and cross-appeal have partially succeeded, each party shall bear their own costs.
p. 12costs order
a. One month's salary in lieu of notice….Kshs 50,908/= b. Payment in lieu of untaken leave for three years…Kshs 152,724/= c. 12 months' salary as compensation for unfair termination …. Kshs 540,000/ = d. 9 years' service pay …….Kshs 229,086/=
p. 12final awards
Less appellants' counterclaim set ofi…………..Kshs 77,000/= Total…………..Kshs 895,718/=
p. 12set-off of counterclaim
the appellant advised him to consider his service terminated, this amounted to constructive dismissal and the trial Court was justified to so find.
p. 9constructive dismissal
The wording of subsection 4 is in mandatory terms and therefore the only interpretation it can yield is that the balance of leave not taken as stipulated lapses.
p. 11statutory leave entitlement
this court having found that the Respondent was terminated without notice will award him one month notice at Kshs 50,908/= which was his last salary gross pay.
p. 10notice pay
First, on first appeal, the Court is under a duty to reconsider and re-evaluate the evidence on record and draw its own conclusions;
p. 7duty of first appellate court

Issues in the judgment

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minor

Cross-appeal ground (ii) mislabels the parties, referring to the employee as 'the Appellant' and the employer as 'the Respondents'

minor

Cross-appeal ground (ii) contains an apparent typographical date error for the termination date

minor

Typographical errors appear in quotations of case names and computations (e.g. '12015j', 'set ofi', 'efience')

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, "Njeru & another t/a Macharia -Mwangi & Njeru Advocates v Kimani (Appeal E043 of 2023) [2024] KEELRC 2828 (KLR)", Case Analysis (2024). ELRCA Appeal No. E039 of 2023 (consolidated with ELRCA Appeal No. E045 of 2023). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/2828/eng@2024-11-14

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