https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/2023

Mwandembo v Swafi Foods Limited (Employment and Labour Relations Cause E042 of 2025) [2026] KEELRC 2023 (KLR) (25 June 2026) (Judgment) Neutral citation: [2026] KEELRC 2023 (KLR) Republic of Kenya In the Employment and Labour Relations Court at Mombasa Employment and Labour Relations Cause E042 of 2025 K Ocharo, J June 25, 2026 Between Herman Mwandembo Claimant and Swafi Foods Limited Respondent Judgment Introduction 1.By a Memorandum of Claim dated 4th April 2025, the Claimant, Herman Mwachala, sued the Respondent, Swafi Foods Limited, seeking a declaration that his termination from employment was unlawful, general damages for breach of contract and unlawful termination, and costs and interest, particularising his claim for unfair termination at twelve (12) months' gross salary. 2.The Respondent entered appearance and filed its Response to the Memorandum of Claim dated 25th June 2025. It admitted that it employed the Claimant under a contract dated 30th November 2022 at a gross monthly salary of Kshs. 220,700.00, but denied that his employment was unlawfully or unfairly terminated. It contended that the Claimant's tenure was marked by poor performance and unprofessionalism which occasioned it substantial financial loss, and that his services were accordingly, and lawfully, dispensed with. 3.The suit proceeded to full hearing. The Claimant testified in support of his case, and the Respondent called its General Manager, Finance and Administration, Mr Alfonce M. Kyalo, in its defence. At the close of the hearing, the parties filed written submissions. The Claimant's Case 4.It was the Claimant's case that he was employed by the Respondent on a permanent basis with effect from 30th November 2022 as Head of Sales and Marketing, earning a monthly salary of Kshs. 220,700.00, and that throughout his tenure he discharged his duties diligently and faithfully. He testified that on 4th October 2024 he received a termination notice instructing him to stop work with immediate effect, without any reason being furnished. He maintained that he had, prior to that notice, never been issued with a warning letter, a notice to show cause, or any other communication suggesting that his performance or conduct was unsatisfactory, and that he was at no stage accorded a hearing or an opportunity to respond to any allegation before the decision to terminate his employment was made. 5.The Claimant acknowledged that he was thereafter paid his terminal dues and issued with a certificate of service. He testified, however, that the abrupt and unexplained manner of his dismissal occasioned him financial hardship, emotional distress and damage to his professional reputation, and that his attempts to engage the Respondent in an amicable resolution of the dispute, including a request for a meeting to discuss the reasons for his termination, went unanswered. The Respondent's Case 6.The Respondent's case, as narrated through Mr Kyalo, was that the Claimant had previously worked for an associated entity, Chamu Supplies Limited, on a one-year contract, and resigned in May 2022 to contest an elective political seat. Having been unsuccessful, he sought re-engagement with the Respondent, proposing performance objectives that included expanding the Respondent's local sales presence to at least 30 of Kenya's 47 counties by the year 2030. On the strength of those representations, the Respondent rehired the Claimant in November 2022 as Head of Sales and Marketing Manager at an enhanced salary of Kshs. 220,700.00 and deployed him to establish and manage a new branch in Nairobi, investing in a motor vehicle and office premises for that purpose. 7.According to Mr Kyalo, the Claimant's performance at the Nairobi office fell short of expectations: he left substantial uncollected debts, some outstanding for more than six months, contrary to company policy, and failed to meet the key performance indicators he had proposed. He was issued with warning letters and, following his transfer back to the Mombasa head office in November 2023, was the subject of several further meetings with the Managing Director and other officers of the Respondent, at which his performance was discussed, without material improvement. Mr Kyalo attributed losses of approximately Kshs. 25,000,000.00, rising to Kshs. 28,000,000.00 by December 2024, to the Claimant's mismanagement of the sales function, including poor market mapping, an inability to account for recruited sales promoters without recourse to a subordinate, and irregularities in the procurement of a company vehicle. 