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ELRCPartially AllowedCause 851 & 861 of 2011 (Consolidated)· [2012] KEELRC 31 (KLR)

JOSEPHAT AMBUBI MUSUMBA & ANOTHER V VEGRO KENYA LIMITED [2012] KEELRC 31 (KLR)

Industrial Court of Kenya
11 December 2012
1,442 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court ruled that employees who keep working after their fixed-term contracts expire become monthly employees who can only be dismissed with one month's notice and a valid reason.

What this practically means

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Executive summary

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Two consolidated causes were brought by Josephat Ambubi Musumba and Kasavu Musyoki Musembi against Vegro Kenya Limited. The 1st claimant, a head mechanic employed on 1st June 2004 on successive fixed term contracts ending 30th November 2008, worked on without a contract until 30th November 2009, when he learned from colleagues that he had been terminated. The 2nd claimant, a heavy commercial vehicle driver employed on 1st June 2006, had a similar history and fate. The respondent's human resource officer admitted that both contracts had expired in November 2008, that the claimants worked long hours (10 and 12 hours daily respectively) and that neither was paid overtime. The court held that the terminations were unfair: the employer never explained the reasons for termination as required by section 41 of the Employment Act, the purported letters were never received and bore the impossible date of 31st November, and referred to a non-existent contract. Having worked a year without contracts, the claimants were deemed monthly employees terminable by one month's notice under sections 35(1)(c) and 36. Each claimant was awarded one month's salary in lieu of notice; overtime was computed on hours exceeding the contracted 45-hour week at 1.5 times the hourly rate; and compensation of four months' and two months' salary respectively was awarded for the unfair terminations. Final awards were Kshs.497,420 for the 1st claimant and Kshs.590,988 for the 2nd, with each party bearing its own costs.

Key legal issues

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01

Fairness of the terminations

Holding

Both terminations were unfair because the employer gave no reasons, the claimants learned of the termination from colleagues, and the letters relied on were dated 31st November, a non-existent date, and referred to a non-existent contract

Reasoning

Section 41 of the Employment Act obliges the employer to explain reasons for termination. The claimants discovered their termination from fellow employees; the purported letters were never received, were dated 31st November 2009 (a non-existent date), and purported to terminate a contract that had expired in 2008. Having worked a year without a contract, they were deemed monthly employees terminable by one month's notice under sections 35(1)(c) and 36.

p. 3
02

Entitlement to notice pay

Holding

Each claimant awarded one month's salary in lieu of notice: Kshs.18,440 to the 1st claimant and Kshs.14,485 to the 2nd

Reasoning

Because the continued employment after contract expiry converted to monthly contracts, terminable only by one month's notice or pay in lieu, and the termination was unfair, each claimant was entitled to one month's salary in lieu of notice at their respective last salaries.

p. 3
03

Entitlement to overtime

Holding

Both claimants awarded overtime calculated on hours worked beyond the contracted 45-hour week at 1.5 times the hourly rate

Reasoning

RW1 admitted the 1st claimant worked 10 hours a day, 60 hours a week, against a contracted 45 hours, and that neither claimant was paid overtime. The 2nd claimant, though his contract left hours unspecified, could not be expected to work more hours than other employees, so the same 45-hour benchmark was applied. Overtime was computed at 1.5 times the hourly rate (salary divided by 195) over 182 weeks.

p. 2
04

Compensation for unfair termination

Holding

4 months' salary (Kshs.73,740) for the 1st claimant and 2 months' salary (Kshs.28,970) for the 2nd claimant

Reasoning

Having found the terminations unfair, the court exercised discretion to award compensation, taking into account the 1st claimant's 6 years and the 2nd claimant's 3 years of service and the circumstances under which they were terminated, awarding less than the 12 months' salary claimed.

p. 3

Legal principles established

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  • Where an employee continues working after expiry of a fixed term contract, the employment is by operation of law converted to a monthly contract terminable by one month's notice or payment of one month's salary in lieu
  • Section 41 of the Employment Act requires an employer to explain to the employee the reasons for termination; failure to do so renders the termination unfair

Court orders

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  1. 1.Judgment for Josephat Ambubi Musumba in the sum of Kshs.497,420
  2. 2.Judgment for Kasavu Musyoki Musembi in the sum of Kshs.590,988
  3. 3.Each party to bear its own costs
Jurisdiction invoked
Original jurisdiction of the Industrial Court under the Industrial Court Act over employment and labour relations disputes

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "JOSEPHAT AMBUBI MUSUMBA & ANOTHER V VEGRO KENYA LIMITED [2012] KEELRC 31 (KLR)", Case Analysis (2012). Cause 851 & 861 of 2011 (Consolidated). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2012/31/eng@2012-12-11

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