Mwangi Ngumo v Kenya Institute of Management [2012] KEELRC 56 (KLR)
The bottom line
#Kenya's Industrial Court awarded a former director over Kshs 9 million because his employer fired him without first giving him a chance to be heard.
What this practically means
#Executive summary
#Key legal issues
#Procedural fairness in termination of employment
The termination was unprocedurally unfair because the Claimant was not given a hearing before the decision to terminate was taken
The decision to terminate was taken at a Special Council meeting of 27 August 2009 to which the Claimant was not invited, and the Respondent did not controvert that assertion. The court held the requirement to notify and hear an employee before terminating is cardinal, and although section 41 addresses misconduct, poor performance or incapacity, fairness and equity required a hearing here.
Whether the contract was void because the KIM Foundation did not exist
The contract was not void; it was between the Respondent and the Claimant, both of whom had capacity, and the non-existence of the Foundation frustrated at most one of four core responsibilities
The contract of 24 March 2009 was entered into between Kenya Institute of Management and Mwangi Ngumo, neither of whose capacity was challenged. KIM Foundation lacked capacity, not the parties. Even if establishing the Foundation was frustrated, three other duties remained performable and the Respondent did not show the four responsibilities were all linked to the Foundation.
Whether the contract was irregular for non-compliance with the Employment Act
The ground was rejected as the Respondent did not specify the provisions allegedly breached and could not blow hot and cold against its own contract
Section 9(2) obliges the employer to draw up a written contract. The Respondent drew the contract itself, did not specify which provisions were breached, and did not produce the minutes of the decision to terminate on that basis. The court found it inequitable to allow the Respondent to run away from its own contract.
Whether the contract was unenforceable
The contract was enforceable; no incapacity of the parties was established and one frustrated object could be severed
The parties were Dr. Mwangi Ngumo and Kenya Institute of Management, and no legal, mental or physical incapacity was shown. The failed object (the Foundation) could have been severed from the good objects, so frustration of one object did not render the contract unenforceable.
Substantive fairness and burden of proving reasons for termination
The Respondent failed to prove the pleaded grounds were valid or fair; the termination was substantively unfair
Under sections 43 and 45 of the Employment Act the employer bears the legal obligation to prove the reasons for termination are valid and fair. The reasons pleaded (voidness, irregularity, unenforceability) each failed, so the termination was substantively unfair.
Remedy for prematurely terminated fixed term contract
Twelve months' gross salary (Kshs 8,019,600/-) awarded under section 49, plus salary for September and October 2009 (Kshs 1,336,600/-)
The court held that under section 49 of the Employment Act, 2007 it may award up to twelve months gross salary beside notice pay, rejecting the common law notice-only approach. The Claimant was also entitled to be paid for September and October 2009 because written notice of termination was only delivered on 3 November 2009 and cannot operate retrospectively.
Legal principles established
#- An employer must grant an employee a hearing before taking the decision to terminate employment; termination without a hearing is procedurally unfair under section 41 of the Employment Act, 2007
- The Court of Appeal decision in Kenya Revenue Authority v Menginya Salim Murgani on the right to hearing before termination was decided per incuriam as it did not consider the Employment Act, 2007
- Under section 49 of the Employment Act, 2007 the Industrial Court is empowered to award damages up to a maximum of twelve months gross salary beside notice pay
- A terminated employee is entitled to salary for the period before written notice of termination was actually delivered to him
- Ambiguities in a contract are construed against the party who drew it (contra proferentem)
Court orders
#- 1.Award of twelve months' gross pay as damages of Kshs 8,019,600/-
- 2.Payment of salary for September/October 2009 of Kshs 1,336,600/-
- 3.Total award of Kshs 9,356,200/-
- 4.No order as to costs
- Jurisdiction invoked
- Industrial Court jurisdiction under the Employment Act, 2007 (dispute over unlawful and wrongful termination of employment)
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.
- Petro Oil Kenya Limited v Kiraithe (Environment & Land Case 174 of 2013) [2023] KEELC 610 (KLR)[2023] KEELC 610 (KLR)31 Jan 2023
Cite this brief
#Cite this brief
Caselaw, "Mwangi Ngumo v Kenya Institute of Management [2012] KEELRC 56 (KLR)", Case Analysis (2012). Cause 851 of 2009. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2012/56/eng@2012-12-14
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.