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Termination of Employment Law put on the dock

The Recent decision of Mukiite v Barclays Bank of Kenya provids the perfect opportunity to muse over the law of summary dismissal/ termination. In inviting us to a blow by blow account of the developments in this area of law, LawAfrica's Charles Kanjama asserts that one cannot help sympathizing with the long serving employee who wakes up one morning to find herself/ himself summarily and even callously out on the street. Yet on the other hand the freedom to contract must he held sacrosant. Is the protection granted by the law to such an employee adequate or is the deep pocket employer invariably getting away with it?

The recent High Court decision in Mukiite v Barclays Bank of Kenya is a hefty 59-page judgment that once again attempts to cast light on the shadowy legal principles governing termination of employment. The gravamen of this case was a letter of termination that set out reasons that would amount to gross negligence and entitle the plaintiff to be summarily dismissed. Barclays Bank however decided to reduce the threatened dismissal to a mere termination by payment of one month’s salary in lieu of notice.

In re-opening the hornet’s nest that had been stirred 25 years ago by East African Airways v Knight, the court attempted to reconcile Rift Valley Textiles v Oganda and CPC Industrial Products v Angima. Two pivotal questions were raised: when is a termination a dismissal; and how will the quantum of damages be determined.

In Kyobe v East African Airways, the plaintiff, a general manager with the respondent, had his employment wrongfully terminated. Since the contract did not specify a notice period, the court held that, given the plaintiff’s seniority, a 6-month notice was a reasonable one. This position was reiterated in Ombanya v Gailey and Roberts where the court held that damages for wrongful dismissal are limited to the wages for the contract notice period. The court approved Addis v Gramophone Co. where it was unequivocally stated that damages would not be awarded for injured feelings or because the manner of dismissal itself makes it more difficult to obtain fresh employment.

This ratio was starkly contradicted shortly thereafter in East African Airways v Knight where Knight claimed damages for “loss of salary, allowance and career.” Lakha, advocate (as he then was) for the appellant, pleaded that the claim, being substantially one for loss of earnings by reason of wrongful dismissal, should have been pleaded as such and quantified. The court departed from a long line of authority when it upheld Knight’s loss of career claim and awarded general damages for an 18-month notice period.

This failure of the Appeal Court to stick staunchly to one position has not been quite expurgated in recent employment cases. The commencement in 1976 of The Employment Act (Cap 226), which consolidated and amended the common law, ought to have clarified the question of notice period. However, going through recent Appeal Court judgments, one is amazed at the failure of the courts to analyse the effect of sections 5(4), 14(5), 16 and 17 of this Act.

The recent minefield of employment cases dates back to 1994. In Rift Valley Textiles v Oganda, the court admirably summarised the law by affirming that, “Even though the dismissal may be wrongful, it stands, and what flows from the breach of the conditions of service, is damages according to the terms of contract.” In painful contrast only six months later, the same court in CPC Industrial Products Ltd v Angima threw into doubt the established law without bothering to openly distinguish it. In the leading judgment joined by Gicheru J.A, Kwach J.A. concluded that the termination of the plaintiff was arbitrary, malicious and most callous. Where Lord Loreburn in Addis v Gramophone Co stated that “I cannot agree that the manner of dismissal affects the damages”, Kwach apparently placed his stamp of approval. The warning bell to employers had been sounded.

Yet in the Appeal Court tradition of exercising mental agility to obscure the law he stated, “the principle that damages will be limited to the period of notice … will only apply if … the employer is not prompted by ulterior motives and acts without malice and in good faith. If the employer acts maliciously or oppressively or even callously … the court should take this into account in assessing damages.” The court then held that the 3-month notice period in the contract’s termination clause was utterly useless and proceeded to uphold an award of 15 months salary as damages. The surprising thing is that not even Muli J.A.’s partial dissent, which attempted to reconcile divergent precedents and to categorise employment contracts, recognised the change in the law on notice period effected by section 14(5) of the Employment Act.

Since Angima, the Appeal Court has limped along in a half-hearted exercise in damage control. In Alfred Githinji v Mumias Sugar of 1996, the court held that damages for wrongful termination of the contract of employment would be limited to the amount specified in the contract and would not include a claim for general damages. In its obiter, the court cited East African Airways v Knight with approval; no mention was made of the effect of section 14 of the Employment Act in altering the principle regarding reasonable notice.

In subsequent cases, Ogoye v KNTC, Mwangi v University of Nairobi and Kenya Ports Authority v Otieno, the Court of Appeal (with Lakha now in the bench) seemed to have finally and unequivocally approved the Rift Valley Textiles decision. The Court was tenaciously clinging to the principle of awarding only specified damages for pay lost during the period in which normal notice would be current, regardless of the manner of termination. Yet in conveniently omitting even a passing mention to the Angima case, the court had failed to exorcise a potent ghost in its own jurisprudence.

It is therefore no surprise that in Mukiite v Barclays Bank, the High Court was forced to perpetuate the legal fiction that in the Angima case, “the Court of Appeal never deviated from the acceptable principles [and that] Kwach J.A. was careful not to contradict the time old principles of law.” However, given that Angima was handed down by Kenya's highest court, the question remains, ‘will aggravated damages be awarded if the manner of dismissal is callous, malicious or done in bad faith?’

The U.K. Employment Rights Act of 1996, which replaced the 1978 Employment Protection Act, recognises and gives legal force to the right of the employee not to be dismissed for an “unfair” reason. In cases of “unfair dismissal” and redundancy, the employer’s motive and the manner of dismissal will receive judicial scrutiny and may result in a special statutory award to the dismissed or retrenched employee. Even as we ponder Kenya’s conflicting strands of judicial reasoning, might it not be time to implement statutory provisions that may better protect the beleaguered Kenyan worker from the vagaries of casual termination for whimsical reasons?

Cases referred to in this analysis:

1. Kyobe v East African Airways [1972] E.A. 403
2. Ombanya v Gailey & Roberts [1974] E.A. 522
3. Addis v Gramophone Co [1909] A.C. 488 (HL)
4. East Africa Airways v Knight [1975] E.A. 165
5. Rift Valley Textiles v Oganda [1992] LLR 308 (CAK)
6. C.P.C. Industrial Products (K) Ltd v Angima [1992] LLR 3472 (CAK)
7. Githinji v Mumias Sugar Co. Ltd [1994] LLR 358 (CAK)
8. Ogoye v KNTC [1996] LLR 450 (CAK)
9. Mwangi v University of Nairobi [1995] LLR 391 (CAK)
10. Kenya Ports Authority v Otieno [1997] LLR 575 (CAK)
11. Mukiite v Barclays Bank of Kenya [1999] LLR 1138 (HCK)