EMPLOYERS CANNOT RELY SOLELY ON THE TERMINATION CLAUSE TO TERMINATE AN EMPLOYMENT CONTRACT WITHOUT VALID REASON(S)
Review of Cause E021 of 2022 [2024]: Benson Muriithi Kagai v Kenga Equatorial Hotels Limited t/a Mombasa Continental Resort
In this case, Mr. Benson Muriithi Kagai (the Claimant) sued Kenya Equatorial Hotel Limited vide a Memorandum of Claim dated 24th March, 2022 and filed in court on 25th March, 2022 and pleaded among other things that:
- On 22nd February, 2022, the Operations Manager called him to his office and issued him with a termination letter dated 21st February, 2022. That the said letter, signed by directors of the hotel did not explain the reasons for his termination and that when the Claimant sought to know the reasons for his termination, the same was never provided.
Benson’s termination letter dated 21st February, 2022 stated as follows: –
“Re: Termination of Employment
On behalf of the Board of KEHL, the Proprietor of the Mombasa Continental Hotel, I wish
to inform you that in exercise of its powers under Clause 18 of the contract of employment
entered by you with it on 14.9.2021, it is terminating your contract forthwith by paying you
one month’s salary in lieu of one month’s notice. I attach a cheque for Kshs.378,393/= (As
per the attached schedule) for which kindly acknowledge receipt by signing and returning
the counterpart of this letter.
The Board wishes you well in your future endeavours.
Yours faithfully,
Eng. S.M. Gathuri
Chairman – BOD”
In its wisdom and determining that the termination of Mr. Benson’s employment was unfair, the court stated as follow:
“It is worth noting that the foregoing letter did not state the reason for terminating the Claimant’s employment. The fact that Clause 18 of the Claimant’s employment contract provided that either party could terminate the contract by giving the other a one-month notice or by paying one month pay (salary) in lieu of notice did not mean that the Respondent could terminate the Claimant’s employment without a valid reason. The said clause could only be invoked by the Respondent if it had a valid reason to terminate the contract of employment.
Section 43 of the Employment Act, 2007 provides as follows:
In any claim arising out of a termination of a contract, the employer shall be required to prove the reason or reasons for the termination, and where the employer fails to do so, the termination shall be deemed to have been unfair within the meaning of Section 45.”
That where a letter of termination of employment is issued by an employer, the reason or reasons for terminating the employee’s contract must be stated in that letter. It is that reason or reasons whose validity the employer would be required to prove in any claim arising out of the termination of contract.
The court went ahead to state that having made a finding that termination of the Claimant’s employment by the Respondent was unfair, and taking into account the short period that the Claimant was in the Respondent’s employment and the manner in which his employment was terminated, I award the Claimant the equivalent of five (5) months’ salary as compensation for unfair termination of employment. It was a common ground that the Claimant’s gross monthly salary at the time of termination was Kshs.250,000/=. His contract of employment stated as much. The equivalent of five (5) months’ salary is Kshs.250,000 x 5 = Kshs.1,250,000/=, which I award the Claimant.
The awarded sum shall be subject to statutory deductions pursuant to Section 49(2) of the Employment
Act.
The Claimant is also awarded costs of the suit and interest. Interest shall be calculated at court rates from
the date of this Judgment.
This decision reinforces the mandatory obligation imposed to the all employers to always give valid reasons before terminating their employees’ employment contract.
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