8.It was the Respondent's case that management ultimately resolved to terminate the Claimant's employment after hearing him and finding his explanation unsatisfactory; that he was given three months' paid notice; and that he collected his terminal dues and a certificate of service in January 2025. The Respondent accordingly prayed that the suit be dismissed with costs. The Claimant's Submissions 9.Learned counsel for the Claimant submitted that the termination was both substantively and procedurally unfair, in that the Respondent issued no notice to show cause, warning letter, suspension letter or disciplinary invitation, and furnished no reasons before the dismissal. It was submitted that, where poor performance is relied upon, the burden lies on the employer to prove the performance standards applied, the appraisal system used, and the steps taken to address the alleged deficiencies, relying on Jane Samba Mukala v Ol Tukai Lodge Limited (Cause No. 823 of 2010) [2013] eKLR, Pius Machafu Isindu v Lavington Security Guards Limited [2017] eKLR, Walter Ogal Anuro v Teachers Service Commission [2013] eKLR, National Bank of Kenya v Anthony Njue John [2019] eKLR, and Kenfreight (E.A) Limited v Benson K. Nguti [2016] eKLR. It was submitted that the Respondent failed to comply with sections 41, 43 and 45 of the Employment Act, and the Court was urged to declare the termination unfair and unlawful and to award twelve months' compensation in the sum of Kshs. 2,648,400.00, general damages for emotional distress and career disruption in the sum of Kshs. 662,100.00, costs and interest. The Respondent's Submissions 10.Learned counsel for the Respondent submitted that the termination was lawful, effectedunder clause 12 of the letter of employment permitting termination on notice by either party, and was substantively justified by the Claimant's demonstrated poor performance, including his failure to meet agreed targets and the uncollected debts he left behind. It was submitted that the Claimant was issued with warning letters and afforded an opportunity, at a meeting convened for that purpose, to explain himself, which he failed to do satisfactorily. Counsel further submitted that the Employment Act does not recognise a head of damages for emotional distress or career disruption, that the remedies available for unfair termination are confined to those under section 49 of the Act, and that any award of compensation ought, in any event, to be limited to one month's salary. The Court was urged to dismiss the claim with costs. Issues for Determination 11.Two issues fall for determination: first, whether the termination of the Claimant's employment was unfair; and second, if so, what reliefs the Claimant is entitled to. Analysis and Determination Whether the termination was unfair 12.It is not in dispute that the Claimant was employed by the Respondent under a contract dated 30th November 2022 at a gross monthly salary of Kshs. 220,700.00, or that his employment was brought to an end in October 2024. I note that the Claimant places the date of the impugned notice at 4th October 2024, while the Respondent's witness refers to a letter of termination dated 26th October 2024; nothing turns on this discrepancy, since it is common ground that the termination took effect in October 2024 and that the Claimant was thereafter paid three months' salary in lieu of notice together with his other terminal dues. The live controversy is whether that termination met the substantive and procedural fairness requirements prescribed by the Employment Act, 2007. 13.Section 47(5) of the Act allocates the burden of proof as between the parties in the following terms:“For the purposes of this Part, the burden of proving that an 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.” 12.The fact of termination having been established, and indeed not seriously disputed, the evidential burden shifted to the Respondent to justify both the reason for, and the manner of, the termination. Section 43 of the Act provides, in material part, that “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”, the reason being that which the employer, at the time of termination, genuinely believed to exist and which caused it to terminate the employee's services. Section 45(1) and (2) further provide that no employer shall terminate an employee's services unfairly, and that a termination is unfair where the employer fails to prove that the reason for it was valid, that it related to the employee's conduct, capacity, compatibility, or the employer's operational requirements, and that the employment was terminated in accordance with fair procedure. 