Nairobi Hospital Ordered to Pay Former CEO Kshs 170,350,000 for Unlawful Termination: The Case of Pamba v Kenya Hospital Association for & on Behalf of the Nairobi Hospital & Another [2025] KEELRC 1776 (KLR)

Case: Pamba v Kenya Hospital Association for & on Behalf of the Nairobi Hospital & Another [2025] KEELRC 1776 (KLR)

I. Background

This case concerned the termination of Dr. Allan Pamba, who had been appointed as the Chief Executive Officer (CEO) of the Nairobi Hospital under a three-year employment contract that included a six-month probationary period. Under the terms of the contract, successful completion of the probation period would result in automatic confirmation, while unsatisfactory performance would lead to an additional three-month performance enhancement plan.

Dr. Pamba's employment was terminated at the end of the six-month probation period, allegedly due to underperformance and his refusal to undertake the extended performance improvement plan.

However, Dr. Pamba contended that the termination was:

• Unlawful, procedurally unfair, and politically motivated;
• Based on a retrospective and irregular evaluation;
• Conducted in violation of both labour law and the hospital’s internal HR policies.

He sought a declaration of unlawful termination, compensation for reputational damage, and other remedies (excluding reinstatement, which he later abandoned upon securing alternative employment).

II. Respondents’ Position

The Respondents (the Kenya Hospital Association and its Board Chair, Dr. Irungu Ndirangu) argued that:

• The Claimant had underperformed during his probation;
• The termination followed his refusal to engage in a performance improvement process;
• The decision was lawful and compliant with the Employment Act and internal HR policy.

III. Issues for Determination

The Court considered the following key issues:

1. Whether the Claimant’s contract was automatically confirmed upon expiry of the probation period;
2. Whether the Claimant was entitled to procedural fairness under Section 41 of the Employment Act;
3. Whether the Claimant was entitled to compensation for unfair termination;
4. Whether the Claimant was entitled to damages for reputational harm (defamation).

IV. Court’s Analysis and Findings

1. Automatic Confirmation of Employment

• The Court held that Dr. Pamba’s employment was automatically confirmed on 8th September 2020, the date his probation period lapsed.
• The Court emphasized that Section 42(2) of the Employment Act requires mutual and written agreement to extend a probationary period.
• As there was no communication or agreement on an extension, and no midpoint review conducted as required by the hospital’s HR policy, the probation was deemed completed.

2. Right to Fair Procedure under Section 41

• The Court ruled that since Dr. Pamba had been confirmed by operation of law, he was entitled to full procedural protections under Section 41.
• The purported extension of probation was unlawful, as it was made after the probation period had already expired, without prior communication or consultation.
• The Board meeting that approved the termination also violated policy, as performance review was not even on the agenda, and due process was not followed.

3. Entitlement to Compensation

• The termination was found to be unlawful, unprocedural, and unfair.
• The Claimant was not issued a notice to show cause, nor given an opportunity to be heard.
• The Court invoked Section 49(1)(c) of the Employment Act and awarded maximum compensation, including:
• Salary for the unexpired contract term;
• Leave dues;
• 12 months’ salary compensation.

4. Reputational Harm and Defamation

• The Court accepted that Dr. Pamba’s dismissal was handled in a demeaning and abrupt manner.
• The premature and unprocedural dismissal, along with media coverage on social media and newspapers, caused serious damage to his professional reputation.
• The Court awarded additional damages for reputational harm and emotional distress.

V. Final Judgment

The Employment and Labour Relations Court declared that:

• The termination was unfair, illegal, null and void;
• The Claimant was awarded a total of Kshs 170,350,000, comprising:
• Salary for the remainder of the contract;
• Terminal benefits and accrued leave;
• 12 months’ salary compensation under Section 49;
• General damages for reputational damage.

VI. Jurisprudential Significance

Confirmation by Operation of Law

• If an employer fails to formally communicate an extension of probation before the probationary period ends, the employee is automatically confirmed.

Strict Application of Section 41

• Section 41 of the Employment Act is mandatory: confirmed employees are entitled to notice and a fair hearing.
• Failure to follow this process renders termination unlawful and actionable.

Employer’s Internal Policies Matter

• The Court gave weight to the employer’s HR manual, noting that deviation from internal procedure further invalidated the termination.

Heavy Compensation for Non-Compliance

• The ruling is a stark reminder that non-adherence to statutory and procedural requirements can expose employers to significant financial liability.

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VII. Practical Implications for Employers

1. Timely and Written Communication: Employers must give written, timely notice if intending to extend probation — silence can lead to automatic confirmation.
2. Compliance with Internal HR Policies: Internal procedures are legally enforceable and must be strictly followed.
3. Fair Hearing is Mandatory: All confirmed employees are entitled to notice, a hearing, and reasons for termination.
4. Handle Terminations with Sensitivity: Poor handling of executive exits, especially those involving media attention, can lead to additional defamation or reputational damages.