LABOUR LAW

ASSIGNMENT

GROUP 8.
KIRUJAH EASTER BRENDA- HDE212-0097/2020
MUTUA MICHEAL KIMANZI- HDE212-0100/2020
DALE LUUSA- HDE212-0101/2020
KIGEN BIRECH EMMANUEL- HDE212-0102/2020
SHADRACK KIBUI- HDE212-0106/2020
PATIENCE NJAMBI- HDE212-0107/2020
MERCY OSUMBA- HDE212-0108/2020
NICOLE WANJIKU- HDE212-0109/2020

Kigen Birech
 1

QUESTIONS.

A) Janet was recently employed as a clerk in a government accounts department.

Outline unethical practices that she should guard against in the performance of her
duties.

Unethical Practices by Accountants

An accountant is an individual whose work involves the application of accounting in
performing some or all of the following: preparing financial statements; conducting financial
investigations; preparing, reporting and advising on the purchase and sale of businesses,
business combinations, obtaining capital for enterprises, changes in partnerships, fraud and
insolvency; preparing tax returns; giving advice on taxation; contesting disputed tax before
officials; preparing or reporting on profit forecast and budgets; planning external and
internal audits and supervising audit work; advising on, reorganizing, devising, and
overseeing the installation and implementation of accounting, bookkeeping and related
systems. (Department of Employment, London, 1972)
Ethics is an important aspect of the accountant in business enterprise’s work and
profession. Professional ethics in this context can be summed up as the commitment of the
management accountant to provide a useful service for management. This commitment
means that the management accountant has the competence, integrity, confidentiality and
objectivity to serve management, effectively. (Blocher et al, 2005: 23-25).
The type of unethical practices by accountants in business include the following;

1) Requests by employers to record purchases or expenditure or sales that never

occurred.

2) Requests to produce figures to mislead shareholders, e.g., participation in the

production of false and misleading financial statements.
3) Request by employers to manipulate tax returns.

4) Request to conceal information.

5) Requests to manipulate overhead absorption rates to extort more income from

customers; and to manipulate cost allocation.

6) Requests to authorize and conceal bribes to buyers and agents, a common request in
some exporting business.

7) Requests to produce misleading projected figures to obtain additional finance or

loan.
 2

8) Requests to conceal improper expense claims put in by top management or senior

managers.

9) Requests to over-or under-value assets.

10) Request to misreport figures in respect of government grants.

11) Requests for information, which could lead to charges of ‘insider dealing’ in shares or
stock.

12) Requests to redefine bad debts as ‘good’ or vice versa.

13) Requests for padding the budget by knowingly include a higher number of
expenditures in the budget than they actually believe is needed.

14) Wasteful spending to exhaust remaining budgeted amounts before the end of the
period.

15) Requests to prepare unreasonable Executive compensation plan. The tax authority
can deny a firm’s right to deduct compensation that it determines to be
unreasonable.

B) Outline situations that may lead to the termination of an employment contract under
the employment act.

Reasons to terminate a contract.

A.) Lack of Consideration

In legal terms, “consideration” refers to something of value given by both parties to a

contract that induces them to enter into the agreement. If there has been no consideration,
or bargained-for exchange, a court will deem the contract invalid and it can be terminated.

B.) Lack of Capacity

A court will not observe the contractual obligations of an individual that lacks capacity (e.g.,
minor or someone deemed mentally incompetent). Although a court does not recognize
minors, a contract made by an adult to a child is accepted. A person is considered mentally
incompetent if he lacks the ability to understand the agreement.
 3

C.) Statute of Frauds

Most oral contracts are enforceable.  However, there are certain contracts that need to be
in writing to be enforceable. Some examples of this include marital agreements, service
agreements that cannot be performed within a year, land contracts, and contracts for goods
of $500 dollars or more. Even though these contracts must be written and signed, a court
can determine whether informal writings such as emails, invoices and letters meet the
statute of fraud requirement.

D.) Mutual Mistake

If both parties involved in a contract are mistaken about the same facts, the contract may be
voidable.

E.) Misrepresentation

A misrepresentation is a false statement of facts that encourages a person to sign the

contract.

F.) Breach

A breach arises when a party fails to perform any term of a contract absent a legal excuse.
However, for a contract to be terminated the contract must be considered in major breach.  
To determine whether a breach was major or minor, the courts will look 6 guidelines
including:

1) The extent to which the breaching party has already performed,

2) Whether the breach was intentional, negligent or the result of an innocent mistake,

3) How certain it is that the breaching party will perform the rest of the contract,

4) How much of the benefit of the contract the non-breaching party has gotten despite the
breach,

5) The extent to which the innocent party can be compensated and,

6) How difficult it would be on the breaching party if the court were to decide that the
breach was material and that the innocent party was under no obligation to perform his side
of the bargain
 4

G.) Discharge by Frustration

A contract may be frustrated where there exists a change in circumstances, after the
contract was made, which is not the fault of either of the parties, which renders the
contract either impossible to perform or deprives the contract of its commercial purpose.

H.) Impossibility of Performance

A contract can be cancelled under what is called an “impossibility theory”. Types of

impossibility theories observed by the court include acts of God, death, or legal
impossibility.

C) Explain the remedies available to an employee in a law for wrongful dismissal.

