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ELRCDismissedAppeal No E173 of 2021· [2025] KEELRC 1462 (KLR)

Livoi v Sunpar Pharmaceuticals Limited (Appeal E173 of 2021) [2025] KEELRC 1462 (KLR)

Employment and Labour Relations Court
15 May 2025
MNMathews Nduma
1,916 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~8 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court confirmed that probationary employees can be terminated without unfair-termination remedies, and signed full-and-final settlement agreements bind parties.

What this practically means

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Executive summary

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This is a first appeal to the Employment and Labour Relations Court at Nairobi against the judgment of Principal Magistrate E. Wanjala, who had found that the Appellant's probationary services were terminated unfairly and unlawfully but dismissed his suit because the parties had executed a full and final settlement agreement, with each party bearing its own costs. The trial court nonetheless awarded leave pay, a certificate of service and two months' salary as compensation before holding that the settlement barred any remedy. On appeal, the court framed two issues: whether the Respondent was obliged to comply with sections 36, 41, 43 and 45 of the Employment Act in terminating a probationary contract, and whether the parties were bound by the settlement agreement. Applying section 42(1) and (2) of the Employment Act and the decision in Danish Jalango v Amicabre Travel Services, the court held that the law of unfair termination does not apply to probationary contracts; the employer was only obliged to give contractual notice or pay in lieu and pay terminal dues. The trial magistrate therefore erred in finding the termination unlawful. On the second issue, following Felix Mutie Musango v Tin Con Manufacturers, the court held the settlement agreement of 31/7/2019, consummated by payment of Kshs. 133,641.00, was a binding contract unimpeached by any evidence of mistake, fraud, misrepresentation or coercion. The appeal was dismissed in its entirety, with each party bearing its own costs of the trial and appeal.

Key legal issues

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01

Whether statutory procedural and substantive fairness requirements apply to termination of a probationary contract

Holding

They do not. A probationary employee is only entitled to contractual notice or payment in lieu, and the law of unfair termination does not apply to probationary contracts.

Reasoning

Section 42(1) of the Employment Act expressly excludes the application of section 41 to probationary contracts. Relying on Danish Jalango v Amicabre Travel Services, the court held there is no obligation on employers to hear probationary employees or give valid and fair reasons under sections 43 and 45. The termination of a probationary contract is strictly regulated by the terms of the contract; the only questions are whether notice was given or paid for, and whether contractual terms were observed.

p. 4
02

Whether the parties were bound by the full and final settlement agreement dated 31/7/2019

Holding

Yes. The agreement, consummated by payment of Kshs. 133,641.00, discharged the Respondent from further liability, and the Appellant led no evidence vitiating it.

Reasoning

The Appellant signed the settlement letter on 2/8/2019 and was paid salary, notice pay and car mileage totalling Kshs. 133,641.00 in full and final settlement. He adduced no evidence of mutual mistake, fraud, misrepresentation or coercion/undue influence. Following Felix Mutie Musango v Tin Con Manufacturers, the court held such a settlement is a binding contract the court cannot interfere with, so the trial magistrate was wrong to award two months' salary as compensation notwithstanding the settlement.

p. 5

Legal principles established

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  • Sections 41, 43 and 45 of the Employment Act do not apply to termination of a probationary contract; the employer need only give contractual notice or pay in lieu and pay terminal dues
  • A full and final settlement agreement signed by the parties is a binding contract which the court cannot interfere with unless vitiated by grounds such as mistake, fraud, misrepresentation or coercion/undue influence

Court orders

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  1. 1.The appeal is dismissed in its entirety
  2. 2.The court abides by the trial court's decision that each party bear their own costs of the trial and this appeal

Authorities

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Legislation

  • Employment Act, 2007section 41
  • Employment Act, 2007section 42(1) and (2)
  • Employment Act, 2007section 43
  • Employment Act, 2007section 45(2)(5)(b)(i)
  • Employment Act, 2007section 49(1)(2) and (4)
  • Employment Act, 2007section 36
  • Constitution of Kenya, 2010Article 41

Cases cited (3)

  • Selle v Associated Motor Boat Company Ltd
    1968 EA
  • Danish Jalango & another v Amicabre Travel Services Limited
    [2014] eKLR
  • Felix Mutie Musango v Tin Con Manufacturers Limited
    [2020] eKLR
On appeal from
Principal Magistrate's Court
Not stated
Jurisdiction invoked
First appellate jurisdiction of the Employment and Labour Relations Court over the magistrate's court (Employment and Labour Relations Court Act); appeal against judgment of Principal Magistrate E. Wanjala

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, "Livoi v Sunpar Pharmaceuticals Limited (Appeal E173 of 2021) [2025] KEELRC 1462 (KLR)", Case Analysis (2025). Appeal No E173 of 2021. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/1462/eng@2025-05-15

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