High cost of wrongful dismissal: How ex-staff are winning millions in court over HR blunders

This trend exposes systemic failures in human resource management practices and raises critical questions about workplace justice in Kenya’s evolving labour market.

From oil executives to hospital CEOs, aggrieved workers are securing multimillion-shilling payouts that reveal deep flaws in termination processes.

The numbers tell a sobering story.

In the past two years, Kenyan courts have awarded hundreds of millions in compensation for wrongful termination cases involving executives, middle managers, and junior staff across multiple sectors.

These cases reveal consistent patterns of procedural violations, disregard for employment laws, and sometimes outright malice in termination processes.

At the heart of these disputes lies a troubling pattern: HR departments repeatedly flouting due process, bending to executive pressure, or outright disregarding employment laws.

The consequences are staggering—not just in financial losses but in reputational damage that lingers long after courtroom battles end.

Recent judgments reveal several common threads in these costly dismissal cases. Procedural missteps top the list, with employers frequently failing to provide adequate notice, denying access to evidence, or rushing through disciplinary processes.

Invalid termination grounds represent another recurring theme, with companies citing vague reasons such as “irretrievable breakdown” or “loss of confidence” that crumble under judicial scrutiny. Perhaps most disturbingly, courts are uncovering cases where terminations were clearly premeditated—orchestrated to remove employees for reasons completely unrelated to performance or conduct.

These patterns suggest that many Kenyan companies still view employment contracts as flexible arrangements that can be terminated at will, rather than legally binding agreements with strict termination protocols.

Some of the most notable and high-profile cases that shook corporate Kenya involve former Nairobi Hospital CEOs.

The institution has become something of a cautionary tale in HR circles, losing multiple high-profile wrongful dismissal cases.

Former CEO Allan Pamba was awarded Sh206 million—probably Kenya’s largest individual payout for wrongful termination—after the court found his six-month tenure ended in what it called a “callous and malicious” fashion.

“The claimant was notified of the dismissal in a callous and offending manner. His flourishing career seemed cut short abruptly and was distressed,” the judgment stated, noting that Dr Pamba had been given no opportunity to address alleged performance issues.

His predecessor, Dr Gordon Odundo, secured Sh72 million compensation after proving he was denied access to his office during disciplinary proceedings—a blatant violation of due process.

“The atmosphere in which the claimant was operating had been poisoned and soured from the date the respondent’s lawyers attempted to storm the claimant’s office,” the court noted with concern.

The hospital defended itself by citing an audit prepared by professional services firm Ernst & Young.

Another former CEO of the regional premier hospital, James Nyamongo, is currently in court claiming Sh100 million for alleged wrongful dismissal after his contract was terminated in November 2024.

Meanwhile, Mediheal Group faces a Sh422 million bill after failing to pay 63 Indian expatriates for months, forcing them to resign.

The court ruled this amounted to constructive dismissal, lambasting the hospital chain for “unfair labour practices that left employees vulnerable and humiliated”.

“Failure to pay employees’ salaries consistently for several months goes to the root of the contract and leaves such employees vulnerable and embarrassed,” said the judge in the June 2025 verdict. “The court holds that such behaviour would push any employee to resign as they are not receiving the fruits of their labour.”

Last week, the Kenya Medical Supplies Authority (Kemsa) was hit with a Sh12 million claim from two finance managers dismissed unlawfully following an adverse audit opinion by the Auditor-General and violation of their rights.

In a ruling that underscores constitutional protections against unfair labour practices, the court found that Kemsa violated the managers’ rights by subjecting them to arbitrary interdiction, forced leave, and constructive dismissal without due process.

“The petitioners suffered psychological torture, public ridicule, and odium upon being publicly subjected to unlawful compulsory leave for an indefinite period without any notice, hearing, or opportunity to explain themselves,” said the court. “The petitioners were interdicted without substantive charges and timelines to respond.”

The energy sector provides some of the most glaring examples of HR failures in executing terminations.

Take the case of David Ohana, former Group Managing Director of KenolKobil, who was abruptly fired in 2019 following Rubis Energy’s acquisition of the company.

Despite being labelled a “poor performer”, court records showed Ohana had received annual bonuses for nearly two decades—until Rubis took over. In a scathing September 2024 judgment, the court ruled his termination was a premeditated purge, ordering Rubis to pay him Sh34.6 million.

Mr Ohana was terminated for alleged non-performance as Group MD, but the court observed that the timing of the sudden ‘poor performance’ assessment raised serious questions. The ruling found this was clearly about installing new leadership rather than addressing genuine performance concerns.