Employment in Kenya is regulated by the Constitution, the Employment Act, 2007, the
Labour Relations Act, 2007, the Labour Institutions Act, 2007, the Work Injury Benefits Act,
and the Employment and Labour Relations Court Act; which is the statute establishing the
Employment and Labour Relations Court (hereinafter referred to as ‘the Court”)
The Court has both original and appellate jurisdiction to hear and determine employment
disputes. The Court has the power to issue a variety of remedies, they include:

1. Interim preservation orders including injunctions in cases of urgency.

These are orders meant to preserve the status quo pending the determination of an
employment dispute by the Court i.e. to preserve the rights and obligations of the
parties before the final determination of the dispute. Such orders include orders to
have an employee continue working and orders to have employees postpone
industrial action, before the Court’s final determination. The purpose of such orders
is to ensure that the final court decision is not invalidated by a change in the
prevailing circumstances.

2. Prohibitor orders
 5

The purpose of prohibitor orders is to stop a party to a dispute from acting in a

particular manner. Prohibitor orders can be granted in the course of the
proceedings and at the final determination of the dispute. Such orders include
orders to stop an employer from terminating the employment of an employee and
orders to stop an employer from carrying out a fresh recruitment process.

3. An order for specific performance

Orders for specific performance are generally granted where monetary

compensation is not sufficient. Such orders can be applied to compel an employer to
improve working conditions and to compel an employer to pay an employee in
accordance with the employment contract. This order is however given under very
limited circumstances in employment suits, since court cases often cause strained
employer-employee relations, creating a hostile working environment.

4. An order for reinstatement

An order for reinstatement requires that an employee whose employment has been
terminated returns to work. It has to take place within three years of dismissal. The
Court can also impose conditions for reinstatement on a case-by-case basis.
Similarly, due to the likelihood of a strained employer- employee relationship, courts
are usually reluctant to issue such orders unless the dispute arose within the public
sector.

5. Declaratory orders

Declaratory orders are proclamations made by the court, stating whether an action
is legal or illegal, procedural or unprocedural or whether a party to a suit acted
lawfully and within its powers. Once a court makes a declaratory order, it follows
that it should make an order as to the next course of action for the parties. For
instance, an aggrieved employee can ask the court to declare his termination from
employment unfair. Consequently, if the court makes such a declaration, it should
state whether the employee ought to be compensated or reinstated.

6. Compensatory order

There are various forms of compensation that the court can award. When
determining the amount of compensation an employee is entitled to, the Court
considers factors such as the length of employment, the wishes of the employee and
the circumstances under which the termination took place.
 6

a.) Payment in lieu of notices

Section 49 of the Employment Act sets out the remedies that one is entitled to if
they are wrongfully dismissed or terminated from employment unfairly. An
employee is entitled to wages which he/ she would have earned, had he been given
the notice period required by law. The notice required by law is usually dependent
on the provisions of the Employment Act or the contract of employment. For
instance, where an employment contract requires that employee be given a month’s
notice, the court can order that such an employee be awarded a month’s pay if no
notice is given to the employee. This is what is commonly known as ‘payment in lieu
of notice’.

b.) Severance pays

Severance pay is given to an employee who has been deemed redundant by his/ her
employer. It is usually calculated at a rate of not less than fifteen (15) days’ pay for
each completed year of service. For example, where an employee has been
declared redundant after working for ten years, her severance pay will be 15 days’
pay, ten times.

c.) Payment for accrued leave days

Employees are entitled to take an annual leave of up to twenty-one (21) days after
12 months of continuous employment. Where an employee continues to work
without leave, such an employee is entitled to payment.

d.) Overtime
Each employment contract should set out an employee’s working hours. Where an
employee exceeds the number of hours under his contract, he is entitled to seek the
court’s enforcement for overtime payment. This includes payment for work done on
public holidays.

e.) Compensation for unfair termination

Where it is established that an employee was unfairly terminated or wrongfully
dismissed, such an employee is also entitled to twelve months pay as compensation
for the unfair termination or wrongful dismissal.

f.) Payment of wages relating to days worked

Where an employee’s services are terminated before the end of the month, then an
employer is required to pay him/ her for the days he/ she has worked, in addition to
payment in lieu of no

7. Order awarding various types of damages

 7

The Employment and Labour Relations Court can award damages, which is monetary
payment made to a party for loss or injury incurred as a result of employment. The
circumstances under which an employee can be awarded damages include:
i. Where an employee brings a successful claim for sexual harassment or
discrimination.
ii. Where an employee is injured in the course of his/ her work.
iii. Where an employee incurs expenses to the benefit of the employer, e.g.,
when getting transferred from one station to another.
iv. Where an employee’s reputation is damaged and his employability reduced
due to the employer’s actions
v. Where an employee destroys property belonging to the eemployer
 8

In Western Development Corporation v. Jemo Abimbola (1972) ANLR, pt. 2433 it was held
that the measure of damages for wrongful dismissal is prima facie the amount the plaintiff
would have earned had he continued with the employment up till the period of judgment.
 9

REFERENCES

(Blocher et al, 2005: 23-25)

(Department of Employment, London, 1972)
Jemo Abimbola (1972) ANLR, pt. 2433