Background.
1. Contending that at all material times he was an employee of the Appellant and that his employment was terminated unfairly, the Respondent sued the Appellant in the above-stated suit, seeking declaratory and compensatory remedies, thus;
a. A Declaration that the Claimant's Contract of Employment was unfairly and unlawfully terminated.
b. A Declaration that the Claimant's terminal dues were wrongfully and/or unfairly withheld by the Respondent.
c. Payment of the Claimant's full terminal dues of Kshs. 3,229,333.30.
d. Costs of the suit.
e. Interests at commercial rates from the date of termination of the Employment Contract till payment in full.
f. Any other relief that this Honourable Court may deem fit to award.
2. The Appellant challenged the claim in the Response to the Memorandum of Claim dated 23rd February, 2021. The Appellant contended that the Respondent’s employment was terminated for a valid reason, namely poor performance, and that the termination was both substantively and procedurally fair. Accordingly, the Respondent was not entitled to the reliefs sought.
3. After hearing the parties on their respective cases and considering them, the learned trial Magistrate entered judgment for the Respondent. The judgment is the subject of this appeal.
Respondent’s case in the lower Court
4. The Respondent’s case was that he was employed by the Appellant, formerly known as Sameer Agriculture & Livestock (Kenya) Limited, as a Sales Supervisor under a letter of appointment dated 2nd June 2019. He stated that his employment contract was for a fixed term of three years, running from 2nd May 2019 to 31st July 2022, and that he earned a gross monthly salary of KShs. 80,000.
5. The Respondent stated that on 8th May 2020, the Appellant issued him with a notice to show cause alleging below-par performance, to which he responded by letter dated 15th May 2020. He further stated that he was subsequently called to a disciplinary meeting on 20th May 2020, but that neither he nor his representative was given a proper opportunity to be heard, and that their concerns were not considered before a recommendation for his dismissal was made.
6. According to the Respondent, his employment was unfairly and unilaterally terminated on 10th June 2020. He argued that, despite the Appellant's allegation of poor performance, the actual cause of the termination was redundancy resulting from workforce downsizing during the Covid-19 pandemic. Consequently, he asserted that the termination was unlawful, unfair, and in violation of justice and equity.
7. The Respondent claimed salary for 11 days worked in June 2020, salary for the remainder of the fixed-term contract, compensation equivalent to 12 months’ salary for wrongful and unlawful termination, and redundancy dues calculated at 15 days’ pay per year worked. His total claim amounted to Kshs. 3,229,333.30.
Appellant’s case in the lower court
8. The Appellant called one witness, Mr Maina, who gave evidence on its behalf before the trial Court. The witness stated that the Respondent was, at all material times, an employee of the Appellant, having been appointed Sales Supervisor by a letter of appointment dated 2nd June 2019.
9. The Chief Operating Officer of the Appellant issued a letter to the Respondent dated 8th May 2020, requiring him to provide an explanation as to why disciplinary measures should not be initiated against him due to poor performance of his duties.
10. The witness argued that, although the Respondent replied to the show cause letter, his explanation was inadequate. He simply offered excuses, attributed his underperformance to other staff members, and did not present any solutions or a plan for improvement despite his declining monthly performance relative to the established targets.
11. He further stated that the disciplinary process was lawful, fair and just. The Respondent was given sufficient notice and allowed to defend himself at the disciplinary hearing. The decision to dismiss him, made on 20th May 2020, was based on a consideration of the representations of all concerned parties. The Respondent’s allegation that he and his representative were not heard, or that their concerns were ignored, could not be true.
12. The witness further stated that the decision to terminate the Respondent’s employment was communicated through the letter dated 10th June 2020. The decision was not unilateral but the outcome of a well-documented, impartial and inclusive disciplinary process. The Appellant further denied that the termination was connected to the Covid-19 pandemic or any redundancy exercise, and maintained that the Respondent’s employment was terminated solely on account of poor performance of his contractual duties.
