THE PLACE OF DISCHARGE VOUCHERS IN EMPLOYMENT TERMINATION

By Ameli Inyangu & Partners Advocates

When employment is terminated, many employers aim to avert any future claims by requiring employees to sign discharge vouchers or settlement agreements. These documents often ensure that employees relinquish any claims they may have against the employer. However, the enforceability of such discharge vouchers has been a contentious issue in Kenyan employment law.

Understanding Discharge Vouchers

A discharge voucher is essentially a contract between an employer and an employee. By signing it, the employee typically acknowledges receipt of terminal dues and waives the right to pursue any further claims against the employer.

Case Analysis: Coastal Bottles Limited v. Kimathi Mithika

In this case, the employee was employed as a General Sales Manager on a two-year contract. However, after eight months, he was served with a termination letter, and his terminal dues were assessed at Kshs. 1,516,281. The employee signed a discharge voucher acknowledging receipt of the dues and waiving any further claims against the employer.

Later, the employee claimed unfair termination, arguing that he had not been granted a hearing prior to dismissal. The employer opposed this claim, citing the signed discharge voucher as evidence that the employee had relinquished further claims.

Court Decisions

• Employment and Labour Relations Court

The Employment and Labour Relations Court ruled in favor of the employee, finding that the termination was unfair. The court held that the settlement agreement did not absolve the employer of further liabilities arising from the employment contract.

• Court of Appeal

On appeal, the employer argued that the discharge voucher barred the employee from making further claims. The Court of Appeal determined that the validity of a discharge voucher depends on whether it was:

1. Freely and willingly executed.
2. Signed at a time when the employee was aware of all relevant information.

The Court of Appeal held that the employee had waived his rights to make further claims, as there was no indication of coercion or misrepresentation by the employer. The employee understood the contents of the discharge voucher and willingly signed it.

Key Principles from Case Law

Later decisions by the Employment and Labour Relations Court have upheld the validity of discharge vouchers as contracts, even when aspects of the termination process are found to be unfair. However, the courts have emphasized the following:

1. Coercion or Misrepresentation: A discharge voucher may be invalidated if the employee can prove they signed it under duress or were misled about its contents.
2. Informed Consent: The employee must have full knowledge of the implications of signing the discharge voucher, including waiving future claims.

Practical Implications for Employees and Employers

• For Employees: Before signing a discharge voucher, ensure you understand its contents and implications. If you wish to pursue claims against your employer in the future, do not sign the document.
• For Employers: Ensure that discharge vouchers are drafted clearly and transparently. Avoid pressuring employees into signing them, as this could lead to legal challenges.

CONCLUSION

Discharge vouchers are valid contracts that can protect employers from future claims. However, their enforceability depends on the circumstances under which they were signed. For employees, understanding the legal implications is crucial before signing such agreements. For employers, fairness and transparency are key to ensuring the validity of these contracts.

For expert advice on employment law, us at Ameli Inyangu & Partners Advocates.

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