https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/1468

**REPUBLIC OF KENYA** **IN THE EMPLOYMENT & LABOUR RELATIONS COURT** **AT MOMBASA** **CAUSE NO. E094 OF 2024** **CALEB KAMOTE MBUKU…………….…………CLAIMANT** **VERSUS** **KENSALT LIMITED………………..………………RESPONDENT** **JUDGMENT** **Background** 1. By the Memorandum of claim dated 2nd October, 2024, the Claimant sued the Respondent seeking judgment against it for the following remedies: - a) The Respondent be ordered to pay the Claimant terminal dues of Ksh19,600,001/=. b) A declaration that the termination of the Claimant’s employment was unfair. c) Award of damages for discrimination. d) Cost of the claim and interest at court rates. e) Any other relief this court deems just to grant. 1. The Respondent challenged the Claimant’s claim in its Reply to the Memorandum of Claim dated 11th November, 2024. The Respondent stated that the Claimant was indeed its employee under a fixed-term contract, which lawfully ended by effluxion of time, not by unfair termination or wrongful dismissal. **Claimant’s case** 1. The Claimant’s case is that he was employed by the Respondent, Kensalt Limited, in 2002 as a Personnel and Training Manager, earning a salary of KShs 45,000/=. Over the years, he rose through the ranks to become Group Human Resources Manager, overseeing the human resource functions of the Respondent’s group of companies. By the time his employment ended, he was earning a consolidated salary of KShs 1,100,000/=. 2. The Claimant states that on or about 3rd September 2024, he reported to the office of his supervisor, Mr. Arpan Basu Roy, for routine discussions and was provided with an internal memorandum to review. According to the Claimant, the memorandum conveyed that a decision had been made to retire him with immediate effect. He asserts that the memorandum was not personally addressed to him and that no prior discussions regarding his alleged retirement had taken place. 3. The Claimant further asserts that his employment contract issued in 2002 did not specify a retirement age, nor was there any other instrument outlining such a provision. He maintains that he served the Respondent diligently for twenty-two years and believes he deserved better treatment than the manner in which he was retired. 4. He states that, as a result of the premature retirement, he suffered psychological torture, loss of dignity, and financial hardship, including an inability to meet loan obligations incurred during his employment. He also contends that the Respondent failed to pay his terminal dues despite a demand and notice of intention to sue. 5. The Claimant therefore seeks payment of one month’s salary in lieu of notice, accrued leave, leave travelling allowance, prorated leave for 2024, salary for four days worked in September 2024, compensation equivalent to twelve months’ salary for unfair termination, salary for the remainder of the contract period, damages for discrimination, issuance of a certificate of service and an official retirement letter, together with costs and interest. 6. Cross examined, the Claimant stated that he worked for the Respondent for a period of 22 years. His promotion to the Group Human Resources Manager was under the contract dated 23rd October 2018. Clause 11 of the contract provided for termination. Sub-clause C[ii] provided for a termination notice. 7. He further testified that under Clause 11[c] [iii] the Respondent would terminate the contract of employment without being bound to give reasons. 8. At the time of separation, he was 58 years old. His prospects of securing another job were minimal. 9. The pay slips that he has presented in evidence demonstrate that at the time of exit from employment, he had loans owed to various institutions. 10. He further testified that his employment was terminated when he had four months remaining on his fixed-term contract. **Respondent’s case** 1. The Respondent asserts that the Claimant was employed by them; however, his employment was lawfully terminated upon the expiration of a fixed-term contract entered into approximately on 23rd October 2022 and signed on 26th October 2022. The Respondent maintains that the contract came to an end by effluxion of time and that no unlawful termination occurred. Furthermore, the reference to “retirement” in the communication sent to the Claimant solely pertains to the natural expiration of the contract and does not imply unlawful or forced retirement. 2. The Respondent asserts that, under the terms of the contract, it was not obligated to provide reasons for non-renewal and that all employment agreements should inherently include an exit clause. It maintains that there is no guarantee of employment until the retirement age and that the Claimant’s contract concluded consensually upon the expiration of the stipulated term. Consequently, the Respondent contends that claims for notice pay and compensation for unfair dismissal are unfounded, as the contract merely expired rather than being terminated prematurely. 