13. The witness also denied that the Respondent was owed the sums claimed, contending that all statutory deductions had been remitted and that, upon dismissal, the Respondent was paid all terminal dues due to him, amounting to Kshs. 117,053 on or about 12th August 2020. The Appellant further stated that the Respondent voluntarily signed an acknowledgement and release form on 12th August 2020, thereby releasing the Appellant from any further liability arising from his employment.
14. Regarding the specific reliefs claimed, the Appellant denied liability for the 11 days’ salary, on the ground that it had been settled in the final dues. It also opposed the claim for salary for the remainder of the contract period, arguing that it had employed another person to replace the Respondent and that granting the claim would amount to unjust enrichment for work not done. The Appellant further denied liability for 12 months’ compensation, maintaining that the dismissal was lawful and procedural, and denied liability for redundancy dues on the basis that the Respondent was not terminated on account of redundancy.
Judgment of the lower court
15. After hearing the parties and considering their evidence and submissions, the learned trial Magistrate entered judgment in favour of the Respondent, finding that his employment was unfairly terminated and awarded him compensation for unfair termination [KShs. 240,000] and payment for salary for the remainder of the contract period [ KShs. 2,080,000], costs and interest.
The Appeal
16. Being dissatisfied with the decision of the lower court, the Appellant appealed against the decision of the lower court on the following grounds;
1) The learned magistrate erred in law and in fact in finding that the Respondent was entitled to the remainder of the Contract period equivalent to 26 months' salary at Kshs 2,080,000, which are anticipatory damages not provided for under Section 49 (1) of the Employment Act and Section 12 of the Employment and Labour Relations Court Act.
2) The learned magistrate erred in law and in fact in failing to make a finding that the Claimant's contract of service had an express termination clause that allowed the parties to exit the contract at their own volition before the contract period lapsed.
3) The learned magistrate erred in law and in fact in failing to make a finding that the contract of service did not sanction payment for the remainder of the contract period as a remedy available to the parties on termination of the contract.
4) The Learned magistrate erred in law and in fact in introducing a term to the contract of service contrary to the parties' intentions and in imposing the same on the Respondent contrary to its wishes.
5) The Learned magistrate erred in law and in fact in granting damages equivalent to 26 months' salary without laying any legal basis for the same, and which exceeded the statutory limit of 12 months’ salary, contrary to Section 49(1) of the Employment Act.
6) The Learned Magistrate erred in law and in fact in failing to consider and to render a determination on the Appellant's submissions concerning the signed acknowledgement and release dated 12th August 2020, conceded to by the Respondent and admitted into evidence by the Appellant.
7) The Learned magistrate erred in the law and in fact in granting an exorbitant and excessive award suffice to a punishment to the Respondent.
8) The learned magistrate showed extreme prejudice by totally ignoring the Appellant's Counsel's submissions on the issue of law and evidence and thereby arrived at an erroneous conclusion.
Appellant’s submissions
17. The Appellant submits that the trial court erred in awarding the Respondent Kshs. 2,080,000 being salary for the remainder of the contract period. The law does not anticipate anticipatory damages.
18. The Appellant further submitted that at the time of separation, the Respondent executed an acknowledgement and release document dated 12th August 2020. By signing the document, the Respondent waived his right to pursue any claims against the Appellant. He was therefore estopped from initiating the claim against the Appellant. The learned trial Magistrate erred in not so finding.
19. It was further submitted that the Respondent did not plead or prove duress, coercion, undue influence, fraud, mistake, misrepresentation or illegality in relation to the execution of the acknowledgement and release document. As such, it bound him. To support this submission, reliance is placed on Coastal Bottlers Limited v Kimathi Mithila [2018] eKLR and Moses Gichuhi Gateru v Njuca Consolidated Company Limited [2019] eKLR.
20. The Appellant further submitted that the Respondent’s contract contained an express termination clause allowing either party to terminate the contract before expiry. It argues that the trial court failed to consider this clause and instead introduced a new term into the contract by awarding payment for the remainder of the contract period, although the contract itself did not provide such a remedy.
