KENYA BUS SERVICES LIMITED v MELEKSADIK OKUTOI [1999] KECA 93 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed that damages for unlawful dismissal are capped at the notice period, no matter how bad the employer's conduct was.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the High Court Judge's finding that the plaintiff's dismissal was unlawful could be impeached
- 2.Whether general damages for unlawful dismissal should be calculated on the basis of the notice period under the contract of employment rather than an open-ended monthly award
- 3.Whether the plaintiff was entitled to his full pension benefits and from what date interest should run
Key legal issues
#Measure of damages for unlawful dismissal
General damages for unlawful dismissal are limited to the notice period the employer would have been obliged to pay on a lawful contractual termination; the High Court's open-ended monthly award was excessive and was reduced to 3 months' basic salary plus house allowance.
Counsel for the appellant submitted, uncontradicted, that damages in unlawful dismissal cases are calculated on the contractual notice basis. The trial Judge had departed from that principle because the plaintiff had served about 28 years and the dismissal reason was extraneous, but the Court of Appeal held that however reprehensible the employer's conduct, the settled principles governing damages cannot be altered. Absent evidence of the applicable notice, 3 months was held reasonable.
Unlawfulness of the dismissal
The finding that the dismissal was unlawful stood, as the appellant abandoned those grounds and had adduced no evidence to justify the termination.
The plaintiff was dismissed verbally without any explanation, and although it was put to him in cross-examination that he was dismissed for holding an illegal meeting, the defendant called no evidence to rebut his claim or to support its plea of lawful termination. The Court held the trial Judge's finding unimpeachable on that state of the record.
Pension benefits upon unlawful dismissal
The plaintiff was entitled to his full pension benefits, comprising both his and the employer's contributions, with interest at 12% p.a. from 1st September, 1987, the date those benefits should have been paid.
Because the dismissal was unlawful, the employee does not forfeit his pension entitlement. The Court agreed with the trial Judge on entitlement but added interest at 12% per annum running from the date of dismissal, since the benefits ought to have been paid at that time.
Legal principles established
#- In employment cases where unlawful dismissal is proved, damages are calculated on the basis of what the employer would have been obliged to pay had it terminated the contract in accordance with its terms, i.e. the notice period, regardless of how reprehensible the employer's conduct was.
- An employer that pleads lawful termination but leads no evidence to justify the dismissal cannot impeach a finding of unlawful dismissal.
- An employee unlawfully dismissed is entitled to full pension benefits (both own and employer's contributions), with interest running from the date of dismissal.
Court orders
#- 1.The appeal allowed to the extent that the award of general damages is reduced to 3 months' basic salary plus house allowance with interest at 12% p.a. from 1st September, 1987 until payment in full
- 2.The defendant to pay the plaintiff his full pension benefits with interest at 12% p.a. from 1st September, 1987
- 3.The defendant to have half of the taxed costs of this appeal
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Nairobi
- H.C.C.S. No. 1129 of 1991
- Jurisdiction invoked
- First appeal to the Court of Appeal against the judgment and decree of the High Court (no specific constitutional or statutory provision stated in the judgment)
Relief refused
#The appellant's challenge to the finding that the dismissal was unlawful
Grounds 1 and 2 were abandoned and the finding could not be impeached as the defendant led no evidence to rebut the claim
The respondent's open-ended monthly general damages award from the date of dismissal to judgment
Damages for unlawful dismissal must be calculated on the notice-period basis; the conduct of the defendant cannot change the legal principles for calculating damages
Costs
The defendant shall have half of the taxed costs of this appeal.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
The conduct of the defendant may have been reprehensible but this cannot change the well known legal principles upon which damages are calculated in such cases.
We allow this ground of appeal and reduce the damages payable to 3 months' basic salary plus house allowance with interest at 12% p.a. from 1st September, 1987 until payment in full.
To the extent we have stated above the appeal succeeds and is allowed. The defendant shall have half of the taxed costs of this appeal. Orders accordingly.
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (1)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Egala & 7 others v Attorney General (Civil Appeal 178 of 2020) [2026] KECA 1649 (KLR)[2026] KECA 1649 (KLR)31 Jul 2026
Cite this brief
#Cite this brief
Caselaw, "KENYA BUS SERVICES LIMITED v MELEKSADIK OKUTOI [1999] KECA 93 (KLR)", Case Analysis (1999). Civil Appeal No. 145 of 1998. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1999/93/eng@1999-01-22
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.