Joshua Toroni Ntabo v Hipora Business Solutions (Ea) Limited (Cause 28 of 2019) [2020] KEELRC 1062 (KLR)
The bottom line
#A Kenyan court upheld a redundancy on a fixed-term contract, ruling severance is only owed per completed year of service.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Where the declared redundancy complied with the law
- 2.Whether there is breach of contract
- 3.Whether the remedies sought should issue
Key legal issues
#Whether the redundancy complied with section 40 of the Employment Act
The redundancy was lawful; notice was given (payment in lieu), the labour officer was notified and terminal dues were paid and acknowledged
Section 40 read with section 2 permits termination on operational requirements. The claimant received notice dated 5 March 2018 effective immediately with payment in lieu, the labour officer was notified, and he was paid terminal dues and signed a discharge voucher. Having served only 3 complete months under the last fixed term contract, he was not entitled to further severance under section 40(1)(g).
Whether there was breach of contract
No breach; the parties were governed by lawful annual fixed term contracts which operated on their terms
The employment was regulated by successive annual fixed term contracts, the last dated 1 January 2018. Each contract is separate and distinct; the last is the operational and regulating document. The redundancy terminated the last contract before its expiry but in accordance with section 40, so no compensable breach arose.
Claims for deductions, allowances and holiday pay
Uniform and polo t-shirt refunds are available upon return of the items; lunch deductions, relocation allowance and public holiday pay fail
Refund of uniform deductions on clearance is reasonable. Food provision was not contractually agreed, so consumed subsidised meals cannot be reclaimed. Relocation allowance applied only to employer-initiated transfers, not disciplinary or intra-town moves. The claimant was contracted for 6 days weekly and paid overtime, and the holidays claimed fell outside his 2018 contract.
Sacco dues
Claims against the respondent fail; Sacco claims lie against the Saccos under their rules
Vachu and Metropolitan Saccos are separate entities outside the respondent's control; membership is voluntary and by application. Deductions were founded on membership. Following Javan Were Mbango v H. Young & Co. (EA) Ltd, an employee must pursue savings and dues through the Sacco's collective rules, not from the employer after termination.
Legal principles established
#- Fixed term contracts operate on their terms and each is separate and distinct from any other; the last contract regulates the employment relationship
- Severance pay under section 40(1)(g) of the Employment Act is payable for completed years of service
- Employer may deduct for branded items but must refund upon return of the items on termination
- Employees who voluntarily join Saccos must pursue Sacco dues under Sacco rules, not from the employer, after termination
Court orders
#- 1.The claims made are dismissed
- 2.The claimant shall clear with the respondent to access the wage deductions for uniform and polo t-shirt
- 3.Each party shall pay own costs
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (labour dispute under Cause No. 28 of 2019)
Relief refused
#Compensation for unfair termination and notice pay
Respondent complied with section 40 of the Employment Act; notice was issued (payment in lieu) and terminal dues paid and acknowledged via discharge voucher
Severance pay beyond what was paid
Under the last fixed term contract the claimant had served only 3 complete months; severance is payable per completed year under section 40(1)(g), and what was paid was generous
Public holidays pay
Claimant was contracted for 6 days a week and paid monthly overtime allowance; the holidays claimed fall outside his 2018 fixed term contract
Lunch deductions refund
No express contractual term for provision of food; claimant consumed the food at a subsidised rate without objection
Relocation allowance
Allowance due only on employer-initiated transfers; other transfers arose from misconduct or were within the same town
Sacco refunds (Vachu and Metropolitan)
Saccos are separate entities; claims lie against the Saccos under their governing rules, not the respondent
Breach of contract damages of Ksh.270,000
Parties were bound by fixed term contracts which operated on their terms; no breach established
Costs
Each party shall pay own costs
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.
Accordingly, the claims made are dismissed. The claimant shall clear with the respondent to access the wage deductions for uniform and polo t-shirt. Each party shall pay own costs.
The respondent complied with the provisions of section 40 of the Act. There is no case for unprocedural termination of employment.
Under the existing fixed term contact, the claimant had only served for 3 complete months. Under section 40(1) (g) of the Act, severance pay is payable for the completed year of service.
There is no breach of contract as alleged so as to cause a claim for payment of such breach. The parties were bound in the employment relationship through fixed term contracts.
Employees who out of their own free will join employees Sacco do so by virtue of their employment and do authorize the employer to make deductions from their salaries to the Sacco for their welfare and for the collective good of all.
To deduct the cost therefrom is an unfair labour practice. however, upon termination of employment, the requirement to return all such branded items so as to get back the deducted wages is reasonable.
Issues in the judgment
#Inconsistent figures on terminal dues paid - the claimant testified he was paid Ksh.113,000 while the defence stated Ksh.151,335 in full and final settlement
The Sacco referred to as 'Vachu Sacco' in the claim is described as 'Virtuous Sacco' in the defence
Internal inconsistency in the relocation policy: the judgment first records a policy allowance of Ksh.6,000 but the defence describes payments of Ksh.3,000 to 5,000
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Joshua Toroni Ntabo v Hipora Business Solutions (Ea) Limited (Cause 28 of 2019) [2020] KEELRC 1062 (KLR)", Case Analysis (2020). Cause No. 28 of 2019. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2020/1062/eng@2020-05-11
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.