Kenya’s Employment and Labour Relations court has ordered Craft Silicon, a Kenyan software firm, and its ride-hailing subsidiary, Little, to pay a former general manager, Ronald Otieno Mahondo, $751,000 (KES 98 million) for unfair dismissal and breach of contract.
Justice Mathews Nduma, in a judgment delivered on October 23, ruled that the two companies had unfairly dismissed Mahondo and denied him a 1% ownership stake in Little, which was then valued at $75 million.
The ruling has exposed how some startups handle equity and employment agreements informally, leaving senior executives vulnerable when disputes arise. It also shows a rare instance where a Kenyan court has recognised verbal promises of shareholding, backed by electronic recordings, as binding.
Mahondo joined Craft Silicon in July 2016 as General Manager, earning KES 240,000 ($1,860) monthly. His salary was raised to KES 340,000 ($2,640) six months later when he successfully helped launch and grow Little, the company’s new ride-hailing venture.
According to his testimony, CEO Kamal Budhabhatti verbally offered him a 1% stake in Little as recognition for his role, with the promise of another 1% if performance targets were met.
In a court document obtained by TechCabal, Mahondo stated that the new terms were outlined in a written contract, but he was never given a copy. His repeated attempts to obtain it allegedly sparked tension with management, leading to what he described as harassment, false accusations, and an orchestrated plan to push him out.
Mahondo secretly recorded several meetings with the CEO and other executives, and those recordings were admitted as evidence in court. He likely did so to protect himself and preserve proof of the promises made to him.
Craft Silicon denied the claims, insisting Mahondo was lawfully dismissed in May 2017 for poor performance, insubordination, and falsifying company data. The company said he had been paid all his dues, including one month’s salary in lieu of notice and accrued leave amounting to KES 633,737 ($4,910).
Craft Silicon did not immediately respond for a request for comment.
The judge ruled that the termination process was “skewed, procedurally flawed, and motivated by bad faith,” saying the flurry of disciplinary memos sent to Mahondo between April and May 2017 coincided with his requests for a copy of the contract, reinforcing the view that his dismissal was meant to block him from claiming his equity.
“The respondent failed materially in using incredible tramped-up charges to defeat the spirit of the Claimant,” Justice Nduma wrote, noting that the secretly recorded conversations confirmed Budhabhatti had awarded Mahondo 1% of the company’s shares.
The court awarded Mahondo $750,000 for his 1% shareholding and KES 1.02 million ($1,020) as compensation for unfair termination. Both sums will accrue interest from the date of judgment until payment in full.
