Arivalagan v Kenindia Assurance Company Ltd

Respondent assumed full control over the secondment. In this regard, he asserts that the Respondent paid his salary and other employment benefits, as its employee. 4. According to the Claimant, he reported for duty on 23 rd July 2021 and, owing to his exemplary performance, his remuneration was reviewed upwards with effect from 22nd July 2022. 5. The Claimant further avers that on 2nd March 2023, the Respondent's Board of Directors resolved to terminate his engagement and repatriate him to United India Insurance Co. Ltd without any lawful cause. He contends that the termination was both substantively and procedurally unfair, as it did not comply with the requirements of the Employment Act and was effected without the contractual six (6) months' notice. 6. Consequently, the Claimant seeks Kshs. 12,629,437.67 comprising unpaid salary for the period from 1st April 2023 to 7th July 2023, bonus pay, annual salary increment, service pay, and damages for unlawful termination of employment. He also seeks a certificate of service, costs of the suit, and interest on the sums claimed. 7. The Respondent opposed the Claim through its Reply dated 11th November 2023. The Respondent avers that its shareholders comprise Indian insurance companies, namely New India Assurance Company Limited, United India 2

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Insurance Company Limited, National Insurance Company Limited, and Oriental Insurance Company Limited, which collectively constitute the General Insurers' (Public Sector) Association of India (GIPSA). 8. The Respondent states that the positions of Managing Director, General Manager (Finance), General Manager (Operations) and General Manager (Life) are reserved for officers deputed from its Indian shareholder companies through a selection process conducted by GIPSA. 9. The Respondent further avers that in January 2021, it advertised the position of General Manager (Operations) on deputation, which was open to employees of its Indian shareholder companies. That being an employee of United India Insurance Company Limited, the Claimant applied for the position on 13th January 2021. 10.According to the Respondent, GIPSA, by a letter dated 5th March 2021, selected the Claimant for appointment as General Manager (Operations) on deputation to the Respondent. 11.The Respondent maintains that the Claimant's engagement was on a secondment basis for a period of two (2) years and that the work permit issued on his behalf was subject to both the duration of the secondment and the terms of the secondment agreement. 3

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12.It is the Respondent's further case that control over the Claimant's employment was never transferred from United India Insurance Company Limited to the Respondent during the period of the secondment. 13.Consequently, the Respondent contends that the Claimant remained, and continues to remain, an employee of United India Insurance Company Limited. 14.The Respondent further avers that by a letter dated 14 th February 2023, United India Insurance Company Limited recalled the Claimant from his secondment and redeployed him to its Regional Office in Nagpur to serve as Regional Manager. 15.The Respondent states that, pursuant to the said recall, its Executive Committee Board, at its meeting held on 2 nd March 2023, approved the Claimant's release to his parent company on or before 31st March 2023, and that this decision was duly communicated to him. 16.The Respondent therefore denies having terminated the Claimant's employment, contending that he was merely released upon recall by his parent employer. Accordingly, the Respondent asserts that the Claim is devoid of merit and urges the Court to dismiss it with costs. 4

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17.At the hearing held on 22nd January 2026, both parties adduced oral evidence in support of their respective cases. Claimant’s Case 18.The Claimant who testified in support of his case as CW1, sought to adopt his witness statement as well as the list and bundle of documents filed alongside his Statement of Claim to constitute his evidence in chief. 19.The Claimant testified that, prior to his engagement with the Respondent, he was employed by United India Insurance Company Limited, an Indian company and one of the Respondent's shareholders. 20.He further testified that under the terms of his contract, either party could terminate the engagement at any time by giving six (6) months' notice, which period could be waived or reduced by mutual agreement. He added that, should the engagement cease before the expiry of the contractual term, the Respondent was obliged to pay him his accrued benefits on a proportionate basis. 21.The Claimant asserted that he discharged his duties diligently and made significant contributions to the Respondent's operations. In particular, he testified that he streamlined the Respondent's underwriting, credit control, refund and claims management processes; identified and eliminated lossmaking insured and broker accounts; regularly analysed branch 5

