Kenya Revenue Authority v Otieno & 3 others
The bottom line
#Kenya's Court of Appeal confirmed KRA unfairly terminated seconded officers' contracts but cut their compensation from 10 to 4 months' salary.
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 secondment contracts of the respondents and other affected officers were unfairly terminated
- 2.Whether the respondents were entitled to 10 months' gross salary compensation
Key legal issues
#Existence of an employer-employee relationship during secondment
KRA was the principal employer of the seconded officers during the secondment period, so the Employment Act applied to the termination of the secondment contracts.
Following Kenya Methodist University v Kaungania, the Court held that the substantive and principal employer is the entity that assigns specific duties remunerated by salary during secondment; the seconding entity is nominal and residual. Section 3 of the Employment Act, excluding the Kenya Police, did not apply because the termination concerned service under KRA, not the National Police Service.
Whether termination of the secondment was unfair
The termination was unfair because the contract allowed termination only on disciplinary cases or other grounds, and no grounds were disclosed in the termination letter.
The secondment clause permitted termination on disciplinary cases or other grounds. No disciplinary cases had been initiated and the termination letter disclosed no grounds; counsel for KRA admitted none were stated. No evidence showed it was no longer necessary for the officers to remain seconded under section 42(3) of the Public Service Commission Act, and the 2016 Guidelines were not referenced in the contract.
Quantum of compensation for unfair termination
The Court reduced the compensatory damages from nine months to three months' gross salary, plus one month's pay in lieu of notice, totalling four months.
Remedies under section 49 are discretionary and compensatory, not punitive. The trial judge had found entitlement to the maximum 12 months but awarded nine months plus notice pay on mitigation. The appellate court interfered because there was no patent or egregious abuse of rights or rank malice to justify nine months' compensation.
Legal principles established
#- Where a person is employed on secondment, the entity assigning the duties and paying the salary during secondment is the principal employer, and an employer-employee relationship exists with it.
- An employer who terminates a secondment contract without disclosing the grounds for termination effects an unfair termination under section 45(2) of the Employment Act.
- A party cannot invoke guidelines not referred to in the contract or the termination letter at a later stage.
Court orders
#- 1.Set aside order number two (2) of the judgment of the Employment and Labour Relations Court
- 2.Substituted an order that the appellant pay each of the respondents and the 60 other affected officers Four (4) months' gross monthly salary at the last monthly rate prior to termination of the secondment contracts (Less PAYE), computed as part of the decree
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
Wrote the leading judgment finding the termination of secondment unfair and reducing compensation from 10 to 4 months' gross salary.
In the end my considered view of the appeal is that it should partly succeed.p. 8
Wrote the judgment
Concurring judgment agreeing with Kiage, JA, adding that the trial award was high and excessive.
The respondents, however, returned to their employer Kenya Police Service and the compensation awarded by the trial Judge was high and excessive in the circumstances.p. 8
Wrote the judgment
Concurring judgment fully agreeing with the reasoning and conclusions of Kiage, JA.
I am in full agreement with his reasoning and conclusions and therefore, have nothing useful to add.p. 8
- On appeal from
- Employment and Labour Relations Court of Kenya at Nairobi
- Constitutional Petition No. E074 of 2023
- Jurisdiction invoked
- First appellate jurisdiction under the Court of Appeal Rules (Rule 31(1) invoked); appeal from the Employment and Labour Relations Court
Relief refused
#Retention of the trial court's award of 10 months' gross salary compensation
The termination was not accompanied by patent or egregious abuse of rights or rank malice justifying nine months' compensation; award reduced to 4 months total.
Costs
The judgment does not state a costs order for the appeal; the trial court's order that KRA pay costs of the petition was not disturbed.
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 appellant to pay each of the respondents and the 60 other affected officers Four (4) months’ gross monthly salary at the last monthly rate prior to the termination of the secondment contracts (Less PAYE) and the amount due to each be computed as part of the decree.
In the end my considered view of the appeal is that it should partly succeed. I would therefore set aside the learned Judge’s order number two (2) and substitute it with an order that;
the appellant was the principal employer of the respondents and other affected officers during the period of secondment, and thus there was an employer-employee relationship.
the termination was not accompanied by any patent or egregious abuse of rights or rank malice to justify Nine-months compensation.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Kenya Revenue Authority v Otieno & 3 others", Case Analysis (2024). Civil Appeal E111 of 2024. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2024/1959/eng@2024-12-20
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.