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Judge orders oil marketer to pay ex-manager Sh8 million for unfair dismissal
The law says that a termination is unfair if the employer fails to prove the reason for termination is based on a fair reason related to either the employee's conduct, capacity, or compatibility, or based on the operational requirements of the employer.
Regional oil marketer Lexo Energy Kenya Limited has been ordered by the Employment and Labour Relations Court to pay its former head of retail Sh8 million as compensation for unfair termination based on unsubstantiated reasons.
The employee, Sammy Maundu, was terminated in March 2024 because of “an irretrievable breakdown in the working relationship with the company”, a reason that the Labour Relations court said is unknown in employment law.
Justice Linnet Ndolo ruled that the reason given for termination did not fall within any of the categories set out under Section 45(2)(b)(i) & (ii) of the Employment Act, which outlines the conditions under which a termination of employment is considered unfair.
Specifically, the said section states that a termination is unfair if the employer fails to prove the reason for termination is based on a fair reason related to either the employee's conduct, capacity, or compatibility, or based on the operational requirements of the employer.
“The unsubstantiated claim of failure to follow internal grievance handling procedures made by the respondent’s (Lexo) witness made no difference in this regard. Further, the claimant was not subjected to any disciplinary process as required under Section 41 of the Act. Consequently, I find and hold that the termination of the claimant’s employment was substantively and procedurally unfair,” said Justice Ndolo.
The court emphasised that under the Employment Act, every termination of employment must be supported by a valid reason.
Mr Maundu was employed by the fuel company in May 2017 and was sacked in March 2024.
In court, he alleged the work environment became untenable due to harassment, including actions that amounted to constructive dismissal, like setting targets for him to meet and then frustrating his way of meeting those targets.
He said these included withdrawal of motor vehicles from field staff under him, who needed the said transport to visit outlying stations, and failure to maintain service stations or taking too long to address maintenance issues.
Mr Maundu also alleged that the company failed to address capacity issues raised by him, including taking inordinately long to replace retail staff who had exited Lexo. He stated in court filings that he stood to lose his staff share options worth approximately $913,745 if he resigned from employment.
In response, the company denied the claims of constructive dismissal and contended that it had maintained a positive working environment for all its employees.
The company, through its Legal and Human Resources Manager, Kelvin Gathara, stated that the claimant had not raised any complaints in this regard. It further denied the allegation that the claimant was edged out of his position and stated that his employment was lawfully terminated by the Employment Act and existing internal policies.
On the claim of shares, the company said Mr Maundu ought to have pursued his claim against the parent entity, Lexo Energy Mauritius Limited.
It told the court that the account to which the claimant transferred his equity was held by Lexo Energy Mauritius Limited, whose director executed the call letters.
While delivering the ruling, which reinforces employers’ duty to justify dismissals under Kenyan labour laws, the court held that an employer has obligation to explain proper reasons for termination of the employment of an employee.
The court awarded the claimant 10 months’ salary in compensation, taking into account his length of service and the finding that he did not contribute to the termination.
“I have also considered that the respondent did not disclose any valid reason for the termination and the claimant was not availed due process,” said Justice Ndolo.