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performance to enhance operational efficiency; and reconciled and streamlined reinsurance accounts, which he claimed saved the Respondent between Kshs. 200 million and Kshs. 300 million. 22.He further testified that, in the course of his employment, he uncovered highprofile fraudulent practices involving senior members of the Respondent's management. According to the Claimant, this led the Respondent to hound him out of office. 23.The Claimant testified that on 2nd March 2023, and contrary to Clause 5 of his contract, the Respondent's Board resolved to terminate his engagement and repatriate him to United India Insurance Company Limited without any lawful justification. He stated that the decision was communicated to him on the same day and that, despite his protests, he was relieved of his duties on 31st March 2023. He further testified that he was required to vacate his office, his personal belongings were removed and placed in the corridor, and his office was thereafter locked. 24.The Claimant stated that he unsuccessfully sought to challenge the decision by lodging a peaceful protest at the Managing Director's office. He added that his subsequent demands for compensation also went unanswered. 6

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25.It was the Claimant's case that his employment was terminated without a valid or lawful reason and in breach of his contract, as he was only given 30 days' notice instead of the stipulated six (6) months' notice. 26.He further testified that the six (6) months' notice issued by United India Insurance Company Limited was intended to take effect upon the expiry of the notice period, namely on 14th July 2023, or upon the expiry of his work permit. 27.The Claimant maintained that he had not committed any employment offence under the Employment Act. He contended that, had there been any such allegation, the Respondent ought to have disclosed the particulars thereof and afforded him an opportunity to respond before taking adverse action. 28.The Claimant maintained that his dismissal was disguised as a repatriation to India. In his view, this was spiteful, discriminatory, and a predetermined intention to remove him from office. He attributed this to hostility from the Respondent's Managing Director (Life) and other senior officers, whom he alleged were aggrieved by his exposure of unethical and fraudulent practices in which they were implicated. Respondent’s Case 7

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29.The Respondent called oral evidence through its Chief Operating Officer, Irene Anyango Owiti, who testified as RW1. Similarly, Ms. Owiti adopted her witness statement and the list and bundle of documents filed on behalf of the Respondent to constitute her evidence in chief. 30.RW1 testified that the Claimant's secondment was governed not only by the letter of secondment but also by the terms and conditions applicable to deputation outside India as prescribed by his parent employer, United India Insurance Company Limited. 31.She further acknowledged that the secondment could be brought to an end by either party upon giving six (6) months' notice, which period could be waived or reduced by mutual agreement. She added that, where the secondment ceased before the expiry of its stipulated term, the Claimant was entitled to payment of his accrued benefits on a proportionate basis. 32.RW1 confirmed that, in recognition of the Claimant's satisfactory performance, the Respondent reviewed his remuneration with effect from 1 st January 2022. 33.RW1 further testified that by a letter dated 14 th February 2023, which was copied to the Respondent, United India Insurance Company Limited recalled 8

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the Claimant from his secondment and directed him to report to its Regional Office in Nagpur, India, to serve as Regional Manager. 34.According to RW1, the Claimant responded to the recall by a letter dated 23rd February 2023, requesting his parent employer either to transfer him as Regional Manager from Nagpur to the Regional Office in Coimbatore or, alternatively, to deploy him as Chief Manager at its Head Office in India. 35.RW1 further testified that, following receipt of the recall letter, the Respondent's Executive Committee Board, at its meeting held on 2nd March 2023, approved the Claimant's release from the Respondent to his parent employer as Regional Manager, and that this decision was communicated to the Claimant on the same date. 36.It was RW1's evidence that the Respondent afforded the Claimant sufficient time to prepare for his repatriation and, in accordance with the terms of the secondment agreement, made the necessary arrangements for his return by: a) Ensuring a smooth transition and handover process between the Claimant and the various departments in the Respondent company; b) Paying for all overseas travelling expenses for the Claimant and his family, such as air ticket, business class, shipping costs from Kenya to the port of Chennai, India; and 9

