The Employment and Labour Relations Court has upheld the dismissal of Java House’s former Chief Operating Officer (COO) Leonard Mudachi on account of redundancy nearly 10 years ago, citing lack of evidence to support his claims that he signed the exit package under duress.
At the same time, the court directed that he be paid $208,293.75 (Sh26.9 million) being the value of his shares at Nairobi Java House Limited and Java House (Mauritius) Limited Long-Term Incentive Plan scheme.
Justice Mathews Nduma declined an objection raised by Java challenging the court’s jurisdiction to determine Mr Mudachi’s claim for payment of the amount.
The court also dismissed Mr Mudachi’s claim for damages over alleged unlawful termination and breach of contract, with Justice Nduma saying that the particulars of duress and coercion were not proved.
Mr Mudachi, whose employment was terminated in November 2015, had alleged that he was under pressure to sign the payment offer due to the financial difficulties the sudden declaration of redundancy caused him.
He had served for two years. He had been hired as business development director before being promoted to the position of COO in August 2014.The court heard that he was given 24 hours to consider the exit package proposal, which included three months’ salary.
Mr Mudachi sued in 2018 arguing that his financial pressures constituted duress and that he signed the offer under coercion. He told the court that the employer was well aware of the loans he owed at the time and therefore took advantage of him.
But the court ruled that there was no sufficient proof of the allegations.
“It is, however, the court’s finding that the claimant has failed to prove that he signed the exit package with a waiver under duress. From October 30, 2015 when the notice of redundancy was given to him, the claimant engaged the respondent continuously regarding the matter,” said Justice Nduma.
The court also found that Nairobi Java House Limited had a genuine reason to abolish the position of COO and did not re-introduce the same for a period of six years thereafter.
According to the court, Java had demonstrated it abolished the position of COO upon a review of the structure of the Nairobi Java House Limited and the position was not filled upon termination of Mr Mudachi.
“Further the court is satisfied that the respondent gave the claimant and the Ministry of Labour at least one month notice of intended termination on grounds of redundancy,” said Justice Nduma adding that Mr Mudachi also served one month notice before the termination was effected.
The court found that Java paid all the mandatory benefits under the Employment Act, 2007 upon affecting the termination on grounds of redundancy.
Regarding loans owed by Mr Mudachi, the court said the loans the claimant had acquired from banks and from Java and the family commitments he had, were a natural occurrence of choice by a person holding a good job like his.
The court concluded that the termination on grounds of redundancy was lawful and fair and dismissed the reliefs sought for award by compensation and general damages.
