The Employment and Labour Relations Court of Kenya has ordered Craft Silicon, a domestic software firm, and its ride-hailing subsidiary Little, to pay their former general manager, Ronald Otieno Mahondo, a total of $751,000 (KES 98 million) for wrongful termination and breach of contract.
On October 23, Justice Mathews Nduma ruled that Mahondo’s dismissal was unjust and that he was wrongfully denied a 1% equity share in Little, which was valued at $75 million at the time.
This case sheds light on the informal and often precarious nature of equity agreements and employment contracts within startups, which can leave key employees vulnerable during disputes. Significantly, it represents a rare instance where a Kenyan court recognized verbal promises of share ownership, corroborated by electronic recordings, as legally binding.
Mahondo joined Craft Silicon in July 2016 as General Manager, initially earning KES 240,000 ($1,860) monthly. After six months, his salary was raised to KES 340,000 ($2,640) following his instrumental role in launching and scaling Little, the company’s ride-hailing service.
According to Mahondo’s testimony, CEO Kamal Budhabhatti verbally assured him a 1% stake in Little as recognition for his efforts, with an additional 1% promised upon achieving specific performance targets.
In court filings reviewed by TechCabal, Mahondo stated that although the revised terms were incorporated into a contract, he was never given a copy. His repeated requests for the document reportedly led to deteriorating relations with management, resulting in harassment, false accusations, and a concerted attempt to push him out.
To protect his position, Mahondo secretly recorded several meetings with the CEO and other executives; these recordings were admitted as evidence during the trial.
Craft Silicon denied the claims, maintaining that Mahondo’s termination in May 2017 was justified due to poor performance, insubordination, and falsification of company records. The company also asserted that all dues, including one month’s salary in lieu of notice and accrued leave amounting to KES 633,737 ($4,910), had been settled.
Requests for comment from Craft Silicon were not immediately returned.
The judge concluded that the dismissal process was “biased, procedurally flawed, and motivated by malice,” noting that the flurry of disciplinary actions against Mahondo between April and May 2017 coincided with his demands for the contract copy, suggesting the termination was orchestrated to block his equity claim.
Justice Nduma remarked, “The respondent resorted to fabricated allegations to undermine the claimant’s legitimate rights,” highlighting that the secretly recorded conversations confirmed Budhabhatti’s promise of a 1% shareholding to Mahondo.
The court awarded Mahondo $750,000 for his equity stake and an additional KES 1.02 million ($1,020) as compensation for unfair dismissal. Both sums will accrue interest from the date of judgment until fully paid.