21. The Appellant further submitted that the Respondent had no legitimate expectation of serving the full term of the contract, given the contract’s termination clause. It relies on Elizabeth Wakanyi Kibe v Telkom Kenya Ltd [2014] eKLR (Civil Appeal No. 25A of 2013) and Engineer Francis N. Gachuri v Energy Regulatory Commission [2013] eKLR (Industrial Cause No. 203 of 2011).
22. The Appellant further argues that awarding the Respondent salary for the remainder of the contract period unjustly enriched him, as he did not work during those months. It submits that employment remedies should be proportionate to the injury suffered and should not serve as punishment for the employer. It relies on Pamela K. Butalanyi v University Council for the Kenya Polytechnic University College [2015] eKLR, D.K. Njagi Marete v Teachers Service Commission, Industrial Cause No. 379 of 2009.
23. The Appellant further argued that the Respondent did not adequately plead or demonstrate actual loss of earnings and bore the obligation to mitigate his loss by pursuing alternative employment.
Respondent’s submissions
24. The Respondent submits that the Appellant issued him with a show cause letter dated 8th May 2020 alleging below-par performance, which he responded to on 15th May 2020. He contends that although he was called to a disciplinary meeting on 20th May 2020, he and his representative were not given a proper opportunity to be heard, and the Appellant thereafter recommended his dismissal. His employment was terminated on 10th June 2020, without his terminal dues, interest, and costs being paid before the lower court.
25. On his claim for salary for the remainder of the contract period, the Respondent submitted that it was not disputed that he was employed under a fixed-term contract which was to run up to 31st July 2022, but was terminated on 10th June 2020, about two years and one month before expiry. Having found that the termination of the contract was unfair, the learned trial Magistrate did not err in awarding the relief. A fixed-term contract should be terminated in accordance with its terms; otherwise, the employer is liable to pay the employee's salary for the remainder of the contract term. To support this submission, reliance was placed on the Kenya Methodist University vs Kaungania & another [ 2022]KECA 90 [KLR]
.
26. It was further submitted that discharge forms are commonly issued after termination and purport to release employers from future claims, but they do not automatically bar an employee from challenging unfair termination. There is generally unequal bargaining power in employment relationships, especially at termination, when an employee may sign such a document under economic pressure to receive terminal dues. Accordingly, the doctrine of estoppel should not apply in every case where an employee executed a discharge form. Each case shall depend on its peculiar circumstances. To buttress this submission, reliance was placed on Thomas De La Rue (K) Ltd v David Opondo Omutelema (2013) eKLR.
27. In conclusion, the Respondent submitted that the trial court properly found that his fixed-term contract was prematurely, unjustifiably and unlawfully terminated without due process. In the circumstances of the matter, the Appellant has not, in this appeal, demonstrated any basis for this Court to disturb the judgment of the lower court.
Analysis and determination
28. I have considered the record of appeal, the judgment of the lower court, the parties’ respective submissions, and the authorities cited. The instant appeal revolves around the following issues: whether, by executing the acknowledgement and release document, the Respondent was estopped from initiating the claim before the trial Court, and whether the Respondent was legally entitled to salary for the remainder of the contract period.
29. As a first appellate court, this Court is required to reconsider and re-evaluate the evidence on record and draw its own conclusions, bearing in mind that it did not see or hear the witnesses testify.
30. There is no dispute that the Respondent signed an acknowledgement and release document dated 12th August 2020, acknowledging receipt of KShs. 117,053 as a full and final settlement of his dues. The Appellant argued that the Respondent bound himself to the terms of the document, thereby waiving his right to any further claims arising from his employment. The Respondent, on the other hand, submitted that the doctrine of estoppel does not apply in every case where the employee executed a discharge form, to any future claim.
31. In my view, the mere fact that an employee executed a discharge, settlement, or clearance document upon separation from employment does not, without more operate as an absolute bar to future claims against the employer. Such a document is not a magic wand that extinguishes all rights and obligations arising from the employment relationship, nor does it automatically sanitize an otherwise unlawful termination.
32. The Court must interrogate the circumstances under which the discharge was executed, its terms, and the intention of the parties. Particular attention must be paid to the wordings of the document, whether the employee executed the document voluntarily, with full knowledge of his rights and the implications of the discharge, and whether adequate consideration was given in exchange of relinquishment of those rights.
