Munguti v Ardhi Sacco Society (Cause E529 of 2024) [2025] KEELRC 2630 (KLR)
The bottom line
#A Kenyan employer that suspended an employee unpaid for over five years was ordered to pay a full year's salary for constructive dismissal.
What this practically means
#Executive summary
#Key legal issues
#Whether the indefinite suspension of over five years without pay terminated the employment relationship
The suspension was inordinately long, unreasonable and an unfair labour practice; the employment contract no longer exists
The Claimant was suspended on 5 February 2019 to allow investigations into alleged manipulation of member accounts. The Respondent's own policy limited investigative suspension to 60 days. RW1 admitted investigations were complete but the report was not produced, and criminal charges came only in September 2024, over five years later, with no explanation for the delay. The court held the prolonged unpaid suspension amounted to abandonment of the contract and an unfair labour practice.
Whether the Claimant was constructively dismissed
Yes; the Respondent's conduct - over five years of unpaid suspension, a frozen account and hostile conditions - constituted repudiatory conduct forcing the resignation
Applying the common law doctrine of discharge by breach and the principles in Western Excavating v Sharp and Enid Nkirote Mukire, the court found the Respondent breached fundamental terms (suspension without pay despite HR policy providing for half pay, frozen salary account, no updates on investigations). These conditions made continued service untenable, so the involuntary resignation is treated as a constructive dismissal.
Whether hearing is required before suspension
No; suspension is administrative and preliminary, not a disciplinary outcome requiring a hearing
Following the Court of Appeal in Kwale County Assembly Service Board v Dzila, the court held that hearing an employee before suspension for investigations is not mandatory under the Employment Act. The suspension here was to facilitate investigations, so the failure to give a prior hearing was not unlawful.
Entitlement to remedies
Maximum compensation of 12 months' salary under Section 49(4) of the Employment Act, withheld salaries for February to May 2019, account unfrozen, and certificate of service awarded; notice pay and service pay refused
The constructive dismissal finding entitled the Claimant to compensation under Section 49(4) of the Employment Act. The court found maximum compensation warranted given the prolonged unpaid suspension and frozen account. Unpaid salaries for March, April and May 2019 were admitted and February was not proved paid. Service pay was barred by NSSF and Provident fund deductions, and notice pay failed because there was no express dismissal.
Legal principles established
#- Suspension must be guided by the terms and conditions of employment and must not be whimsical; a suspension lasting more than five years without pay amounts to abandonment of the employment contract and an unfair labour practice
- An employee need not be heard before suspension; suspension is administrative and preliminary to investigation
- Constructive dismissal occurs where the employer's conduct breaches fundamental terms of the contract or renders the work environment unbearable, forcing the employee to terminate the contract
Court orders
#- 1.A declaration that the Claimant was constructively dismissed
- 2.An order restraining the Respondent, its agents, employees or any other person acting under its directions from dealing or in any other manner interfering with the Claimant's account number 20011660700235 at FOSA
- 3.An order that the Claimant's account number 20011660700235 at FOSA be forthwith unblocked and she be allowed to operate the same from the date of the judgment
- 4.An order that the Claimant be issued with a certificate of service within 14 days of the judgment
- 5.12 months' salary as compensation for constructive dismissal at Kshs.1,104,000/=
- 6.Payment of withheld salaries for the months of February, March, April and May 2019 at Kshs.368,000/=
- 7.Respondent to bear the costs of the suit with interest on the compensation and salary awards from the date of judgment until payment in full
- Jurisdiction invoked
- Section 12(3)(viii) of the Employment and Labour Relations Court Act, 2011 (jurisdiction over employment and labour relations disputes); matter transferred from the Magistrates' Court on account of jurisdiction
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Munguti v Ardhi Sacco Society (Cause E529 of 2024) [2025] KEELRC 2630 (KLR)", Case Analysis (2025). ELRC Claim transferred from Magistrates' Court, Further Amended Statement of Claim (original filing 8th February 2019). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/2630/eng@2025-09-29
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.