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Court of AppealDismissedCivil Appeal No. 125 of 2011

Oshwal Academy (Nairobi) & another v Indu Vishwanath [2015] KECA 120 (KLR)

Court of Appeal
18 December 2015
3,025 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Court of Appeal confirmed that a teacher's dismissal was a disguised redundancy, awarding her severance and notice pay worth nearly Shs.1.5 million.

What this practically means

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Executive summary

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This was an appeal by Oshwal Academy (Nairobi) and Oshwal Education and Relief Board against an award of the Industrial Court of Kenya (now the Employment and Labour Relations Court) in favour of Indu Vishwanath, a chemistry teacher and head of department who had served the appellants and their predecessors for about 23 years. The trial court had found that the employment expired by effluxion of time under the fixed term contract commencing 1st September 2006, but that the appellants engaged in unfair labour practice through sporadic and inconsistent use of contracts, that the termination was a disguised redundancy, and that the respondent had a legitimate expectation of continuity; it awarded severance pay of Shs.1,270,356 for 23 years of service. The Court of Appeal, exercising its first-appeal powers including re-appraisal of evidence, condensed the issues into whether the change from permanent to fixed term contract amounted to unfair labour practice, whether the termination amounted to redundancy, and what remedies were due. It held that parties may amend contracts and that unfairness must be inferred from particular circumstances rather than generalized; that non-renewal of a fixed term contract requires no reasons beyond effluxion of time unless the contract imposes such an obligation, but the required notice timelines must be honoured; and that once an employer alleges reasons of conduct, capacity or compatibility, section 43(1) of the Employment Act requires it to prove them and to follow the mandatory process, failing which the termination is unfair. The court declined to disturb the trial judge's factual finding of redundancy and awarded the additional notice pay of Shs.224,000 the trial judge had found but omitted to award. The appeal was dismissed with costs to the respondent against the appellants.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether change of a permanent employment contract to a fixed term contract amounts to illegal and unfair labour practice
  2. 2.Whether the termination of employment contract amounted to redundancy
  3. 3.Whether the respondent is entitled to any remedies

Key legal issues

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01

Whether change of a permanent employment contract to a fixed term contract amounts to illegal and unfair labour practice

Holding

The court held that parties are at liberty to amend contracts by executing new ones, and unfairness must be inferred from the particular circumstances of termination, not from the change of contract type itself

Reasoning

Section 2 of the Employment Act recognises both permanent and fixed term contracts. Parties may amend by executing new contracts. The dispute before the court arose from the termination of employment, not from the change of contract type. Unfairness is context-specific and the employee's remedy lies in disputing the termination under section 35(4) of the Act.

p. 3
02

Whether the termination of employment amounted to redundancy

Holding

The court upheld the trial judge's inference of redundancy, finding the termination involuntary and at the initiative of the employer, and that the appellants proved no valid reason based on conduct, capacity or compatibility

Reasoning

The trial judge, having heard the witnesses, chose the respondent's version inferring redundancy; the appellate court would not disturb that finding. The short notice, the sporadic and inconsistent contracts, and the appellants' failure to prove reasons alleged in the supplementary defence supported the inference of disguised redundancy. Once reasons were alleged, section 43(1) obliged the employer to prove them; failing which the termination is unfair under section 45. The mandatory process under sections 40 and 41 was not followed.

p. 5
03

Whether the respondent is entitled to any remedies

Holding

As the claim was founded on redundancy, the respondent was entitled to severance pay under section 40(1)(g) of the Employment Act and to notice pay, which the trial judge found but omitted to award

Reasoning

Parties are bound by their pleadings; the claim having been founded on redundancy rather than unfair or wrongful termination, severance pay under section 40(1)(g) was the appropriate award. Notice pay was proved and the trial judge's finding entitled the respondent to two months' pay in lieu of notice under clause 18 of the contract, which the Court of Appeal added.

p. 5

Legal principles established

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  • Non-renewal of a fixed term contract requires no reasons beyond effluxion of time unless the contract itself imposes such an obligation, and the decision not to renew must be communicated within the timelines required by the notice clause
  • Once an employer alleges reasons of conduct, capacity or compatibility for termination, it must prove those reasons under section 43(1) of the Employment Act and take the employee through the mandatory process; failure renders the termination unfair under section 45
  • An appellate court will be reluctant to interfere with a trial judge's finding of fact where the judge had the advantage of hearing the witnesses first hand

Court orders

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  1. 1.The appeal is dismissed
  2. 2.The trial court's assessment of severance pay of Shs.1,270,356.00 is not disturbed
  3. 3.The respondent is awarded two months' salary in lieu of notice in the sum of Shs.224,000/= as stipulated in the contract of employment
  4. 4.The appellants bear costs of the appeal and of the proceedings in the Employment and Labour Relations Court

The bench

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One judgment of the whole court — no separate or dissenting opinions.

majority
Philomena Mbete Mwilu
P. M. MwiluJA
Currently serving
majority
majority
On appeal from
Industrial Court of Kenya at Nairobi (Employment and Labour Relations Court)
Industrial Cause No. 110(N) of 2009
Jurisdiction invoked
Section 17 of the Employment and Labour Relations Court Act, in accordance with Article 164(3) of the Constitution

Relief refused

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Appellants' challenge to the finding of disguised redundancy and to the severance pay award

The court declined to interfere with the trial judge's finding of fact and the assessment of damages

p. 5

Costs

The appellants bear costs of the appeal and of the proceedings in the Employment and Labour Relations Court

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

Unfairness has to be inferred from the particular set of circumstances and cannot be generalized.
p. 3Unfair labour practice - context-specific inquiry
employers are not under any obligation to give employees reasons for non-renewal of fixed term contracts, unless there is such an obligation created in the expiring contract.
p. 4Non-renewal of fixed term contracts
The claim having been founded on redundancy and not unfair or wrongful termination, we agree that the respondent was entitled to severance pay in terms of section 40 (1) (g) of the Employment Act, 2007.
p. 5Remedies - severance pay tied to pleaded claim
In conclusion, we make orders that the appeal is dismissed. We do not find any basis to interfere with the trial court?s assessment of damages on account of severance pay in the amount of Shs.1,270,356.00 and we only add that the respondent be and is hereby awarded two month?s salary in lieu of notice as stipulated in the contract of employment in the sum of Shs.224,000/=.
p. 5Final orders - disposition

Issues in the judgment

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minor

The judgment states 'The trial court thus awarded the appellant severance pay' although the recipient was the respondent, an apparent drafting slip

minor

The pleading is described as a supplementary defence '(sic)' but contains averments ordinarily associated with a defence of the appellants; the record also inconsistently dates the operative contract as commencing 1st September 2006 while paragraph 2 refers to a contract commencing 5th October 2005

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (3)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Oshwal Academy (Nairobi) & another v Indu Vishwanath [2015] KECA 120 (KLR)", Case Analysis (2015). Civil Appeal No. 125 of 2011. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2015/120/eng@2015-12-18

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