3. The Respondent further avers that Sections 35 and 41 of the Employment Act were neither breached nor applicable in the context of an expiring fixed-term contract. It maintains that the Claimant’s right to fair labour practices under Article 41 of the Constitution was not violated. The contract's termination did not cause him embarrassment, hardship, or an inability to secure future employment. 4. The Respondent also disputes the Claimant’s claims for salary for the unserved portion of the contract and for compensation equivalent to twelve months’ salary, arguing that these claims constitute unjust enrichment and compensation for services not rendered. It contends that it did not compromise the Claimant’s earning capacity, physical well-being, or professional reputation. 5. The Respondent’s witness, in his cross-examination testimony, stated that the Claimant was retired while the appointed date of expiry of his contract had not yet arrived. 6. He was retired under the Memo dated 30th August 2024, which took effect immediately. The witness admitted that he called the Claimant to his office and explained that the Respondent had decided to retire him. The Respondent does not have a retirement policy. The Claimant’s employment did not provide for retirement. 7. The witness stated that he would not explain why the Claimant retired, as the decision was made by top management without his [the witness's] involvement. 8. Having worked for the Respondent for twenty-two years, it would have been fair for him to be given reasons for the retirement. 9. At the time of separation, the Claimant owed the Respondent a loan of KShs. 1,300,000. The Respondent did not present to the court any document showing that the loan was not repaid. 10. Indeed, the pay slips, which were ordinarily prepared by the Respondent, show that the Claimant owed KCB KShs. 6.700.000 and Cooperative Bank of Kenya KShs. 280,000. 1. The Claimant is entitled to the sums sought under paragraph 12[i]-[iv] of the Statement of Claim. The Respondent considered the figures before offsetting the amounts owed to it by the Claimant. The Respondent has not presented any document showing the tabulation. 2. Before the said Memo, there were no discussions between the Claimant and the Respondent regarding the impending termination of his employment in the manner it was or at all. **Claimant’s submissions** 1. The Claimant identifies two issues for determination: whether the Respondent had a valid reason to retire the Claimant, and whether the Claimant is entitled to the reliefs sought. 2. Under Sections 43 and 45 of the Employment Act, the Respondent was obligated to prove the reason for termination and that the reason was fair and valid. To support this point, reliance is placed on **Kenya Commercial** **Bank Limited v Thomas Nyangi Mwita [2019] KECA 337 (KLR).** 3. The Claimant argues that a keen look at the Memo, through which the Claimant’s employment was terminated with immediate effect, reveals that no reasons were given why the Claimant was being retired, and does not allude to any prior discussions on the retirement. Additionally, the Respondent’s witness did not present any evidence from which the reason for the termination can be discerned. 4. Inarguably, the Claimant’s employment was terminated without him being accorded a hearing, contrary to the dictates of procedural fairness. Adherence to the dictates of procedural fairness is mandatory even when an employee is being retired by the employer. To support this submission, reliance has been placed on the Court of Appeal decision **Nation Media Group Limited v Munene [ 2025] KECA [KLR].** 5. Regarding remedies, the Claimant submits that RW1 admitted he was entitled to one month’s notice pay, accrued leave, leave travelling allowance, pro rata leave, and salary for four days worked in September 2024, totalling approximately KShs 2,000,001/=. Although the Respondent alleged that these dues were offset against a salary loan of KShs 1,300,000/=, the Claimant submits that no proper final dues tabulation was produced to demonstrate any repayments made or the outstanding balance. He therefore urges the court to award the full amount claimed. 6. The Claimant further submits that he is entitled to twelve months’ compensation under Section 49(1)(c) of the Employment Act on account of the unfair manner of his retirement. He urges the court to consider the circumstances of termination, his twenty-two years of service, his age, the difficulty of obtaining comparable employment, the outstanding loans he continues to service, and the expenses incurred in pursuing the claim. **Respondent’s submissions** 1. The Respondent identifies two issues for determination, whether the Claimant’s retirement was lawful, and whether he is entitled to the reliefs sought. 