Mugo v Farmers Choice Limited (Cause 242 of 2019) [2024] KEELRC 95 (KLR)
The bottom line
#A Kenyan court ruled a manager's dismissal for poor performance was unfair because the employer had no appraisals, improvement plan, or proper hearing — awarding three 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 Claimant's contract was terminated on valid ground
- 2.Whether termination was carried out fairly
- 3.Whether the Claimant merits the remedies sought
Key legal issues
#Valid ground for termination
Valid ground was not established; no performance appraisal, targets or PIP were in place despite poor performance being the ground
The Respondent thrice employed the Claimant and thrice terminated her for poor performance without ever conducting a structured appraisal or a Performance Improvement Plan. There was not a single appraisal form on record. Following Peter Kamau Mwaura, a high level of proof is required where poor performance is cited, and the Respondent discharged none of it.
Fair procedure under Section 41
Procedure was defective: no letter to show cause was issued; the alleged hearing notification form was blank with no evidential value and no minutes of any hearing existed
The Respondent did not issue a letter to show cause detailing charges. The 'Notification and Hearing Nomination Form' produced was completely blank, bearing neither the Claimant's details nor any charges, date or venue, and its unsigned handwritten annotations had no evidential value. No minutes of any disciplinary hearing existed, so the minimum statutory standards under Sections 41, 43 and 45 were not met.
Whether the negotiated payments constituted full and final settlement
The payments covered substantial ground but did not amount to full settlement; the Claim remains partially payable
The Parties' Advocates negotiated voluntary settlement and the Claimant received salary for days worked, annual leave, notice pay and Kshs. 95,000 in costs. However, there was no evidence the sums were in full and final settlement; the amounts were received without prejudice and negotiations over compensation continued, though they did not cross the line to full settlement.
Legal principles established
#- Where poor performance is cited as justification for termination, the employer must show a performance assessment policy or practice and measures to address poor performance, such as a Performance Improvement Plan
- Termination for poor performance should follow failure of a Performance Improvement Plan (PIP)
Court orders
#- 1.It is declared that termination was unfair
- 2.The Respondent shall pay to the Claimant equivalent of 3 months' salary in compensation for unfair termination, at Kshs. 1,110,000
- 3.No order on the costs
- 4.Interest allowed at court rate, from the date of Judgment, till payment is made in full
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 (Sections 41, 43, 44[4][c], 45 cited)
Relief refused
#Salary for July 2018 at Kshs. 370,000
Already paid; terminal benefits including salary for days worked and 3 months' notice pay were paid through the Advocates
3 months' salary in lieu of notice at Kshs. 1,110,000
Already paid as part of negotiated payments
Pro-rata leave at Kshs. 569,230
Annual leave was among terminal dues already paid
12 months' salary in compensation for unfair termination at Kshs. 4,400,000
Court awarded only 3 months' compensation, noting substantial payments already made towards settlement
Costs
No order on the costs (each party to bear own costs implicitly)
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 Court is satisfied that termination was not based on a fair procedure, and was not grounded on valid reason. It did not meet the minimum statutory standards of fairness under Sections 41, 43 and 45 of the Employment Act. Termination was unfair.
a. It is declared that termination was unfair. b. The Respondent shall pay to the Claimant equivalent of 3 months’ salary in compensation for unfair termination, at Kshs. 1,110,000. c. No order on the costs. d. Interest allowed at court rate, from the date of Judgment, till payment is made in full.
It is a universally acclaimed principle of employment law, and human resource practice, that a poor performer is subjected to a Performance Improvement Plan [PIP].
An Employer must show that it had in place, an employment policy or practice, to assess performance. Measures to address poor performance, once evaluation has taken place, must be available.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Mugo v Farmers Choice Limited (Cause 242 of 2019) [2024] KEELRC 95 (KLR)", Case Analysis (2024). Not stated in the judgment as provided. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/95/eng@2024-01-31
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.