33. Further, a discharge voucher ordinarily speaks to the settlement of specific monetary dues acknowledged by the parties at the point of separation. It does not necessarily constitute a blanket waiver of statutory rights, including the right to challenge the fairness, legality, or validity of a termination. Employment rights created and protected by statute cannot be lightly contracted away, especially where doing so would undermine the protective objective of labour legislation.
34. The execution of a discharge document may provide evidential support to an employer’s contention that certain dues were settled, but it does not automatically foreclose an employee from pursuing a claim for unfair termination, unlawful dismissal, discrimination, or any other violation of statutory employment rights. To hold otherwise would permit employers to insulate unlawful employment practices from judicial scrutiny through the simple expedient of obtaining signatures on discharge forms at the point of separation.
35. I have carefully reviewed the aforementioned document executed by the Respondent and am firmly of the opinion that the document does not, in unequivocal terms, address foreclosure against the Respondent to pursue a claim for unlawful or unfair termination.
36. The Appellant’s challenge to the trial Court’s finding of unfair termination of the Respondent’s employment and to the compensatory award under section 49[1][c] of the Employment Act in this appeal seems largely based on the fact that the learned Magistrate did not consider the implications of the document and of the Respondent’s execution of it, otherwise he wouldn’t have found in favour of the claim for unfair termination. Having found as I have hereinabove [para.35], I am not persuaded to disturb the finding and the award.
37. On the second issue concerning the award of Kshs. 2,080,000 being salary for the remainder of the fixed-term contract. The lower court awarded the Respondent 26 months’ salary on the basis that his fixed-term contract was to run until 31st July 2022 and had been terminated on 10th June 2020. The Appellant argues that this was an award of anticipatory income, not provided for under section 49 of the Employment Act, and that the contract contained a termination clause.
38. In the case of D K Njagi Marete v Teachers Service Commission [2020] KECA 840 (KLR), the Court of Appeal held that a claim for anticipatory salary/benefits was not anchored in law. The employee had claimed salary and allowances for the 11 years he would have served until retirement, but both the trial court and the Court of Appeal rejected that claim. The Court emphasized that remedies for unfair termination are governed by section 49 of the Employment Act and that compensation is capped at a maximum of 12 months’ gross salary.
39. This Court takes cognisance of the unsettled waters over whether an employee whose fixed-term contract was terminated unfairly before the appointed lapse date would succeed in suing for salary for the remainder of the period. As would be discerned from the case of Josphine Mwende vs University of Nairobi [2021] eKLR, cited by Counsel for the Respondent, this Court’s view has been that the employee is legally entitled to. However, jurisprudence from other Judges of this Court has held otherwise. See Ambogo v Sameer Agriculture and Livestock (Kenya) Limited (Employment and Labour Relations Cause 199 of 2022) [2023] KEELRC 2257 (KLR) (29 September 2023) (Judgment).
40. Certainly, with the Supreme Court decision in Francis Ngokonyo & 2 others v Telkom Kenya Limited (SC Petition No. E009 of 2025), the waters should settle. The Court aptly held that claims for anticipatory salaries or future salary earnings lack a statutory underpinning under the Employment Act, 2007. Such awards not only amount to unjust enrichment but also offend public policy and contradict the principle that contracts of employment are, by their nature, terminable. Damages for wrongful or unlawful dismissal are confined to what is contractually or statutorily provided for, such as payment in lieu of notice, accrued benefits, and pension entitlements. In other words, the Court cannot grant anticipatory salaries and allowances for a period during which the employee did not render any service to the employer.
41. By reason of the foregoing premise, I find that the learned trial Magistrate erred in awarding the Respondent KShs. 2,080,000 for the remainder of the contract period.
42. In the upshot, the appeal herein succeeds only to the extent that the award of KShs. 2,080, 000 is hereby set aside.
43. Each party shall bear its own costs.
Read, Signed and Delivered this 28th Day of May 2026.