Ojwang' v Finejet Limited (Cause 1623 of 2018) [2022] KEELRC 4152 (KLR)
The bottom line
#A Kenyan court ruled that terminating an employee without a valid reason, fair process, or a full month's notice entitles the employee to compensation.
What this practically means
#Executive summary
#Key legal issues
#Whether termination of the claimant's employment was fair and lawful
The termination was substantively and procedurally unfair. The respondent gave no reason for termination, led no evidence of misconduct, and its one-month notice was ineffectual because it was served on October 2, 2018 for employment to end October 31, 2018 - shorter than a calendar month. The claimant was also not taken through any disciplinary process under section 41 of the Employment Act.
The court held that the Employment Act prescribes minimum terms that override contractual 'termination at will' clauses. Section 45(2) requires the employer to prove a valid and fair reason and fair procedure. The respondent's own witness confirmed there was no disciplinary process, no reason was given, and the notice period fell short of one calendar month, rendering the termination both substantively and procedurally flawed.
Whether the claimant was entitled to pay in lieu of notice and salary for October 2018
Awarded pay in lieu of notice of Kshs 165,000/= because the one-month notice was ineffectual, and salary for the 23 days worked in October 2018 (Kshs 126,500/=), the full October salary claim being reduced because the claimant had by October 24, 2018 opted out by consulting an advocate.
Having found the termination notice ineffectual for failing to meet the one-month threshold in clause 23 of the Employment Agreement, the court awarded pay in lieu of notice. On October salary, the court found the claimant could not claim to still be an employee after instructing an advocate to contest the termination, so only 23 days were payable.
Whether the claimant was entitled to service pay
Declined. Service pay was not contractually agreed, the claimant gave no consideration for the respondent's promise, and the respondent was remitting NSSF contributions, disentitling the claimant under section 35(6)(d) of the Employment Act.
The court noted the respondent's promise of Kshs 165,000/= as service pay was discretionary and that RWI confirmed NSSF contributions were being deducted and remitted. The claimant tendered no evidence of entitlement and provided no consideration for the promise, so the prayer was declined.
What compensation under section 49(1)(c) was appropriate
The equivalent of 2 months' salary (Kshs 330,000/=) was fair, having regard to section 49(4) factors: the claimant's seniority, roughly 2 years 9 months of service, clean record, and lack of appeal.
The court applied section 49(4) of the Employment Act, noting that 12 months' compensation is reserved for exceptional circumstances. It weighed the claimant's rank, length of service, absence of misconduct and desire to continue in employment in fixing compensation at two months' salary.
Whether the respondent could lawfully off-set the Finejet Sacco loan from the claimant's terminal dues
No. There was no agreement on the amount owed; the respondent's own correspondence was inconsistent; and the claimant never authorised the off-set as he had done for the Gulf Bank loan. The unilateral off-set violated the claimant's right to fair labour practices under Article 41, entitling him to the amount used to off-set the Sacco loan.
The court contrasted the express authorisation in the Gulf Bank application form with the absence of any authority for the Sacco off-set. Relying on the Alice Ndaani decision, it held that Sacco loans are distinct from employment contracts and must be recovered under the loan agreement, not by withholding terminal dues.
Legal principles established
#- For a termination of employment to pass muster it must be both substantively justifiable and procedurally fair.
- An employer cannot unilaterally off-set an employee's Sacco loan from terminal dues absent a clear agreement or policy and the employee's concurrence; doing so violates the employee's right to fair labour practices under Article 41 of the Constitution.
- Once a court finds that an employer unlawfully terminated employment, the appropriate remedy is that provided under section 49 of the Employment Act, exercised judiciously with regard to section 49(4).
Court orders
#- 1.Judgment entered for the claimant against the respondent: pay in lieu of notice of Kshs 165,000/=.
- 2.Pay for 23 days worked in October 2018 of Kshs 126,500/=.
- 3.Compensation equivalent of 2 months' salary of Kshs 330,000/=.
- 4.The amount used by the respondent to off-set the alleged Finejet Sacco Loan to be paid to the claimant.
- 5.Costs of the suit to the claimant.
- 6.Interest at court rates from date of judgment till payment in full.
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction over employment and labour relations disputes under Article 162(2) of the Constitution and the Employment Act, 2007
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Ojwang' v Finejet Limited (Cause 1623 of 2018) [2022] KEELRC 4152 (KLR)", Case Analysis (2022). ELRC Cause, Memorandum of Claim filed December 10, 2018. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2022/4152/eng@2022-09-29
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.