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c) Paying all the necessary benefits accrued by the Claimant on a proportionate basis, which formed part of his final dues as per clause 5 of the secondment contract. 37.RW1 further testified that the Claimant deliberately misconstrued his recall by his parent employer as a termination of his secondment by the Respondent, whereas, in the Respondent's view, he had merely been repatriated in accordance with the terms of the secondment arrangement. 38.She further stated that, arising from this grievance, the Claimant lodged complaints and made serious allegations against the Respondent's management before the Insurance Regulatory Authority, the High Commission of India in Kenya, and the Federation of Kenya Employers, thereby injuring the Respondent’s reputation. 39.RW1 maintained that the Respondent did not terminate the Claimant's employment. She testified that the Claimant's last day at work with the Respondent was 31st March 2023, following which he resumed employment with his parent employer, United India Insurance Company Limited, as Regional Manager in Chennai, India, with effect from April 2023, a position he continues to hold. Submissions 10

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40.On the part of the Claimant, it was submitted that he was an employee of the Respondent within the meaning of the Employment Act, as he worked exclusively at the Respondent's offices, reported to and was supervised by the Respondent's management, and had his salary, allowances, benefits, work permit and regulatory clearance processed and paid for by the Respondent. It was further submitted that the Respondent reviewed the Claimant's salary upwards in July 2022. 41.Referencing the case of Everret Aviation Ltd v Kenya Revenue Authority [2013] eKLR, the Claimant posited that the existence of an employment relationship is not determined by the label placed by the parties, but by the reality of the relationship. 42.In the same vein, the Claimant submitted that the Respondent exercised full operational and managerial control over him. He maintained that he was therefore an employee of the Respondent for purposes of the Employment Act and that the label “secondment” does not negate the existence of an employment relationship. 43.It was further submitted by the Claimant that the Respondent did not issue him with a cessation notice under Clause 5 of the secondment agreement, nor did it waive or reduce the notice period by mutual consent. The Claimant 11

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contended that the Respondent relied on a repatriation letter dated the 14 th February 2023, issued by a third party. 44.It was the Claimant’s position that his removal from office constituted termination. In support of this position, the Claimant placed reliance on the case of Elizabeth Washeke & 62 others v Airtel Networks (K) Ltd & another [2013] KEELRC 572 (KLR). 45.Relying on the decision in Walter Ogal Anuro v Teachers Service Commission [2013] eKLR, the Claimant submitted that the Respondent's actions in removing him from office and requiring him to vacate the workplace amounted, in substance, to a termination of his employment, thereby attracting the procedural and substantive safeguards provided under the Employment Act. 46.The Claimant further argued that once termination occurred, the Respondent was under a mandatory obligation to comply with procedural requirements, including issuance of notice, affording him an opportunity to be heard, and adherencе to the contractual termination mechanism provided under Clause 5 of the Secondment Agreement. 47.In this regard, the Claimant submitted that the Respondent neither subjected him to a disciplinary or consultative process nor issued him with a notice of 12

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termination. Instead, it relied on an administrative process described as “repatriation” to justify his removal from service. 48.The Claimant maintained that the failure to follow statutory and contractual due process by the Respondent rendered the termination procedurally unfair and unlawful within the meaning of Sections 41 and 45 of the Employment Act. 49.On the other hand, the Respondent submitted that the Claimant, though seconded to the Respondent’s company, was still an employee of the United India Insurance Co. Ltd being the Primary Employer. To buttress this position, reliance was placed on the cases of Nahashon Cheruiyot Ngeno v Strengthening of Mathematics & Science Education Project & another [2015] KEELRC 1440 (KLR) and SMW v DHL Kenya (Cause 698 of 2019) [2023] KEELRC 1468 (KLR) (15 June 2023). 50.The Respondent further submitted that being the host Employer, it did not have the right to terminate the Claimant’s employment either. The Respondent maintained that the right to terminate the Claimant’s employment in the Secondment arrangement solely rested upon the Parent company being United India Insurance Co. Ltd, which was the Claimant’s Primary Employer. 13

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51.It was the Respondent's submission that the Claimant had failed to produce any documentary evidence showing that the Respondent terminated his employment as alleged. 52.The Respondent further submitted that, in the absence of a letter of termination or any other evidence demonstrating that it terminated the Claimant's employment, the Claimant had failed to discharge the burden of proving his claim for wrongful termination. Analysis and Determination 53.Flowing from the pleadings, the evidence on record and the rival submissions, the Court finds that the following issues fall for determination: a) Whether the Claimant's employment was terminated by the Respondent; b) Subject to the finding in (a), whether the termination was unfair and unlawful; and c) Whether the Claimant is entitled to the reliefs sought. Termination of employment? 54.The parties have taken opposing positions on this issue. While the Claimant contends that his employment was terminated by the Respondent, the Respondent maintains that no such termination occurred. 14

