The Employment and Labour Relations Court has issued a significant ruling clarifying that employers cannot stop paying workers simply because a business is facing financial difficulties, in a decision likely to affect thousands of employees across Kenya.

🇰🇪 Breaking It Down

In the ruling delivered in Kisumu, the court found that an employee who resigned after going for four consecutive months without salary had been constructively dismissed, holding that the employer’s financial struggles could not justify withholding wages while still expecting the employee to continue reporting to work.

The employer had argued that workers had been informed about the company’s financial problems and asked to remain patient until the business stabilised, insisting that the unpaid salaries would eventually be settled.

However, the court rejected the argument, with Justice Nzioki wa Makau stating that it was not the responsibility of an employee to figure out how an employer would raise money to pay wages.

📌 What You Need to Know

The judge ruled that by failing to pay salaries for several months , the employer had effectively created the conditions that forced the employee to leave work, thereby amounting to constructive dismissal.

Additionally, the court emphasised that salary payments are not optional or discretionary benefits that employers can postpone whenever businesses face financial difficulties.

Instead, the judge noted that payment of wages remains one of the most fundamental obligations under an employment contract, regardless of the economic situation facing a company.

While the court upheld claims relating to unlawful termination, salary arrears, notice pay, service pay and compensation, it reduced some of the additional claims presented by the employee.

The court found that claims relating to underpayments , house allowance and accrued leave had partly fallen outside the statutory limitation period provided under the Employment Act, limiting the amount the employee could recover.

Legalists say that the ruling reinforces the principle that the financial risks of operating a business must reside with the employer and cannot be transferred to workers through prolonged salary delays.

📰 Source: Kenyans.co.ke