2. The Respondent contends that, examining all pertinent facts of the case, it is evident that the situation pertains to an employee's retirement rather than termination of employment. Prior to the Claimant's retirement, he was afforded an opportunity to be heard in accordance with principles of natural justice. He was granted a hearing on September 3, 2024. Citing Johnstone **Jadhan Othieno Okumu v Pwani Oil Products Limited Industrial Cause No. 155 of 2013 [2013] LLR 281 (ICK),** the Respondent argues that in the context of section 41 of the Employment Act, the procedural requirements contemplated therein do not equate a mini-court hearing. 3. The Respondent further argues that the Claimant did not make any protest upon receiving the information from Mr Apran Basu Roy that he had made a decision to retire him. The Claimant did not show up for work on the 4th September 2024, akin to saying, ‘Look, I refused to go back to those people. I was not heard. Order them to pay me.’’ 4. The Respondent also relies on Bernard Wanjohi Muriuki v Kirinyaga Water and Sanitation Company Limited, Kenya Union of Domestic, Hotels, Educational Institutions, Hospitals and Allied Workers v Egerton University (Industrial Cause No. 208 of 2013), and Kennedy Mwakha Munyeti v Wilson Rading Otieno (Industrial Cause No. 108 of 2013) to argue that retirement and contract expiry-related employment separations do not necessarily attract the procedural requirements applicable to dismissals on grounds such as misconduct, incapacity, or poor performance. 5. Regarding the reliefs sought, the Respondent submits that the claims remain unsubstantiated. It argues that items relating to notice pay, leave, leave travelling allowance, pro rata leave, and salary for days worked had already been computed and offset against the Claimant’s admitted salary advance debt of Kshs 1,400,000/=, leaving the Claimant indebted to the company in the sum of Kshs 36,753/=. 6. Regarding the claim for salary in respect of the unexpired portion of the contract, the Respondent submits that the Claimant is not entitled to payment for services not rendered. It contends that the contract relied upon by the Claimant took effect on 26th October 2022 and that only eighteen days remained before expiry at the time of retirement. The Respondent relies on **Simon Patrice Matianyi v G4S Security Services (K) Ltd, Industrial Cause No. 20 of 2012 [2012] LLR 241 (ICK)**, to argue that courts do not award future earnings for services not rendered unless there is legal justification. 7. The Claimant failed to prove his case on the balance of probabilities. The Court is therefore urged to dismiss the entire claim with costs. **Analysis and submissions** 1. I have carefully considered the parties’ pleadings, evidence and submissions, and the following issues emerge for determination; 2. Whether the Claimant’s employment was terminated at the initiative of the Respondent. 3. Whether the termination was unfair. 4. whether the Claimant is entitled to the reliefs sought. 5. In paragraph 3 of the Reply to the Memorandum of Claim, the Respondent pleaded; ***“The Respondent denies in toto the contents of paragraphs 4, 5, and 6 of the Memorandum of Claim and puts the Claimant to strict proof. In* further *response to the above, the respondent states that on or about the 23rd October,2022 and signed on 26th October 2022, the Claimant and the Respondent entered into a contract of employment which came to an end by effluxion of time and the Claimant was retired, and there was no unfair termination of employment.”*** 1. It is trite law that parties are bound by their pleadings, and nothing turns on any evidence or position that is at variance with them. 2. Having asserted that the Claimant’s employment was terminated by the expiration of the contractual period, the Respondent would not justifiably and appropriately advance an alternative explanation. The Court recognises that, in its evidence and submissions, the Respondent modified its stance, relinquishing the argument of expiration of time and instead emphasising "retirement” without providing clarification on the circumstances that led to the retirement. Initially, the Respondent asserted through its pleadings that the Claimant had retired when his contract expired due to the passage of time. Legally, nothing turns on the new position, and evidence that was at variance with the pleadings. 3. Inarguably, the Claimant last served the Respondent under a two-year fixed-term contract commencing on 2nd December 2022, which was therefore due to run until 2nd December 2024. As correctly admitted by the Respondent’s witness, the Claimant’s employment was brought to an end before the expiration of the fixed -term contract. 