“This had nothing to do with the claimant’s performance,” said the court. “This was an employee who had served the respondent for close to 17 years and annually received bonuses as appreciation for good performance.”

“How he suddenly became a poor performer five months into 2019—coinciding with Rubis Energy’s acquisition—can only be understood as a premeditated arrangement to change leadership at whatever cost.”

The court declared Mr Ohana’s termination unfair because the employer failed to prove the reasons were valid and fair as required by Section 45(1) of the Employment Act.

Similarly, Lexo Energy Kenya was ordered to pay its former head of retail Sh8 million after citing an “irretrievable breakdown” in their working relationship—a reason the Labour Court dismissed as legally baseless.

The employee alleged that the work environment became untenable due to harassment, including actions amounting to constructive dismissal—such as setting targets then frustrating his ability to meet them.

His claims included withdrawal of vehicles from field staff who needed them to visit stations, and failure to maintain service stations or address maintenance issues promptly. The company denied these allegations.

The Employment Act strictly limits termination grounds to misconduct, incapacity, redundancy, or operational necessity. Lexo’s vague justification exposed its failure to align dismissals with statutory requirements.

The technology sector has not been immune either. In what employment lawyers are calling a landmark case, Little Cab’s former General Manager was awarded Sh98 million after proving his termination was orchestrated to deny him a promised 1 percent equity stake.

Covert recordings revealed executives scheming to avoid honouring their commitment—evidence so damning the court condemned the dismissal as unlawful and malicious.

“This case goes beyond wrongful termination,” remarked a corporate employment lawyer. “It reveals how easily corporate promises can be discarded when they become inconvenient. The recordings showed clear bad faith.”

Banks have also found themselves on the wrong side of employment judgments.

KCB was ordered to pay Sh115.5 million to 29 former employees (though the ruling is under appeal), while ABSA Kenya is fighting an Sh8.3 million award to a former branch manager who accused the bank of privacy violations and procedural flaws during his dismissal.

Read: Absa Bank fined Sh5m for ‘spying’ on Mombasa branch manager Thomas Mwangi

While HR departments bear much scrutiny in these cases, industry experts argue that the problem runs deeper. The rising tide of wrongful dismissal cases has put HR professionals in an uncomfortable spotlight.

Many HR professionals find themselves caught between enforcing proper procedures and appeasing powerful executives demanding quick terminations.

Priscah Mwangi, a veteran HR consultant, paints a troubling picture: “In many organisations, HR isn’t consulted for advice on whether to terminate—they’re simply told to make it happen. Professionals who push back often find themselves sidelined or even targeted.”

This dynamic creates what Ms Mwangi calls the “HR executioner syndrome”—where human resource managers become mere implementers of predetermined decisions rather than guardians of fair process.

“HR acts as an executioner, not an advisor,” she explains. “Senior executives frequently sanction terminations, reducing HR’s role to simply processing predetermined outcomes. Professionals who comply are rewarded; those who uphold the rules are often punished.”

Ms Mwangi argues that the Institute of Human Resource Management (IHRM) should hold accountable any HR professional who fails to follow due process in employee terminations.

“This would dissuade HR professionals from just ticking boxes and encourage them to challenge senior executives during disciplinary processes,” she says.

“Holding HR professionals personally accountable for mishandling terminations would deter complicity and empower them to resist unprofessional demands. The IHRM must also protect members who resist such demands.”

Kenya’s employment laws provide robust protections against unfair dismissal. Section 45 of the Employment Act clearly outlines valid termination grounds, while Section 41 mandates proper procedure including notice and hearing. The Human Resource Management Act goes further, listing professional misconduct such as ignoring due process.

Yet enforcement remains inconsistent.

IHRM, which regulates the profession, has been criticised for not taking stronger action against members who facilitate wrongful terminations.

The surge in wrongful termination lawsuits presents both challenges and opportunities for Kenyan businesses.

Forward-thinking companies are responding by strengthening internal disciplinary processes with clear timelines and documentation requirements and investing in HR training focused on employment law compliance.

Other measures include establishing independent review mechanisms for termination decisions, developing clearer performance metrics and improvement processes and creating whistleblower protections for HR staff who resist improper directives.

For employees, these rulings offer renewed hope that employment contracts carry real weight. As the Labour Court judge noted in a recent judgment: “An employment relationship is not merely transactional—it carries dignity implications that courts will protect.”

The message to corporate Kenya is clear: in an era of increasing judicial scrutiny, cutting corners on dismissals has become a prohibitively expensive gamble. Companies that fail to reform their HR practices may soon find themselves joining the growing list of those paying millions for their mistakes.

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