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55.It is common ground that the Claimant was engaged by the Respondent as its General Manager (Operations) pursuant to a secondment agreement dated 14th June 2021. 56.The Claimant's case is that, upon his secondment, control over his employment was vested in the Respondent, which paid his salary and other employment benefits as its employee. The Respondent disputes this contention, maintaining that the Claimant remained at all material times an employee of his parent employer, the United India Insurance Company Limited. 57.In light of the foregoing rival positions, the preliminary question that must be determined by the Court is the legal effect of the secondment arrangement on the employment relationship between the Claimant and his principal employer, United India Insurance Company Limited. 58.On the nature of a secondment arrangement, this Court adopts the reasoning in SMW v DHL Kenya (Cause 698 of 2019) [2023] KEELRC 1468 (KLR), where the Court stated as follows: “The concept of secondment in employment law is not novel. It arises when an employer temporarily releases an employee to work for another employer with the understanding that the employee will resume 15

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his services with the original employer upon the lapse of the term of the temporary transfer. In effect, the contract of employment between the original employer and employee is not terminated by reason of the temporary assignment of the employee to the new employer…On the one hand, the original employer stands in the position of the legal employer. On the other hand, the secondary employer stands in the position of the host or economic employer. Whilst the economic employer enjoys the actual services of the employee during the currency of secondment, the primary employer remains the legal employer of the employee with the consequence that the employment relation (sic) between the employee and the primary employer remains alive.” 59.In the present case, it is not disputed that the Claimant's appointment as the Respondent's General Manager (Operations) followed a competitive process in which he applied, was interviewed, and was subsequently selected for deputation. 60.It is equally common ground that, at the time of his application, the Claimant was employed by United India Insurance Company Limited as a Regional Manager in India. The record further indicates that his application for the position with the Respondent was forwarded by United India Insurance 16

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Company Limited to the General Insurers' (Public Sector) Association of India (GIPSA). 61.From the evidence on record, the Claimant's secondment arose from the shareholding arrangement between the Respondent and its Indian shareholder companies, including United India Insurance Company Limited, under the GIPSA. 62.Following the secondment, the parties subsequently executed a secondment agreement setting out the terms and conditions governing the Claimant's engagement with the Respondent, including his remuneration and other benefits during the period of the secondment. 63.It is notable that the agreement expressly provided that the Claimant's secondment would remain subject to such other terms governing deputation for service outside India as might be prescribed by his parent employer, United India Insurance Company Limited. 64.Applying the reasoning in the case of SMW v DHL Kenya (supra), the Court is persuaded that although the Claimant rendered services to the Respondent during the period of the secondment and was remunerated accordingly, United India Insurance Company Limited remained his primary and legal employer, while the Respondent assumed the role of the host or economic employer. Accordingly, the secondment did not extinguish or otherwise alter 17

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the subsisting employment relationship between the Claimant and his parent employer. 65.Having reached that conclusion, the next issue for consideration is whether the Respondent terminated the Claimant's employment. 66.It is common ground that the secondment came to an end following a letter dated 14th February 2023 from United India Insurance Company Limited, copied to the Respondent, recalling the Claimant to India and posting him to its Regional Office in Nagpur to serve as Regional Manager. To this end, the Claimant was directed to assume that position upon being released by the Respondent. 67.The record further shows that, at its meeting held on 2 nd March 2023, the Respondent's Executive Committee Board took note of the recall by the Claimant’s parent employer and approved his release on or before 31st March 2023. 68.The foregoing sequence of events leaves little doubt that it was United India Insurance Company Limited, in its capacity as the Claimant's primary employer, that brought the secondment to an end by recalling him to India. 18

