EMPLOYEE TERMINATION RIGHTS IN KENYA

 Termination of employment can be a serious issue, especially when it’s done unfairly. Kenyan law has clear rules that protect employees from being fired without following due process. In this post, I’ll use the case of Anthony Mkala Chitavi v Malindi Water & Sewerage Co. Ltd [2013] eKLR to explain your rights as an employee during termination in Kenya.

FACTS OF THE CASE 

Anthony Mkala Chitavi (the Claimant) was first appointed as Chief Executive Officer by Malindi Water & Sewerage Company Ltd (the Respondent) on a three-year renewable contract effective June 28, 2006. His salary package included a basic salary of Kshs 70,800/-, house allowance of Kshs 30,000/-, and other allowances of Kshs 27,000/- per month. 

On August 2, 2007, the Permanent Secretary, Ministry of Water and Irrigation, appointed him as Managing Director for Mombasa Municipality Water Supply (NWCPC) on a new three-year contract, commencing August 15, 2007. This new role came with a significantly higher salary totaling Kshs 300,000/- per month. 

Then, in October 2008, the same Ministry moved him back to Malindi Water as their Managing Director. The Ministry explicitly told him he would sign a new employment contract with Malindi Water, and his starting salary package would be less than what he was earning at Mombasa Water. He signed this new contract with Malindi Water in November 2008. 

 In January 2009, Anthony was charged with abusing his office from when he was at Mombasa Water. In August 2009, the Ministry told Malindi Water to suspend him because of these corruption charges. Soon after, the Ministry also sent a report to Malindi Water about mismanagement and bad purchasing practices that seemed to involve Anthony. Malindi Water formed a special committee to investigate. In September 2009, Malindi Water sent Anthony the Ministry's report and the committee's findings of "gross administrative misconduct" and asked him to provide his explanations by the end of the month. He did send his written explanations. 

 He was then called to a Board meeting on October 13, 2009, to defend himself. Anthony went to the meeting with his lawyer, but he asked for more time to prepare (just one more day), which was denied. He then walked out of the meeting. Dismissal: Two days later, on October 15, 2009, Malindi Water sent him a letter firing him immediately (summary dismissal) for "gross misconduct and abuse of office". The letter listed several reasons, including: excessive mileage claims, failing to stop irregular tendering (bad purchasing deals), irregular staff recruitment, and excessive use of budget allocations.  

Anthony filed a Statement of Claim on December 2, 2009, arguing his dismissal was unjustified, unfair, and a breach of contract because no proper investigations were carried out and natural justice was not observed. He also claimed constructive dismissal due to his salary reduction. He sought salary arrears (the difference from his Mombasa Water salary), damages for unlawful dismissal, and damages for breach of contract. 

LEGAL ISSUES 

• Whether the Claimant’s contract with the Respondent dated November 3, 2008, was a continuation of his previous contract dated August 2, 2007 (with Mombasa Water Supply).
•  Whether this was a case of constructive dismissal. (Did Malindi Water make his job so unbearable that he was forced to leave, even though he didn't technically resign?) 
•  Whether the dismissal of the Claimant was unfair, addressing both procedural and substantive fairness. In procedural fairness: Did Malindi Water follow the correct steps when firing him? and in substantive fairness: Did Malindi Water have good and proven reasons for firing him?
•  If the dismissal was unfair, what would be the appropriate relief. 

COURT'S REASONING 

• Was the contract a continuation? The court said, "No, definitely not!". Even though the Ministry moved him, Malindi Water and Mombasa Water are separate companies. The court cited legal precedent that continuity of employment must be with the same dismissing employer. Anthony also admitted in cross-examination that his contract with the Respondent was a new contract, not a continuation. Therefore, there was no continuity of employment. 
• Was it constructive dismissal? The court explained that constructive dismissal occurs when an employer creates an intolerable work environment that forces an employee to resign. In this case, Anthony did not resign; he underwent a disciplinary process and was subsequently dismissed. Therefore, the court concluded that this was not a case of constructive dismissal. 
• Was the dismissal fair? 