13.Section 41 of the Act, for its part, sets out the procedural safeguards an employer must observe before terminating an employee on account of misconduct, poor performance or physical incapacity: the employer must explain to the employee, in a language the employee understands, the reason for which termination is being considered, inform the employee of the right to be accompanied by a fellow employee or a shop-floor union representative of the employee's choice, and thereafter hear and consider the employee's response, and that of the person chosen to accompany him, before any final decision is made. 14.The Court of Appeal, in Pius Machafu Isindu v Lavington Security Guards Limited [2017] eKLR, described the weight of these obligations in terms with which I respectfully associate myself:“There can be no doubt that the Act, which was enacted in 2007, places heavy legal obligations on employers in matters of summary dismissal for breach of employment contract and unfair termination involving breach of statutory law. The employer must prove the reasons for termination/dismissal (section 43); prove the reasons are valid and fair (section 45); prove that the grounds are justified (section 47(5)), amongst other provisions. A mandatory and elaborate process is then set up under section 41 requiring notification and hearing before termination.” 12.The Employment and Labour Relations Court, in Walter Ogal Anuro v Teachers Service Commission [2013] eKLR, made the same point in slightly different terms, holding that: “For termination to pass the fairness test, it must be shown that there was not only substantive justification for the termination but also procedural fairness.” 13.Both limbs - substantive and procedural - must therefore be satisfied conjunctively; the presence of one without the other does not suffice to render a termination fair. 14.Turning to the substantive limb, the reason advanced by the Respondent for the termination was the Claimant's poor performance, said to be evidenced by uncollected debts, unmet key performance indicators, declining sales, escalating operating losses, and irregularities in the procurement of a company vehicle. Where poor performance is relied upon as the reason for termination, the employer is held to an exacting standard of proof. In Jane Samba Mukala v Ol Tukai Lodge Limited (Cause No. 823 of 2010) [2013] eKLR, the Court held that the employer bears a high burden and must demonstrate the performance evaluation system used to distinguish good performance from poor performance, and the effort made, through tools such as self-evaluation, peer review or supervisor assessment, to identify weaknesses, set targets with defined timelines, and review progress, before resort is had to warnings or termination. The Court of Appeal reiterated a materially identical standard in National Bank of Kenya v Anthony Njue John [2019] eKLR, holding that where performance is cited as the reason for termination, “the employer is placed at a high level of proof” and must show both the evaluation system applied and the opportunity given to the employee to improve. 15.Measured against that standard, the Respondent's case falls short. Beyond the oral assertions of Mr Kyalo, the Respondent placed before the Court no performance appraisal records, no documented targets bearing the Claimant's acknowledgement, no evaluation tool or scorecard, and no primary financial records substantiating the alleged losses of Kshs. 25,000,000.00 to Kshs. 28,000,000.00 said to be attributable to the Claimant's conduct. Nor was it shown that the key performance indicators relied upon as the measure of the Claimant's failure had been reduced to an agreed, binding set of contractual targets rather than the aspirational objectives he had himself proposed when seeking re-engagement. A bare assertion that an employee performed poorly, unaccompanied by the evaluative machinery the authorities require, does not discharge the burden the law places on the employer. I am not satisfied that the Respondent proved, to the standard required, a valid reason for the Claimant's termination. 16.The procedural limb fares no better. Although the Respondent pleaded that the Claimant was issued with warning letters and was the subject of several meetings with management, no such letters were exhibited, and no minutes, notice to show cause, or other record was produced to demonstrate that the Claimant was ever formally notified, in the manner contemplated by section 41, of specific charges against him, informed of his right to be accompanied by a fellow employee or union representative, and given a genuine opportunity to respond before the decision to terminate his services was taken. General managerial engagements touching on business performance are not the equivalent of the disciplinary hearing that section 41 contemplates, which is a hearing directed at specific allegations, attended by the statutory safeguard of representation, and preceding, not following, the decision to dismiss. I find that no such hearing was demonstrated to have taken place. 