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ELRCPartially AllowedNot stated in judgment (Cause filed 19 August 2022)· [2025] KEELRC 899 (KLR)

Wanyama v United Nations Sacco Society (UN SACCO) Limited (Cause E581 of 2022) [2025] KEELRC 899 (KLR)

Employment and Labour Relations Court
20 March 2025
2,610 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court ruled that even valid business reasons for ending a job are not enough — employers must formally warn and hear the employee first, or pay compensation.

What this practically means

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Executive summary

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The Claimant sued the Respondent Sacco for unfair termination and breach of contract after her employment ended on 1 November 2021 following an organisational restructuring. She contended that a Human Resource Consultant's email of 5 March 2021 confirmed her appointment as Head of Credit Management and that the subsequent re-advertisement of that position was a scheme to give it to another candidate. The Court held that the Consultant had no mandate to make appointments, that the Claimant could not be 're-appointed' to a position she had never held, and that the re-advertisement to correct an omitted qualification fell within the employer's managerial prerogative. On substance, the termination arose from operational reasons under section 45(2)(b)(ii) of the Employment Act, 2007: the Claimant declined the offered Finance Officer position at higher remuneration and did not apply for lower positions. The Court found valid and fair reasons proved, but held the termination procedurally unfair because the Respondent never formally warned the Claimant that her existing contract would terminate upon her refusal, nor invited representations, failing section 45(2)(c). Balancing about 12 years of service against the procedural failure, the Court awarded compensation equivalent to 4 months' gross salary, pay in lieu of notice, accrued leave and leave allowance, totalling Kshs 2,282,692/79 with interest at court rates from the date of judgment. Post-termination claims for salary, travel allowance and pension were rejected, the NSSF claim was referred to the Fund, and the Respondent was directed to issue a certificate of service. The Claimant was awarded costs.

Key legal issues

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01

Whether the Claimant was validly appointed Head of Credit Management

Holding

No; the HR Consultant lacked mandate to appoint and the Claimant never held the position previously

Reasoning

The email of 5 March 2021 came from the Human Resource Consultant whose terms of engagement did not include making appointments, a role reserved to the Board. Re-appointment signifies appointment to a position previously held, and the Claimant had not held the Head of Credit Management position. The Consultant was not called as a witness. The Court answered the question in the negative.

p. 2
02

Whether the re-advertisement of the position was justified

Holding

Yes; it was within the employer's managerial prerogative

Reasoning

The re-advertisement corrected an omission of the Certified Credit Professional qualification in the initial advert. The Court held it could not micromanage the employer, and re-advertising fell within the Respondent's managerial prerogative in pursuit of its restructuring objectives. The Claimant nevertheless participated in the new interview process.

p. 3
03

Whether the termination was procedurally fair

Holding

No; the procedure failed the section 45(2)(c) test

Reasoning

Although the termination was for operational reasons under section 45(2)(b)(ii), the Respondent never formally and unambiguously told the Claimant it intended to terminate her existing contract if she declined the offered Finance Officer position, nor invited her representations. The Court therefore found the termination procedurally unfair despite valid reasons.

p. 4
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Whether there were valid and fair reasons for termination

Holding

Yes; the Claimant declined the offered Finance Officer position

Reasoning

The Claimant's substantive position was Finance Officer; she was offered the same position at higher remuneration under the new structure, declined, and did not apply for lower positions. Since the contract was for personal services, the Respondent could not coerce her to serve. The Court found valid and fair reasons proved for the restructuring-based separation.

p. 6
05

What remedies were due

Holding

4 months' gross salary compensation, pay in lieu of notice, accrued leave and leave allowance; certificate of service

Reasoning

Weighing 12 years of service against the Respondent's failure to follow fair procedure, the Court awarded the equivalent of 4 months' gross salary as compensation under section 49, allowed pay in lieu of notice admitted by the Respondent, and the leave allowances offered. A certificate of service is a statutory entitlement. Post-termination claims (salary, allowances, pension) were rejected.

p. 6

Legal principles established

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  • An employer relying on operational reasons/restructuring must show valid and fair reasons and a fair procedure under section 45 of the Employment Act, 2007
  • Fair procedure in restructuring-based termination requires formal notification of intended termination on operational grounds and an opportunity to make representations
  • The Court will not micromanage an employer's managerial prerogative to re-advertise positions in a restructuring
  • A contract for personal services cannot be specifically enforced against an employee who declines an offer

Court orders

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  1. 1.Declaration that the termination of the Claimant's employment was procedurally unfair
  2. 2.Award of compensation equivalent to 4 months' gross salary of Kshs 1,687,084/-
  3. 3.Award of accrued leave of Kshs 222,117/-
  4. 4.Award of leave allowance of Kshs 27,147/-
  5. 5.Award of pay in lieu of notice of Kshs 346,344/-
  6. 6.Total award of Kshs 2,282,692/79 with interest at court rates from date of judgment
  7. 7.Respondent to issue the Claimant with a certificate of service
  8. 8.Claimant to have costs of the Cause
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over employment disputes (Employment Act, 2007; Employment and Labour Relations Court Act)

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, "Wanyama v United Nations Sacco Society (UN SACCO) Limited (Cause E581 of 2022) [2025] KEELRC 899 (KLR)", Case Analysis (2025). Not stated in judgment (Cause filed 19 August 2022). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/899/eng@2025-03-20

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