Court Rules Unfairly Dismissed Employees Cannot Claim Salaries Up to Retirement

An Employment and Labour Relations Court has delivered a significant ruling on compensation for unfair dismissal. The court determined that employees cannot claim salaries and benefits they would have earned up to retirement age even when termination is found unlawful.

Justice Anna Ngibuini Mwaure delivered the judgment in Kericho. The case involved an accounts clerk at a private mission hospital whose dismissal the lower court had earlier declared unfair.

The ELRC upheld the finding of unfair termination but sharply reduced the damages awarded by the lower court. The dispute began when the hospital accused the clerk of irregularities in transport reimbursements for a paediatric clinic programme.

Hospital management claimed transport allowances were paid to 70 participants when only 34 attended. The employee denied responsibility for the alleged loss. This led to disciplinary proceedings and his eventual dismissal.

On appeal, the hospital contested both the unfair termination finding and the amount of compensation. Justice Mwaure ruled that while the hospital substantially followed Section 41 of the Employment Act procedures, it failed to prove the misconduct allegations.

Contradictory testimony from the hospital’s own witnesses undermined its case. However, the judge rejected the lower court’s award of future earnings extending to retirement.

The court emphasised that employment contracts are not guaranteed to last until retirement. It dismissed claims for projected basic salary over 70 months, retirement benefits and most future allowances.

The final award was limited to one month’s salary in lieu of notice at Ksh63,144.90, seven months’ compensation for unfair termination, accrued leave, house allowance and medical allowance. The total came to Sh577,775.70.

This decision clarifies limits under Section 49 of the Employment Act. It signals that courts will not entertain speculative long-term claims in unfair dismissal cases.

The ruling carries implications for both employers and employees. Employers must still ensure fair procedures and credible evidence before dismissal. At the same time, employees seeking redress now face clearer boundaries on possible compensation.

Legal observers see the judgment as a landmark in balancing worker protections with realistic remedies under Kenyan labour law.