17.I am mindful that the Respondent paid the Claimant three months' salary in lieu of notice and issued him with a certificate of service. Neither circumstance cures an otherwise unfair termination. As the Court of Appeal held in Kenfreight (E.A) Limited v Benson K.Nguti [2016] eKLR:“…the termination of the respondent's contract of service was, in the circumstances, unfair, the payment of one month's salary in lieu of notice notwithstanding.” 12.Compliance with the notice or payment-in-lieu requirements of a contract of service is a distinct obligation from the substantive and procedural fairness demanded by sections 41, 43 and 45 of the Act, and satisfaction of the former does not excuse a failure to satisfy the latter. 13.For these reasons, I find that the Respondent failed to prove, on either the substantive or the procedural limb, that the termination of the Claimant's employment was fair. The termination was, in the circumstances, unfair within the meaning of section 45 of the Employment Act, and I so find. Whether the Claimant is entitled to the reliefs sought 25.Having found the termination unfair, I turn to the reliefs to which the Claimant is entitled. He sought a declaration that the dismissal was unlawful; general damages for breach of contract, unlawful termination, emotional distress, and career disruption; compensation, particularised at twelve months' salary; and costs and interest. 26.The declaration sought follows as a matter of course from the finding already made, and I grant it. 27.As to the claim for general damages for emotional distress and career disruption, the remedies available to an employee whose services have been unfairly terminated are, subject to any distinct cause of action properly pleaded and proved, those set out under section 49 of the Employment Act. That provision does not extend to an award of general damages for mental distress or injury to reputation, matters which lie, if at all, in the separate domain of the law of tort and were not, in any event, particularised or supported by any independent evidence, medical or otherwise, in this case. I decline to make an award under this head. 28.The principal relief remaining is compensation under section 49(1)(c) of the Employment Act, which empowers the Court to award “the equivalent of a number of months' wages or salary not exceeding twelve months based on the gross monthly wage or salary of the employee at the time of dismissal”, such relief being discretionary and not an entitlement as of right up to the statutory maximum. Section 49(4) of the Act directs the Court, in exercising that discretion, to have regard to a number of factors, including the wishes of the employee, the circumstances in which the termination took place and the extent to which the employee contributed to it, the practicability of reinstatement or re-engagement, the employee's length of service, the reasonable expectation of the employee as to the continuation of the employment, the opportunities available to the employee for securing comparable employment, and any compensation already paid by the employer and received by the employee. 29.I have carefully considered the wholesale failure of the Respondent to comply with the mandatory procedural safeguards of section 41 and its inability to substantiate its stated reasons to the standard the law demand, against the relatively short duration of the Claimant's tenure under the relevant contract, and the notice pay already received, I am satisfied that an award at the statutory maximum of twelve months would not be warranted, and that fair and equitable compensation in this case is the equivalent of six (6) months' gross salary. At the admitted gross monthly salary of Kshs. 220,700.00, six months' salary is calculated as Kshs. 220,700.00 × 6, giving a sum of Kshs. 1,324,200.00. I accordingly award the Claimant compensation for unfair termination, under section 49(1)(c) of the Employment Act, in the sum of Kshs. 1,324,200.00. 31.The sum awarded shall attract interest at court rates from the date of this judgment until payment in full. The Claimant shall have the costs of the suit. Disposition 31.For the reasons set out above, I make the following orders: -a.A declaration be and is hereby made that the termination of the Claimant's employment by the Respondent was unfair and unlawful.b.The Respondent shall pay to the Claimant compensation for unfair termination undersection 49(1)(c) of the Employment Act in the sum of Kshs. 1,324,200.00, being the equivalent of six (6) months' gross salary of Kshs. 220,700.00 (Kshs. 220,700.00 × 6). (c) The Claimant's prayer for general damages for emotional distress and career disruption is declined.d.The sum awarded in (b) above shall attract interest at court rates from the date of this judgment until payment in full.e.The costs of the suit shall be borne by the Respondent. It is so ordered. READ, DELIVERED AND SIGNED THIS 25TH DAY OF JUNE 2026.OCHARO KEBIRAJUDGE