Lugado v Gold Crown Foods (EPZ) Limited
The bottom line
#A Kenyan court ruled Gold Crown Foods unfairly fired its HR head, awarding him Kshs. 2.8 million because the company ignored its own disciplinary rules.
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 termination of the Claimant's employment was fair, procedurally and substantively
- 2.Whether the Claimant is entitled to the reliefs sought
Key legal issues
#Procedural fairness of the disciplinary process
Termination was procedurally unfair: two days' notice contrary to the five-day policy minimum, evidence served at the hearing, accuser not named, witnesses not availed for cross-examination, biased panel, curtailed appeal window, and dismissal partly on grounds not in the notice to show cause
The court applied section 41 of the Employment Act as elaborated in Postal Corporation v Tanui and the Supreme Court's LMN decision, holding that the right to be heard is not a formality. The employer's own Disciplinary Policy fixed minimum notice and disclosure standards; falling short of its own standard rendered the hearing unfair. Participation in a flawed hearing does not cure it.
Authenticity of the Disciplinary Policy alleged to be fabricated
Fraud must be specifically pleaded and strictly proved; the Respondent failed, and the 2013 Human Resource Policy Manual was found to be the applicable policy
The Respondent's witness acknowledged the manual; the termination letter itself invoked the disciplinary policy; the handover notes recorded the policies; the impugned document was described as a 2023 policy with no evidence connecting it to the 2013 manual; no forensic examination was offered; and the allegation was abandoned in submissions.
Substantive justification for the termination
No valid and fair reason was proved: the procurement policy breached did not exist, the Director who gave the instructions was not called, the engagement and payment were not solely the Claimant's doing, and the minutes were unreliable
The court held that a genuine belief under section 43(2) must be reasonably held on existing facts. Accusing an employee of breaching a non-existent policy is antithetical to a valid reason. The Bukenya inference was drawn against the Respondent for failing to call the Director, and untested statements could not be preferred over the Claimant's sworn evidence.
Reliefs: notice pay, compensation, reinstatement and other prayers
One month's notice pay and six months' compensation under section 49(1)(c) awarded; reinstatement, underpayment, aggravated damages, apology and deletion refused
Reinstatement was barred by lapse of the three-year period under section 12(3)(vii) and impracticability given the senior position of trust and broken relationship. Compensation was balanced against the short nine-month service and the Claimant's own contributory lapses, weighed against the unfairness and reputational harm of unproven accusations.
Legal principles established
#- An employer who departs from its own disciplinary policy in the case of a particular employee commits a strong indicator of procedural unfairness; a policy binds the employer that made it
- An employee cannot be validly terminated for breaching a procedure that was never prescribed, written or made known to him
- Where a party fails without explanation to call a witness within its control whose evidence goes to the heart of the matter, the court may infer the evidence would not have supported that party's case
- A genuine belief under section 43(2) must be reasonably held on material before the employer; a belief contradicted by the employer's own documents is not genuine
Court orders
#- 1.A declaration that the termination of the Claimant's employment was both substantively and procedurally unfair
- 2.Payment of one month's salary in lieu of notice: Kshs. 400,000
- 3.Compensation under section 49(1)(c) of the Employment Act, being six months' salary: Kshs. 2,400,000
- 4.Sums awarded subject to statutory deductions, if any, applicable in law
- 5.Interest on the sums awarded at court rates from the date of judgment until payment in full
- 6.Issuance of a certificate of service under section 51 of the Employment Act within thirty days of the judgment
- 7.Prayers for reinstatement, underpayment for services to sister companies, aggravated and exemplary damages, and apology and deletion of records dismissed
- 8.Respondent to bear the 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 Act, section 12 (employment and labour relations jurisdiction)
Relief refused
#Unconditional reinstatement
Three-year statutory window under section 12(3)(vii) had lapsed; senior position of trust and broken-down relationship made reinstatement impracticable
Kshs. 10,320,000 for underpayment for services rendered to sister companies
No agreed additional remuneration; claim unparticularised and figure not founded on any agreed or proven rate
Aggravated and exemplary damages
Section 49(1)(c) compensation already accounts for circumstances including reputational injury; no conduct outside the termination warranting such damages
Apology and deletion of records
No legal basis laid; declaration of unfairness sufficient vindication
Costs
The Respondent shall bear the costs of the suit; interest on the sums awarded at court rates from the date of judgment until payment in full.
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.
A policy binds the employer that made it as much as it binds the employees to whom it applies.
A procedure that has never been prescribed cannot be breached. An employee can only be held to a standard that has been set and made known to him.
Participation in a hearing that is flawed at its foundation does not cure it. The question is not whether the employee attended and spoke, but whether he was given a fair opportunity to meet the case against him. He was not.
The Director thus became, in effect, the complainant, a witness and a judge in the same cause.
A declaration is hereby issued that the termination of the Claimant's employment by the Respondent was both substantively and procedurally unfair;
The Respondent shall pay the Claimant the following sums: (i) One month's salary in lieu of notice: Kshs. 400,000; (ii) Compensation under section 49(1)(c) of the Employment Act, being six (6) months' salary: Kshs. 2,400,000;
The Respondent shall bear the costs of the suit.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Lugado v Gold Crown Foods (EPZ) Limited", Case Analysis (2026). Employment and Labour Relations Cause E074 of 2024. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/2731/eng@2026-09-30
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.