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ELRCPartially AllowedCause filed 27 January 2021 (number not stated in judgment)

Kimani v Langata Hotel Development Ltd (Cause E067 of 2021) [2025] KEELRC 701 (KLR)

Employment and Labour Relations Court
6 March 2025
RSRadido Stephen
1,723 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~7 min to read original · ~4 min brief

The bottom line

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A Kenyan court ruled that a hotel unfairly cut a manager's salary and fired her during COVID-19, awarding her Kshs 975,000 because employers must consult before pay changes.

What this practically means

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Executive summary

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The Claimant, a Front Office Manager at the Respondent's Tamarind Tree Hotel, sued for unfair termination and contractual breach after her employment was terminated during the COVID-19 pandemic. Her salary had been reviewed downward twice in March and April 2020, purportedly following Government austerity directives, and she was served with a termination notice on 7 May 2020 without the contractual 3 months' notice or pay in lieu. The Court framed issues around the lawfulness of the salary reduction, compliance with the notice clause, unfairness of termination, and whether COVID-19 frustrated the contract. On salary reduction, the Court held that section 10(5) of the Employment Act, 2007 requires consultation before varying remuneration; the employer produced no evidence of consultation, and served the variation letters only on the same day as the termination notice, so the variation breached contract and statute - though no relief was granted because none was pleaded. On frustration, applying the Supreme Court's decision in Kwanza Estates Ltd v JKUAT, the Court held that financial hardship from COVID-19 does not automatically discharge contractual obligations; the pandemic was not a frustrating event, and the Respondent could have opted for redundancy. The termination was found unfair for non-compliance with the contractual notice and with sections 35(1), 41 and 43 of the Employment Act. The Court declared the termination unfair and awarded compensation of 5 months' gross salary (Kshs 975,000/-) with interest from judgment, plus costs. The accrued leave claim of Kshs 61,675/- was declined for want of evidential foundation. Judgment delivered virtually in Nairobi on 6 March 2025 by Radido Stephen, Judge.

Questions the Court framed

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

  1. 1.Whether the reduction of the Claimant's salary was voluntary and lawful
  2. 2.Whether the termination clause in the Claimant's contract (3 months' termination notice) was complied with
  3. 3.Whether the termination of the Claimant's employment was unfair and unlawful
  4. 4.Whether the law on frustration of contract was applicable in the circumstances
  5. 5.What remedies are available to the Claimant

Key legal issues

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01

Lawfulness of the salary reduction

Holding

The downward variation of remuneration breached section 10(5) of the Employment Act because the employer did not consult the Claimant.

Reasoning

The employer reduced the salary twice in March/April 2020 citing COVID-19 austerity and Government directives, but produced no directive and served the variation letters only on 7 May 2020, the same day as the termination notice. Section 10(5) requires consultation before varying remuneration; consent is not needed but consultation is key. No material suggested consultation, so the variation fell below the statutory standard.

p. 2
02

Frustration of contract by COVID-19

Holding

COVID-19 did not operate to frustrate the Claimant's employment contract.

Reasoning

Following the Supreme Court in Kwanza Estates, financial hardship alone, even from an extraordinary event like the pandemic, does not automatically discharge contractual obligations. The Respondent faced booking cancellations and hotel closure, but like the University in Kwanza Estates, this was not absolute impossibility of performance; the Respondent had the option of terminating on redundancy grounds per the Tripartite Memorandum of Understanding.

p. 3
03

Unfair termination

Holding

The termination was unfair both contractually and statutorily.

Reasoning

The contract provided for 3 months' notice or pay in lieu, which was neither given nor offered. The employer also failed to notify the Claimant of contemplated termination on operational requirements or invite representations as required by sections 35(1), 41 and 43 of the Employment Act. Notably, the employer had secretly prepared a termination notice on 29 April 2020 while negotiating salary reductions.

p. 4
04

Remedies

Holding

Five months' gross salary (Kshs 975,000/-) awarded as compensation for unfair termination.

Reasoning

Considering the roughly 4 years of service and the breach found on salary reduction for which no relief was pleaded, the Court deemed the equivalent of 5 months' gross salary (at Kshs 195,000/-) appropriate. Accrued leave claim failed for want of evidential foundation.

p. 4

Legal principles established

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  • Section 10(5) of the Employment Act requires consultation, though not consent, before varying remuneration; failure to consult is a breach of contract/statute.
  • Financial hardship alone, even from the COVID-19 pandemic, does not discharge contractual obligations; COVID-19 was not a frustrating event of the employment contract.

Court orders

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  1. 1.Declaration that the Respondent unfairly terminated the Claimant's employment
  2. 2.Award of compensation equivalent to 5 months' gross salary, Kshs 975,000/-
  3. 3.The award to attract interest at court rates from the date of judgment
  4. 4.The Claimant to have costs

The bench

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

RS
majority

Wrote the judgment

Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (employment dispute)

Relief refused

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Relief for the unlawful salary reduction

No relief pleaded under this head of claim

p. 2

Claim for accrued leave of Kshs 61,675/-

No evidential foundation laid for the claim

p. 5

Costs

The Claimant to have costs.

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.

The Court, therefore, finds that the variation downwards of the Claimant's remuneration did not meet the standard contemplated by section 10(5) of the Employment Act, 2007.
p. 2salary variation - statutory consultation requirement
This Court is of the same mind and finds that the COVID-19 public health pandemic did not serve as a frustrating event of the Claimant's contract.
p. 4frustration of employment contract by COVID-19
The Court finds that the Respondent terminated the Claimant's contract unfairly.
p. 4unfair termination
The Court finds and declares that the Respondent unfairly terminated the Claimant's employment.
p. 5declaration
The Claimant is awarded: (i) Compensation Kshs 975,000/-.
p. 5final orders - compensation
The award to attract interest at court rates from the date of judgment.
p. 5final orders - interest
The Claimant to have costs.
p. 5final orders - costs

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, "Kimani v Langata Hotel Development Ltd (Cause E067 of 2021) [2025] KEELRC 701 (KLR)", Case Analysis (2025). Cause filed 27 January 2021 (number not stated in judgment). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/701/eng@2025-03-06

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