Two years ago the Kenyan Employment & Labour Relations Court awarded the staggering sum of Ksh.155,767,000 (US$1,512,300) to a former employee of Kenya Airways as damages for unfair termination. The decision  in the case of Alex Wainaina Mbugua v Kenya Airways Limited (Cause 430 of 2016) [2017] eKLR sent shock waves  across the employer fraternity in Kenya while, at the same time, bolstering the confidence of employees in challenging almost every form of termination of employment. It was genuinely feared that such high awards could potentially cripple  businesses and make the termination of employment by employers a very risky and costly affair.

 Fortunately, in a well-reasoned judgment delivered in June 2019, the Court of Appeal has restated the correct legal principles to be applied by the ELRC in awarding damages for unfair termination. In Kenya Airways Limited v Alex Wainaina Mbugua (Civil Appeal No.107 of 2018) [2019] eKLR , the higher court faulted the ELRC for awarding the  statutory maximum of 12 months’ pay without giving any reasons or justification for it.

Equally importantly, the Court of Appeal restated the legal principle that reinstatement is generally not an appropriate remedy in contracts of personal service.

The significance of this judgment is that it will potentially aid  parties in reaching out of court settlements since the previously juicy awards which encouraged employees to go to court instead of negotiating reasonable terms of separation  may soon become a  relic of history.

 In an article published in the Business Daily on 22nd August, 2019, William  analyses the far-reaching implications of this important decision . Click here to access the article.