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ELRCPartially AllowedNot stated in judgment

Gideon v Elsabi Share Company Limited (Cause E920 of 2021) [2024] KEELRC 689 (KLR)

Employment and Labour Relations Court
28 March 2024
1,290 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~5 min to read original · ~4 min brief

The bottom line

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A Kenyan employer who fired an employee without a hearing was ordered to pay Kshs. 5.6 million, but the court refused salaries for the unexpired contract period.

What this practically means

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Executive summary

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This was an undefended employment claim before the Employment and Labour Relations Court at Nairobi, decided ex parte by James Rika, Judge, on 28th March 2024. The Claimant, employed as a Credit Manager on a 3-year renewable contract from 1st January 2021 at a monthly gross salary of Kshs. 400,000, was locked out on 16th September 2021 and thereafter received an undated termination letter that purported to give 30 days' notice while terminating the contract with immediate effect. No reasons were given in the letter, no disciplinary hearing was held, and the only justifications mentioned (failure to greet the CEO and an alleged irregular loan of Kshs. 1 million to a customer) were never communicated with an opportunity to respond. The Respondent filed a Memorandum of Appearance but no Response, and did not attend the final hearing despite service. The Court held the termination breached Sections 41, 43 and 45 of the Employment Act and Article 47 of the Constitution. It awarded September 2021 salary (Kshs. 400,000), one month's notice pay (Kshs. 400,000) and maximum compensation of 12 months' salary (Kshs. 4,800,000), totalling Kshs. 5,600,000, plus costs. It refused anticipatory salaries of Kshs. 10.8 million as unjust enrichment, citing Moni Wekesa v. Mt. Kenya University against a 'cash-grab' trend, and declined the unparticularised annual leave claim of Kshs. 160,000.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the termination of the Claimant's employment was fair and lawful
  2. 2.Whether the Claimant was entitled to September 2021 salary
  3. 3.Whether the Claimant was entitled to one month's notice pay
  4. 4.Whether the Claimant was entitled to compensation for unfair termination equivalent of 12 months' salary
  5. 5.Whether the Claimant was entitled to anticipatory salaries for the remainder of the contract
  6. 6.Whether the Claimant was entitled to the annual leave claim

Key legal issues

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01

Fairness of termination

Holding

Termination was unfair - no hearing, no communicated allegations, and a paradoxical letter purporting to give 30 days' notice while terminating with immediate effect

Reasoning

The Claimant was locked out and subsequently received an undated termination letter that purported to give one month's notice while terminating the contract with immediate effect. No disciplinary hearing was held, no allegations were communicated with an opportunity to respond, contrary to Sections 41, 43 and 45 of the Employment Act and Article 47 of the Constitution. The Respondent filed no defence to controvert the Claimant's evidence.

p. 3
02

Compensation for unfair termination

Holding

Compensation awarded at the equivalent of 12 months' salary (Kshs. 4,800,000), taking into account the 9 months worked, the remaining 27 months of the contract, and expectation of renewal

Reasoning

The Claimant worked 9 months of a 3-year renewable contract and did not contribute to the termination. The Respondent filed no evidence to limit compensation. The Court granted the maximum of 12 months' salary as compensation, taking into account the remaining contract period and expectation of renewal.

p. 3
03

Anticipatory salaries

Holding

Refused - such a claim would constitute unjust enrichment and an unhealthy trend in employment litigation

Reasoning

The Claimant sought salaries for the unexpired contract period of Kshs. 10.8 million. The Court held that compensation for unfair termination already accounted for the contract's remaining duration and expectation of renewal; paying salaries for services never rendered would unjustly enrich the Claimant and entrench a 'cash-grab' trend in unfair termination claims.

p. 3
04

Undefended claim procedure

Holding

The Claimant took every step to bring the Respondent to Court; the Respondent filed no Response and kept away, and the Claim proceeded ex parte

Reasoning

Service was effected and a Memorandum of Appearance was filed, but the Respondent attended sporadically, never filed a Response despite several adjournments and scheduling dates, and was absent at the final hearing. The Court proceeded ex parte on the evidence of the Claimant alone.

p. 2

Legal principles established

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  • Termination without a hearing and without communicated reasons and an opportunity to respond violates Sections 41, 43 and 45 of the Employment Act and Article 47 of the Constitution
  • Claims for anticipatory salaries beyond compensation for unfair termination are unreasonable and risk turning unfair termination claims into unjust enrichment

Court orders

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  1. 1.Declaration that the termination was unfair
  2. 2.Respondent to pay September 2021 salary at Kshs. 400,000
  3. 3.Respondent to pay notice at Kshs. 400,000
  4. 4.Respondent to pay compensation for unfair termination at Kshs. 4,800,000 (total Kshs. 5,600,000)
  5. 5.Costs to the Claimant

The bench

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One judgment of the whole court — no separate or dissenting opinions.

majority

Wrote the judgment

Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over employment claims (Employment Act; Article 47 of the Constitution invoked)

Relief refused

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Anticipatory salaries for the remainder of the contract (Kshs. 10.8 million)

Would amount to unjust enrichment; compensation for unfair termination already took into account the remaining contract period and expectation of renewal

p. 3

Annual leave (Kshs. 160,000)

The Claimant did not specify the period over which leave was claimed or how the figure was computed

p. 3

Costs

Costs to the Claimant

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

It is declared that termination was unfair.
p. 3Final orders - declaration of unfair termination
The Respondent shall pay to the Claimant: September 2021 salary at Kshs. 400,000; notice at Kshs. 400,000; and compensation for unfair termination at Kshs. 4,800,000 – total Kshs. 5,600,000.
p. 3Final orders - quantum awarded
Every known standard of fair dealing between an Employer and an Employee, was thrown out of the window by the Respondent.
p. 3Fair procedure in termination
The Court has recently, in Petition 138 of 2016, Moni Wekesa v. Mt. Kenya University, spoken against turning claims for unfair termination into a cash-grab industry.
p. 3Anticipatory salaries refused
Grant of anticipatory salaries, calculated at Kshs. 10,800,000, would amount to unjust enrichment.
p. 3Anticipatory salaries - unjust enrichment

Issues in the judgment

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minor

The case number of the suit is not stated anywhere in the judgment text provided

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, "Gideon v Elsabi Share Company Limited (Cause E920 of 2021) [2024] KEELRC 689 (KLR)", Case Analysis (2024). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/689/eng@2024-03-28

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