Mungai v Bullworks Design Factory Limited [2023] KEELRC 3232 (KLR)

Mungai v Bullworks Design Factory Limited (Cause E359 of 2020) [2023] KEELRC 3232 (KLR) (8 December 2023) (Judgment)

Neutral citation: [2023] KEELRC 3232 (KLR)

Republic of Kenya

In the Employment and Labour Relations Court at Nairobi

Cause E359 of 2020

J Rika, J

December 8, 2023

Between

Reynolds Mungai

Claimant

and

Bullworks Design Factory Limited

Respondent

Judgment

1. This Claim is undefended.

2. It was filed on 6th August 2020.

3. It was scheduled for formal proof on 4th October 2023.

4. The Claimant elected to proceed under Rule 21, E&LRC {Procedure] Rules 2016.

5. He confirmed filing of his Closing Submissions, at the last appearance before the Court, on 24th October 2023.

The Claim. 6. The Claimant was employed by the Respondent as a Product Designer, effective from 9th March 2020.

7. The contract was for 1 year. The Claimant was to serve the first 2 months under probation.

8. His basic monthly salary was Kshs. 170,000. He was eligible for commission at 8% per project; health insurance; monthly airtime allowance at Kshs. 2,000; monthly internet bundle of up to 1GB; and monthly transport allowance with Bolt, as the service provider.

9. The contract was amended through an addendum, dated 1st April 2020. The net monthly basic salary, was changed to Kshs. 156,110.

10. The Claimant states that probation ended on 9th May 2020, and the period was not extended. He considered his employment to have been confirmed, on 9th May 2020.

11. The Respondent persistently failed to pay the Claimant his salary. He was only paid once, a sum of Kshs. 81,000.

12. He claims salary arrears for the months of March, April, May and June 2020, amounting to Kshs. 461,000.

13. He claims airtime allowance and internet expenses, at Kshs. 6,332 for the months of May and June 2020.

14. He was not paid house allowance, which he claims for the months of March, April, May and June 2020 at Kshs. 81,887.

15. He states that, on 15th June 2020, the Respondent purported to terminate his contract, effective 8th June 2020, and offered a week’s salary, in lieu of notice. The letter states that probation with the Respondent was being terminated with effect from 8th June 2020.

16. The Claimant states that termination breached his right to fair labour practices: his salary was withheld; he was not given reason to justify termination; and was not accorded a hearing.

Prayers 17. He prays for: -a.Kshs. 461,580 in arrears of salary.b.Kshs. 81,387 in arears of house allowance.c.Notice pay at Kshs. 179,526. d.8 months’ salary for the remainder of the contract period, at Kshs. 1,436,212. e.Kshs. 6,332 in airtime and internet expenses.f.USD 1,000 bonus, unlawfully withdrawn by the Respondent.g.Damages for unfair termination.h.Costs.i.Interest.

The Court Finds: - 18. The Claimant was employed by the Respondent as a Product Designer, for a period of 1 year.

19. The effective date of employment was 9th March 2020. There was a probationary period of 2 months.

20. This ended on 9th May 2020.

21. There was no letter extending the probationary period issued by the Respondent, and logically, the Claimant was correct in considering the contract to have been confirmed. He continued to work for the Respondent until 15th June 2020, when the Respondent issued him a letter, purporting to terminate ‘’ your probation period.’’ This was well over 1 month, after probationary period came to an end.

22. The Claimant was no longer on probation, and the Respondent was wrong, in thinking that he was, and in terminating ‘’your probation period.’’

23. The Respondent acknowledged the Claimant’s arrears of salary through the letter of termination dated 15th June 2020.

24. The only discrepancy in the computation given by the Respondent, and that given by the Claimant, is on the months of March 2020 and June 2020. The end result is that the Respondent acknowledged arrears of salary at Kshs. 421,297, while the Claimant prays for Kshs. 461,580.

25. In the absence of evidence from the Respondent to support its computation, or discount that made by the Claimant, the Court upholds and grants the claim for salary arrears as pleaded by the Claimant, at Kshs. 461,580.

26. The amount claimed as airtime allowance and internet expenses, is supported by the contract concluded by the Parties. The clause on remuneration gave airtime allowance of up to Kshs. 2,000 monthly to the Claimant, and internet bundles of up to 1GB monthly. The Respondent has not availed evidence to contradict the Claimant on these items. Airtime allowance and internet expenses are granted at Kshs. 6,332.

