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ELRCPartially AllowedNot stated in the judgment as provided

Okumu v Prime Power Batteries E.A. Limited (Cause E176 of 2021) [2024] KEELRC 1229 (KLR)

Employment and Labour Relations Court
9 May 2024
2,901 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~12 min to read original · ~4 min brief

The bottom line

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A Kenyan court ruled an employer's termination unfair because it couldn't pick between poor performance and redundancy, awarding the employee about Kshs. 721,000 plus costs and interest.

What this practically means

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Executive summary

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The Claimant sued the Respondent Company alleging unfair, unlawful and unprocedural summary dismissal from his position as Sales and Marketing Manager, Western Region, effective 9th November 2020. He contended that the reason given (poor performance) was invalid and that the Respondent later told him his position had been declared redundant; he claimed terminal dues including leave, notice pay, severance, 12 months' compensation, and underpayments, totalling Kshs. 1,461,581/-. The Respondent, whose witness filed a statement but which was absent at trial and filed no submissions, maintained that the dismissal was lawful and that the Claimant was a poor performer and negligent. The Court held that poor performance and redundancy are mutually exclusive grounds governed by different statutory procedures under sections 41 and 40 of the Employment Act respectively. The Respondent failed to demonstrate the reason for termination as required by section 43, rendering the dismissal unfair under section 45. The Court noted the absurdity of the employer awarding pay rises to a 'poor performer'. Poor performance, the Court held, is not a basis for summary dismissal under section 44. The claim for service pay failed because the Claimant did not prove he was not an NSSF member, service pay being excluded by section 35(6)(d). Judgment was entered for the Claimant for the August 2020 underpayment of Kshs. 11,650/-, one month's salary in lieu of notice (Kshs. 101,388.75), and six months' salary as compensation (Kshs. 608,332.50), with interest and costs, plus a certificate of service under section 51.

Questions the Court framed

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

  1. 1.Whether the Claimant was an employee of the Respondent
  2. 2.Whether the Respondent had a valid reason for terminating the Claimant's employment
  3. 3.Whether the Claimant is entitled to the terminal benefits sought in the Statement of Claim
  4. 4.Who should bear the cost of the suit and interests

Key legal issues

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01

Validity of the reason for termination

Holding

The Respondent failed to demonstrate a valid reason; the inconsistent claims of poor performance and redundancy rendered the termination unfair and unlawful

Reasoning

The Respondent asserted poor performance but also suggested redundancy. The Court held these are mutually exclusive grounds with distinct statutory procedures. The witness's testimony that the Claimant received pay rises despite alleged poor performance undermined the Respondent's case. Failure to prove the reason implicates unfairness under sections 43 and 45 of the Employment Act.

p. 5
02

Procedural fairness in termination

Holding

No notice or hearing preceded the termination; poor performance is not a ground for summary dismissal under section 44, entitling the Claimant to notice pay

Reasoning

The Claimant was neither given notice nor an opportunity to be heard. A poor performer should be placed under a performance improvement programme before termination under section 41. Redundancy would require the section 40 procedure. As neither procedure was followed and poor performance does not justify summary dismissal, the Claimant was entitled to notice pay in addition to compensation.

p. 5
03

Entitlement to service pay

Holding

Claim for service pay disallowed because the Claimant did not prove he was not an NSSF member

Reasoning

Section 35(6)(d) of the Employment Act excludes service pay for employees who are members of the National Social Security Fund. The burden lay on the Claimant to establish he was not such a member. Having failed to do so, the claim for service pay/gratuity could not succeed notwithstanding the unfair termination finding.

p. 5

Legal principles established

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  • An employee cannot lawfully be terminated simultaneously on grounds of poor performance and redundancy; each ground has distinct statutory procedures that cannot be conflated
  • Failure by an employer to demonstrate the reason for termination renders the dismissal unfair and unlawful under sections 43 and 45 of the Employment Act
  • Service pay under section 35 of the Employment Act is payable only where the employee is not a member of the NSSF
  • Poor performance is not among the grounds justifying summary dismissal under section 44 of the Employment Act

Court orders

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  1. 1.Underpayment in August 2020 – Kshs. 11,650/-
  2. 2.One month's salary in lieu of notice – Kshs. 101,388.75
  3. 3.6 months salary as compensation – Kshs. 608,332.50
  4. 4.Costs of the suit to the Claimant
  5. 5.Interest at court rates on the sum in (a) from the date of filing suit till payment in full
  6. 6.Interest at court rates on the sums in (b) and (c) from the date of judgment till payment in full
  7. 7.Certificate of service in terms of section 51 of the Employment Act

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 under the Employment Act, 2007 (first-instance employment claim)

Relief refused

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Service pay/severance pay

The Claimant did not demonstrate that he was not a member and contributor to the NSSF, which would exclude entitlement to service pay under section 35(6)(d) of the Employment Act

p. 5

Declaration of liability for discriminatory conduct

Not addressed or awarded by the Court in the judgment or final orders

Compensation of 12 months' salary

The Court awarded 6 months instead, capping compensation given the short period of service and manner of termination

p. 5

Costs

Costs of the suit awarded to the Claimant, with interest at court rates on the underpayment sum from filing suit, and on the notice pay and compensation from the date of judgment till payment in full.

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.

A careful reading of the two sections of the Act demonstrates that one cannot be terminated for both poor performance and redundancy.
p. 5Mutual exclusivity of poor performance and redundancy as grounds for termination
Failure to demonstrate reason implicates the decision to terminate to be unfair and unlawful within the meaning of section 45 of the Act.
p. 5Consequences of failure to prove reason for termination
It is ridiculous for an employer to reward an employee with increments in salary when the employee is a poor performer.
p. 5Evidence undermining allegation of poor performance
In the final analysis, I enter judgment for the Claimant against the Respondent for: a. Underpayment in August 2020 – Kshs. 11,650/-
p. 5Final orders

Issues in the judgment

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minor

The Respondent's defence is internally contradictory, claiming simultaneously that no terminal dues are owed and that all dues were paid; the Claimant flagged this and the Court did not expressly resolve it

minor

The case number, cause number and full party names are not stated 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, "Okumu v Prime Power Batteries E.A. Limited (Cause E176 of 2021) [2024] KEELRC 1229 (KLR)", Case Analysis (2024). Not stated in the judgment as provided. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/1229/eng@2024-05-09

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