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69.Consequently, since the recall originated from the Claimant's primary employer and not the Respondent, the Court is unable to find that the Respondent terminated the Claimant's employment. 70.This conclusion accords with the holding in SMW v DHL Kenya (supra), where the Court observed that the primary employer remains the legal employer of a seconded employee and is the only entity with the authority to terminate the underlying employment relationship, while the host employer lacks such authority. 71.The Court further notes that, in his letter dated 23 rd February 2023, the Claimant acknowledged the authority of United India Insurance Company Limited over his employment by expressing his willingness to accept the transfer. His only request was that he be posted to Coimbatore as Regional Manager or to the Head Office as Chief Manager instead of being deployed to Nagpur as he was nearing retirement and he intended to settle in Coimbatore. 72.What’s more, under Section 47(5) of the Employment Act, the burden lay on the Claimant to establish that an unfair termination or wrongful dismissal had occurred before the Respondent could be called upon to justify the termination. 19

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73.In the Court's view, the Claimant failed to discharge that evidential burden. The material before the Court does not establish that the Respondent terminated his employment. 74.Having so found, the question whether the termination was fair or lawful does not arise for determination. 75.The Court now turns to consider whether the Claimant is entitled to any of the reliefs sought. Reliefs? 76.Having found that the Respondent did not terminate the Claimant's employment, the claim for compensation for unfair termination cannot be sustained and is accordingly declined. 77.As regards the claim for unpaid salary for the period between 1 st April 2023 and 7th July 2023, the evidence on record establishes that, upon his release by the Respondent, the Claimant resumed duty with his principal employer, United India Insurance Company Limited. 20

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78.Indeed, during cross-examination, the Claimant admitted that he resumed receiving his salary from his principal employer with effect from 23 rd April 2023. In the circumstances, the Respondent cannot be held liable to pay the Claimant salary for a period during which he neither rendered services to it nor remained under the secondment arrangement. To hold otherwise would be unconscionable and would result in unjust enrichment. 79.The Claimant further seeks payment of Kshs. 371,212.50, being a bonus allegedly paid to all the Respondent's employees for the year 2022. However, the Court notes that payment of a bonus was not provided for under the secondment agreement. Further, bonus payments are generally discretionary and are ordinarily dependent on factors such as an employer's financial performance and internal policy. In addition, the Claimant did not adduce evidence to substantiate his assertion that the Respondent paid a bonus to all its employees for the year 2022. Accordingly, this claim is declined. 80.The Claimant further claims Kshs. 222,426.00 as salary increment for the period between 1st January 2023 and 31st March 2023. Again, the Court notes that an annual salary increment was not an express term of the secondment agreement. The evidence shows that the Claimant's salary was reviewed with effect from 1st January 2022 on account of his performance during the 21

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preceding year. The Court therefore finds that the increment was performance-based and not a contractual entitlement. 81.In the Court's view, the grant of a salary increment in 2022 did not create a contractual obligation on the Respondent to award similar annual increments thereafter. Consequently, this claim equally fails. 82.The claim for service pay is also declined. The Claimant's pay slips confirm that statutory contributions were made to the National Social Security Fund (NSSF) and that he was also a member of the Respondent's pension scheme. He therefore falls within the exceptions set out under Section 35(6) of the Employment Act and is consequently not entitled to service pay. Orders 83.In the final analysis, the Claim fails and is hereby dismissed with an order that each party shall bear its own costs. DATED, SIGNED and DELIVERED at NYERI this 31ST DAY of JULY 2026. ……………………………… STELLA RUTTO JUDGE In the presence of: 22

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For the Claimant Mr. Akumu For the Respondent Ms. Wamuyu Court Assistant Ndati ORDER In view of the declaration of measures restricting court operations due to the COVID-19 pandemic and in light of the directions issued by His Lordship, the Chief Justice on 15th March 2020 and subsequent directions of 21st April 2020 that judgments and rulings shall be delivered through video conferencing or via email. They have waived compliance with Order 21 Rule 1 of the Civil Procedure Rules, which requires that all judgments and rulings be pronounced in open court. In permitting this course, this court had been guided by Article 159(2)(d) of the Constitution which requires the court to eschew undue technicalities in delivering justice, the right of access to justice guaranteed to every person under Article 48 of the Constitution and the provisions of Section 1B of the Civil Procedure Act (Chapter 21 of the Laws of Kenya) which impose on this court the duty of the court, inter alia, to use suitable technology to enhance the overriding objective which is to facilitate just, expeditious, proportionate and affordable resolution of civil disputes. STELLA RUTTO JUDGE 23

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