27. The contract provided for a basic salary of Kshs. 170,000 monthly, which was later amended to Kshs. 156,110.

28. This was described as the basic salary.

29. Allowances and other benefits payable to the Claimant were specified to include: health insurance; airtime allowance; internet bundles; and monthly transport allowance.

30. House allowance was not mentioned, and was not paid to the Claimant as required under Section 31 of the Employment Act. His computation, based on 15% of the basic salary in well-founded in law and fact, and is allowed as prayed, at Kshs. 81,387.

31. The e-mail dated 19th April 2020 from the Respondent to the Claimant, communicated withdrawal of bonus payment of USD 1,000, offered to the Claimant.

32. The Respondent has not given evidence to justify withdrawal of bonus. The Respondent withdrew bonus, stating in the e-mail dated 19th April 2020, that the completion of carbon project, over which bonus was to be paid, was what the Claimant was hired for in the first place. In other words, the Respondent had changed its mind, and deemed the salary payable to the Claimant sufficient, in compensating him for work done. Bonus payment, was no longer necessary.

33. In Industrial Court Cause Number 1530 of 2011, Sunil Kumar v. G4S Security Services Limited [2013] e-KLR, and Peter Gachenga Kimuhu v. Kenol Kobil Limited [2014] e-KLR, the Court held that an Employer is not permitted to claw back from the Employee, a vested benefit. Disgorgement, or recall of a vested benefit, is allowed only where the Employee obtains the benefit through violation of the law, or breach of his contract.

34. The Respondent has not established why bonus was withdrawn. No violation or breach was attributed to the Claimant in clawing back his bonus. It was known from the time the Claimant was hired, that he was on a monthly salary and expected to work on the project. It was irregular for the Respondent to withdraw bonus on the explanation that the Claimant was earning a salary for the same work.

35. Bonus is granted at USD 1,000, which the Court converts for ease of execution, at the current CBK indicative rate of exchange, of USD to Kshs, at Kshs. 153,200.

36. Having completed his probationary period, the Claimant was entitled to 1- month notice of termination, or 1-month salary in lieu thereof. His prayer for notice at Kshs. 179, 526 is allowed.

37. The prayer for 8 months’ salary for the remainder of the contract period is an overshot. It was not guaranteed that the Claimant would serve out his contract period. There was provision for termination through notice. The law provides for compensation for premature and unfair termination of a contract of employment. Anticipated salaries are not the prescribed compensation. The Court has granted the Claimant notice pay. There is a prayer for damages for compensation for unfair termination, which is meant to redress the economic injury sustained by the Claimant, for loss of employment over a period of 8 months.

38. The 8 months remaining in the Claimant’s contract is relevant under Section 49 [4] of the Employment Act, in considering a suitable remedy to grant to the Claimant. It is to be considered alongside other factors, including the Claimant’s length of service, which was quite short, at 2 months.

39. In Elizabeth Wakanyi Kibe v. Telkom Kenya Limited [2014] e-KLR, the Court upheld the position that employment remedies must be proportionate to the economic injury sustained by the Employee. They are not meant to be facilitators of unjust enrichment. Grant of 8 months’ salary over a period the Claimant did not render any labour to the Respondent, would be disproportionate to the economic injury suffered by him, on loss of employment. Salary is paid in exchange for work actually performed, not work expected to be performed.

40. He is granted compensation for unfair termination, equivalent of 2 months’ gross salary at Kshs. 353,052.

41. Costs to the Claimant.

42. Interest allowed at court rate from the date of Judgment, till payment is made in full.

In sum it is ordered:-a.The Respondent shall pay to the Claimant: arrears of salary at Kshs. 461,580; airtime and internet allowances at Kshs. 6,332; house allowance at Kshs. 81,387; bonus at Kshs. 153,200; notice at Kshs. 179,526; and compensation for unfair termination, equivalent of 2 months’ salary, at Kshs. 353,052 – total Kshs. 1,235, 077. b.Costs to the Claimant.c.Interest allowed at court rate from the date of Judgment, till payment is made in full.

DATED, SIGNED AND RELEASED TO THE PARTIES ELECTRONICALLY AT NAIROBI, UNDER PRACTICE DIRECTION 6[2] OF THE ELECTRONIC CASE MANAGEMENT PRACTICE DIRECTIONS, 2020, THIS 8TH DAY OF DECEMBER 2023. JAMES RIKAJUDGE