4. By an Internal Memo dated 30th August 2024, the Respondent wrote to Arpan Basu Roy, thus; ***“As you are aware, the time has now come for Caleb Mbuku to retire from Kensalt. This exercise can be undertaken with immediate effect.*** ***We would like to thank Caleb for his services at Kensalt over the years.*** ***Kindly relieve him of his duties with immediate effect. You need to clear his dues in line with the retirement laws of Kenya.*** ***You need to inform your team of this development.”*** 1. The Respondent’s witness explicitly testified that, after this Memo, he communicated the top management’s decision and implemented the instruction contained in the Memo. Undoubtedly, the contract of employment was terminated at the Respondent’s initiative. 2. In fact, given that the termination was with immediate effect, without the contractual or statutory notice, it is not off the mark to conclude that what happened was a summary dismissal in terms of section 44[1] of the Employment Act, 2007. 3. The Respondent contends that the instant case is a clear case of retirement rather than a termination of employment. This is a difficult position to understand. Not because it is complex in any sense, but because it makes no logical or legal sense. 4. In the instant matter, the employee’s separation from employment did not arise from retirement in the legal sense, but from the premature termination of a subsisting contractual engagement. To characterise such termination as “retirement” is therefore not only legally inaccurate, but appears calculated to obscure the true nature of the separation and the attendant rights and obligations flowing therefrom. This Court is careful not to permit parties to sanitise or rebrand premature terminations of fixed-term contracts under the guise of retirement, as doing so would undermine both contractual certainty and the protections afforded to employees under the law. 1. Having established, as I have hereinabove, that the Claimant’s employment was terminated at the initiative of the Respondent, I now proceed to examine whether the termination was fair. 2. In a dispute regarding the termination of an employee’s employment, the law, Section 43 of the Employment Act,2007, bestows on the employer the burden to prove the reason for the termination. In default, the termination shall be deemed unfair by dint of Section 45 of the Act. Section 45 of the Act places a further duty upon the employer to prove that the reason or reasons was fair. The Respondent bore this duty. 3. In **Kenya Commercial Bank Limited v Thomas Nyangi Mwita [2019] KECA 337 (KLR)**, the Court of Appeal elaborated on the duty as follows; **“*Section 43 of the Employment Act, 2007 requires that in a claim arising out of termination of a contract, it is the duty of an employer to prove the reason or reasons for termination, and where the employer fails to do so, such termination is deemed to have been unfair within the meaning of section 45 of the said Act. By the said section 45 termination of employment by an employer is deemed to be unfair if the employer fails to prove that the reason for termination is valid and that the reason for termination is a fair reason. Further, by section 47 of the said Act, where there is a complaint of unfair termination of employment or wrongful dismissal, the burden of proving that unfair termination of employment or wrongful dismissal has occurred shall rest on the employee, while the burden of justifying the grounds for the termination of employment or wrongful dismissal shall rest on the employer.”*** 1. In my view, blurred by the legally and logically unsound position it took regarding the manner of the Claimant’s separation by engaging in an artificial and unsustainable distinction that is unsupported by both principle and common sense, between retirement and termination, the Respondent did not see the sense in endeavouring to discharge the legal burden. 2. The Respondent did not present any evidence to demonstrate the reason for its decision to retire the Claimant with immediate effect, thereby terminating his employment before the appointed lapse date of his contract. The Respondent's decision was not contractually justified and or shown to be anchored in any stipulations of its Human Resources Policies and Manual or in any legal provision. As a result, it is not difficult to see that the Respondent failed to discharge its legal burdens under sections 43 and 45 of the Employment Act. The termination was substantively unfair. 3. The memorandum was not addressed to the Claimant personally, no prior written notice was issued to him, and no evidence was produced to show that he was invited to make representations before the decision took effect. Therefore, the Claimant’s termination was unfair and unlawful. 