Ohana v Kenol Kobil PLC (Cause 601 of 2019) [2024] KEELRC 2184 (KLR)
The bottom line
#A Kenyan court found a Group CEO's dismissal for poor performance unfair because the employer had no appraisals, targets, or improvement plan, awarding USD 336,000 compensation.
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 respondent had valid reasons for terminating the claimant's service and if so whether the termination was carried out through a fair procedure
- 2.Whether the respondent was justified in clawing back monies paid to the claimant on account of bonus and COLA
- 3.Whether the claimant was entitled to benefit under the settlement agreement
- 4.Whether the respondent is entitled to judgment on the counter-claim
- 5.What is the appropriate remedy to grant to the successful party in the circumstances
Key legal issues
#Whether termination on account of poor performance was substantively and procedurally fair
The termination was unfair; the respondent failed to prove valid and fair reasons because no 2019 targets or strategic objectives were set, no formal appraisal was done, no performance improvement measures were taken, and the process appeared premeditated to install a Rubis-preferred MD.
The court applied the Jane Samba Mukala standard requiring employers to prove the measures and effort leading to a poor-performance dismissal. No formal appraisal, no rating, no targets for 2019, and no prior appraisals were produced. The chronology, including Bergeron's appointment as MD effective 1st June 2019 while the claimant still held the office, showed premeditation. Termination was therefore unfair under section 45(1) of the Employment Act.
Whether the clawback of the advance bonus of USD 250,000 and COLA was justified
The clawback of both was justified: the 2018 bonus was never board-approved and the claimant conceded the supporting documentation was unsigned and unauthenticable; the claimant was an expatriate not eligible for COLA.
The claimant conceded bonus was discretionary and produced no email or authentic memo evidencing approval; the purported memo was unsigned and not on letterhead. On COLA, a 2018 memo excluded international expatriates, and the claimant's salary was in USD. Deductions under clause 19 of the contract were therefore proper.
Whether the claimant was entitled to benefits under the 9th April 2019 Settlement Agreement
No; the settlement agreement applied to lower cadre non-management staff, negotiated by elected non-management representatives, and could not irregularly extend the claimant's fixed-term contract.
RW1 confirmed negotiations were conducted by non-management representatives with Rubis, and the claimant never participated. Including the Group CEO, on a fixed-term contract nearing expiry, in a two-year job-security guarantee would amount to an irregular extension of his contract.
Whether the respondent was entitled to judgment on the counterclaim
Yes, but only to the extent of USD 67,719.27 after setting off terminal dues, and this was set off against the compensation award for unfair termination, leaving USD 268,280.73 payable to the claimant.
Having found the advance bonus and COLA clawbacks justified, the respondent was owed USD 67,719.27 after deducting these from terminal dues. However, the unfair termination finding entitled the claimant to maximum compensation of twelve months' salary (USD 336,000), which was set off against the counterclaim sum.
The appropriate remedy
Maximum compensation of twelve months' salary under section 49(1)(c) of the Employment Act, awarded on the net salary of USD 28,000 per month, set off against the counterclaim, with interest and costs to the claimant.
The circumstances of the termination justified the maximum compensation under section 49(1)(c). The court computed twelve months at the contractual net salary of USD 28,000, giving USD 336,000, less the counterclaim balance of USD 67,719.27, yielding USD 268,280.73, subject to statutory deductions and interest at court rates from judgment.
Legal principles established
#- Where poor performance is the reason for termination, the employer bears a high level of proof and must show the performance measurement policy in place, the assessment conducted, and the measures taken to address poor performance before termination.
- The court does not undertake a merit review of an employer's decision to dismiss, but applies the band of reasonableness test, with some measure of merit review to assess the reasonableness of the decision.
- A termination is unfair under section 45(1) of the Employment Act where the employer fails to prove that the reason for termination is valid and fair.
- Discretionary bonus and COLA entitlements are construed strictly according to the contract and applicable policy; an employee must prove board approval or eligibility for such payments.
Court orders
#- 1.Respondent to pay the claimant maximum compensation of twelve months' salary under Section 49(1)(c) of the Employment Act, being USD 336,000
- 2.The award of USD 336,000 is set off against USD 67,719.27 due to the respondent on the counterclaim, leaving a net sum of USD 268,280.73
- 3.The award is subject to taxes and statutory deductions where applicable and attracts interest at court rates from the date of judgment until payment in full
- 4.Claimant to have costs of the suit
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
Relief refused
#Claim under the 9th April 2019 Settlement Agreement (redundancy/severance package)
The claimant was Group CEO/management and the settlement agreement covered lower cadre non-management staff on fixed job security terms
Balance of 2018 bonus (USD 400,000 additional bonus and USD 50,000 ex-gratia) and validation of the USD 250,000 advance bonus
Bonus was discretionary, board never approved the 2018 bonus, and the claimant had no authentic documentation of approval; the advance bonus payment was irregular and clawback was justified
COLA payments (validated against clawback)
The claimant, being an expatriate Israeli national with a US dollar-denominated salary, was not eligible for COLA
Costs
The Claimant shall further have costs of the suit.
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 respondent is therefore liable to pay the claimant USD 336,000 less the USD 67,719.27 being the judgment on the counterclaim. That is to say the sum of USD 268,280.73.
It will not sufice to just say that one has been terminated for poor performance as the efiort leading to this decision must be established.
From the foregoing the Court inevitably reaches the conclusion that the termination of the claimant's service was unfair on account of failure by the respondent to prove that the reasons for termination were valid and fair as required by section 45(1) of the Employment Act.
the payment of the advance bonus of USD 250,000 was irregular and the respondent was therefore justified in clawing back the same
He was therefore an expatriate hence was not eligible for COLA, the respondent was therefore justified in clawing back any monies paid to him on account of COLA.
The Claimant shall further have costs of the suit.
Issues in the judgment
#The judgment inconsistently dates the claimant's contract of employment - at times 12th June, 2014 or 1st November, 2017, but the determination states 1st January, 2017
The judgment states a claimant assertion that Bergeron was appointed group MD by letter dated 1st April, 2019 with effect from 1st June, 2019, yet elsewhere records Bergeron's Board appointment only from 21st May, 2019 and the respondent's employment contract for Bergeron dated 9th July, 2019
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Ohana v Kenol Kobil PLC (Cause 601 of 2019) [2024] KEELRC 2184 (KLR)", Case Analysis (2024). Memorandum of Claim dated 6th September, 2019. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/2184/eng@2024-09-06
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.