On Procedural Fairness: The court noted that Section 41 of the Employment Act, 2007, requires employers to demonstrate procedural fairness. They have to inform the employee clearly what they are accused of, give them a chance to prepare and explain their side and listen to their explanation before making a decision. The court found that Malindi Water did follow the correct procedure: Anthony was informed of the charges in writing on September 14, 2009, and even given the investigation reports. He admitted he knew about them. He was given nearly two weeks to provide his written explanation, which the court considered adequate time to prepare. He was also given an opportunity to speak and defend himself at the Board meeting on October 13, 2009. Even though he asked for more time and then walked out, the court said he didn't give a good reason for needing more time, especially since he had already had weeks to prepare. Since the opportunity was given, and he didn't use it, the process was still procedurally fair. 

 

On Substantive Fairness: Sections 43, 45, and 47(5) of the Employment Act require an employer to prove the reasons for termination were valid and fair. The court considered all reasons cited by the Respondent for dismissal but it concluded that although the Respondent may have had reasons to terminate, they failed to provide sufficient material evidence to justify the grounds of misconduct and prove that the reasons for termination were valid and fair . The termination was consequently found to be substantively unfair. 

COURT'S HOLDING/JUDGEMENT 

Continuity of Employment: The court held that Anthony Mkala Chitavi was not in continuous employment with Malindi Water & Sewerage Company Ltd.

Constructive Dismissal: The court held that this was not a case of constructive dismissal .

Fairness of Dismissal: The court held that the dismissal was procedurally fair but substantively unfair because Malindi Water failed to prove the reasons for termination were valid and fair .

Salary Arrears: Anthony's claim for Kshs 1,102,000/- as salary arrears (the difference from his Mombasa Water salary) was dismissed due to the lack of continuous employment.

Compensation for Unfair Termination: Anthony was awarded Kshs 672,000/- as compensation, calculated as three months of his gross wages at the time of termination (Kshs 224,000/- x 3 months). The court exercised its discretion, considering the three-year contract, gratuity provisions, and Anthony's prospects as an engineer.

Damages for Breach of Contract: This claim was not awarded as the Employment Act, 2007, now provides remedies for unfair termination and wrongful dismissal.

Costs: No order as to costs was made, specifically because Anthony failed to comply with the court's directions on filing written submissions. 

LEGAL PRINCIPLES ESTABLISHED 

Continuity of Employment is Specific: Just because you're moved to a new role by the same higher authority doesn't mean your employment continues if you're signing a new contract with a different legal entity (like a different company). It's usually considered a fresh start.

Constructive Dismissal Requires Resignation: To claim you were constructively dismissed, you generally have to show that your employer made working conditions so bad that you were forced to quit. If you were fired after a disciplinary process, even if you disagreed with it, it's not constructive dismissal.

Two Pillars of Fair Dismissal in Kenya: For a dismissal to be legal and fair, employers must get both the "how" and the "why" right:

• Procedural Fairness: You must be told what you're accused of and given a proper chance to explain and defend yourself. If this chance is given, and you don't use it, the process can still be considered fair.
•  Substantive Fairness: The employer must have genuine, valid, and fair reasons for dismissal, and they have the burden to prove those reasons with actual evidence in court. Simply stating reasons isn't enough; they need to back them up.

Employer's Responsibility to Prove: If an employee claims unfair dismissal, the employer is responsible for showing the court that their reasons were true and fair. If they can't provide the evidence, even if they thought they had good reasons, the dismissal will likely be ruled unfair. 

The case of Anthony Mkala Chitavi shows that how an employee is dismissed is just as important as why they are dismissed. Kenyan law requires employers to follow proper procedure, give clear reasons, and allow the employee a chance to be heard. As an employee, you have rights, and if those rights are violated during termination, the courts can step in. Whether you’re employed or managing staff, understanding these rules can protect you from costly mistakes or unfair treatment.

Catch you in the next blog!

 

Disclaimer- The information provided is for general informational purposes only and should not be considered as professional advice. Please consult a qualified professional for specific guidance. 

REFERENCES 

Anthony Mkala Chitavi v Malindi Water & Sewerage Co. Ltd [2013] KEELRC 920 (KLR), Employment and Labour Relations Court at Mombasa, Judgment delivered 6 December 2013.