4. Procedural justice is the procedural twin of substantive fairness. The Application of natural justice, specifically the right to a fair hearing, is paramount in termination of employment matters. Judicial wisdom suggests that the process by which a decision is reached is often as important as the decision itself. In the absence of procedural fairness, even a substantively justified dismissal may be rendered unfair, as a lack of fair process undermines the legitimacy of the employer’s action. 5. The Respondent contended that, in terminating the Claimant’s employment in the manner it did, it acted in conformity with the dictates of procedural fairness contemplated in section 41 of the Employment Act and with natural justice. Further, the Claimant was accorded a hearing on 3rd September 2024. 6. This assertion ignores the fact that the mandatory procedure set out in Section 41 is a three-step process. It begins with notifying the employee of the employer’s intention to terminate their employment and the basis for that intention, followed by the affected employee being given an adequate opportunity to make representations on the intention and the grounds for it, and, lastly, the employer considering the representation before making a final decision. All that happened on the said date was an explanation to the Claimant of the Respondent’s decision, which had been reached without him first being notified of the Respondent’s intention and reasons for the same, making representations and consideration of the same representations. No doubt, the dictates of procedural fairness were not adhered to. 7. On the second issue, the Claimant seeks terminal dues and compensation. **One-month salary in lieu of notice Ksh1,100,000/=** **20 days leave earned and not taken KShs 733,3331=** **Leave travelling allowance for 2023 KShs 12,000/=** **Prorate leave for 2024 KShs 8000/=** **4 days worked in September 2024 KShs 146,668=** 1. These reliefs were specifically set out in paragraph 12[ 1-5] of the Claimant’s Statement of Claim. In his evidence on cross-examination, the Respondent’s witness testified that, at separation, the Claimant was entitled to the reliefs; however, the entitlement was offset against the Kenyan shillings one million three hundred thousand shillings that he owed the Respondent. Further cross-examination revealed that the witness had no document to demonstrate that the Claimant indeed owed the Respondent the amount. In light of this admission, I find no reason to hold that the Claimant is not entitled to the sums. 2. The claim for compensation is justified in principle, this Court having found that the termination was unfair. Under Section 49 of the Employment Act, the compensatory relief contemplated thereunder is at the discretion of the Court and granted depending on the circumstances of each case. I have carefully considered the length of the Claimant’s service, his age, the prospects of securing similar employment, considering his age, his expectation that he was to be in employment till the appointed lapse date of his contract of employment, the period that remained to the lapse of his contract period, and that he did not in any proven manner contribute to the termination, and hold that he is entitled to the compensatory relief to the extent of five months’ gross salary. 3. The Claimant also sought compensation for the remaining duration of the contract, amounting to Ksh 4,400,000. This remedy is one I choose not to grant. Section 49 of the Employment Act, 2007, does not authorise anticipatory earnings; however, I am of the opinion that this provision should be amended accordingly to empower the court to award such earnings when justice requires. 4. In the case of **Francis Waithaka Ngokonyo and 2 others vs Telkom Kenya Limited [2025] KESC 75[KLR],** the Supreme Court explicitly held that claims for anticipatory salaries of future salaries lack a statutory foundation under the Employment Act. 5. Under Section 51 of the Employment Act, 2007, a certificate of service is a statutory entitlement for an employee, regardless of how they left employment. The Claimant is entitled to the certificate. 6. In the upshot, Judgment is hereby entered against the Respondent in the following terms; 7. A declaration that the termination of his employment was substantively and procedurally unfair. 8. Compensation pursuant to the provisions of section 49[1][c] of the Employment Act, five months’ gross salary, KShs. 5,500,000. 9. One month’s salary in lieu of notice, KShs. 1,100,000. 10. 20 days earned but unutilized leave days, KShs. 733,333. 11. Leave travelling allowance for 2023, KShs. 12,000. 12. Prorated leave pay for unutilized leave days in 2024, KShs. 8000. 13. Salary for four days worked in September 2024, KShs. 146, 668. 14. Costs of the suit. 15. Interest on the awarded sums above, from the date of this judgment till full payment. **Read, Signed and Delivered this 28th Day of May 2026.** **OCHARO KEBIRA** **JUDGE.**