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Court of AppealDismissedCivil Appeal No. 12 of 2015· [2015] KECA 302 (KLR)

Iyego Farmers Co-operative Sacco v Kenya Union of Commercial Food and Allied Workers [2015] KECA 302 (KLR)

Court of Appeal
28 October 2015
PWP. N. WakiRNR. N. NambuyePKP. O. Kiage
3,473 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Court of Appeal confirmed that a SACCO unfairly dismissed its factory manager because it failed to prove the misconduct charges against him, and must pay damages and costs.

What this practically means

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Executive summary

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This is a unanimous first-appeal judgment of the Court of Appeal at Nyeri (Waki, Nambuye and Kiage, JJ.A) dismissing the appeal of Iyego Farmers Co-operative SACCO against the decision of Abuodha, J. of the Employment and Labour Relations Court, which had found that the summary dismissal of Ayub Kamau, a Factory Manager, was unfair and awarded damages and terminal dues. The Court first held that appeals from the ELRC are no longer restricted to matters of law, since Section 17(2) of the Employment and Labour Relations Court Act was deleted by the Statute Law (Miscellaneous Amendments) Act, 2014; such appeals are therefore first appeals in which the Court must re-evaluate the evidence. It also held that the appellant's citation of the repealed Employment Act Cap 226 was not fatal, as the parties and trial court plainly applied Employment Act No. 11 of 2007. On the merits, the Court found the disciplinary procedure fair under Section 41, but held that the appellant failed to justify the dismissal: the evidence showed the electric motor had been dismantled by two other employees, Ayub was unaware it was missing, the allegation of a mischievous employment history was neither put to him nor proved, and a colleague facing similar charges was reinstated. The gratuity award was proper since the CBA barred terminal benefits only for gross misconduct or redundancy dismissals, and the six months' salary award fell within the statutory discretion. The appeal was dismissed with costs to the respondent.

Key legal issues

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01

Whether the jurisdiction of the Court of Appeal over appeals from the Employment and Labour Relations Court is restricted to matters of law

Holding

The restriction was deleted; appeals now lie against any judgment, award, order or decree and are first appeals on fact and law.

Reasoning

The Court noted that Section 17(2) of the Employment and Labour Relations Court Act, which had restricted appeals to matters of law, was deleted by Section 34A(3) of the Statute Law (Miscellaneous Amendments) Act, 2014 issued on 24th November 2014. The current Section 17 provides that appeals lie to the Court of Appeal against any judgment, award, order or decree issued by the Court in accordance with Article 164(3) of the Constitution. Accordingly, the appeal is a first appeal, obliging the Court to re-consider and evaluate the evidence and draw its own conclusions.

p. 3
02

Effect of citing a repealed statute in the Memorandum of Appeal

Holding

The erroneous citation of the repealed Employment Act Cap 226 was not fatal because the parties and the trial court plainly relied on Employment Act No. 11 of 2007.

Reasoning

Following the Supreme Court's approach in Hermanus Phillipus Steyn v Giovanni Gnecchi Ruscone, procedural provisions should not be interpreted as cast in stone in the interest of justice. It was not in dispute that the applicable law was the Employment Act No. 11 of 2007, and the record and submissions showed that the Act relied upon by the parties and the trial court was the correct one. The mis-citation was therefore a curable procedural slip, not a substantive defect going to the appeal.

p. 4
03

Whether the procedure adopted for the disciplinary proceedings was fair

Holding

The disciplinary procedure complied with Section 41 of the Employment Act and could not be faulted.

Reasoning

The Court endorsed the statement of the ingredients of procedural fairness: the employee must be informed of the contemplated charges, given a proper opportunity to prepare and be heard and present a defence, and where summary dismissal is contemplated the employer must hear and consider any representations before deciding. On the facts, Ayub was given a show-cause letter, suspended pending investigations, invited to a disciplinary hearing where charges were laid, and made representations. The Court found the procedure in accordance with Section 41.

p. 5
04

Whether the reasons for the summary dismissal were valid and justifiable

Holding

The appellant failed to prove that Ayub deliberately falsified the stock card, failed to report the loss, or was guilty of gross misconduct; the reasons did not justify the dismissal.

Reasoning

Applying the reasonable-employer test from British Leyland v Swift and Nampak Corrugated, the Court found there was clear evidence the electric motor had been dismantled by Justus Kamweru and James Kanyugi and Ayub was unaware it was missing until stock taking. The allegation of a mischievous employment history was neither a ground he was asked to answer at the disciplinary hearing nor proved, and Kamweru, who faced similar charges, was reinstated. The employer therefore failed to discharge its burden under Sections 45 and 47(5) of the Employment Act.

p. 6
05

Whether the trial court erred in awarding gratuity and six months' salary as damages

Holding

Both awards were proper: the CBA only barred terminal benefits for dismissal for gross misconduct or redundancy, and the damages award was within the Court's discretion.

Reasoning

On gratuity, clause 4 of the collective bargaining agreement prohibited terminal benefits only for employees dismissed for gross misconduct or redundancy; since the termination was found unfair, Ayub was entitled to terminal benefits. On the six months' salary, Section 49(1)(c) of the Employment Act and Section 12(3)(vi) of the Employment and Labour Relations Court Act empower the court to award damages up to twelve months' salary. Applying the Kemfro Africa test for interference with quantum, the Court was not satisfied the award was a wholly erroneous estimate.

p. 6

Legal principles established

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  • Appeals from the Employment and Labour Relations Court to the Court of Appeal are no longer restricted to matters of law; the restriction previously contained in Section 17(2) of the Employment and Labour Relations Court Act was deleted by Section 34A(3) of the Statute Law (Miscellaneous Amendments) Act, 2014, and such appeals are first appeals.
  • An erroneous citation of a repealed statute in a memorandum of appeal is not fatal where the record and submissions show the parties and the trial court relied on the correct statute.
  • In a complaint of unfair termination, the burden of proving that unfair termination occurred rests on the employee, while the burden of justifying the grounds for termination rests on the employer, and the employer must prove a valid and fair reason and fair procedure.
  • Procedural fairness under Section 41 of the Employment Act requires that the employer inform the employee of the charges, afford a proper opportunity to prepare and be heard, and hear and consider any representations before dismissing.
  • In assessing whether a dismissal is fair, the test is whether a reasonable employer might reasonably have dismissed, there being a band of reasonableness within which employer decisions may differ; an employer who dismisses an employee on a ground the employee was not called upon to answer, while reinstating another employee facing similar charges, has not justified the dismissal.
  • An appellate court may only interfere with the quantum of damages where the trial judge took into account an irrelevant factor, left out a relevant one, or the amount is so inordinately low or high that it is a wholly erroneous estimate of damage.

Court orders

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  1. 1.The appeal is dismissed
  2. 2.The appellant to pay costs to the respondent

Authorities

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Legislation

  • Labour Relations ActSection 62
  • Labour Relations ActSection 69(a)
  • Employment ActCap 226
  • Employment ActNo. 11 of 2007
  • Employment ActSection 44
  • Employment ActSection 44(4)(c)
  • Employment ActSection 45
  • Employment ActSection 45(2)
  • Employment ActSection 47(4)
  • Employment ActSection 47(5)
  • Employment ActSection 41
  • Employment ActSection 49
  • Employment ActSection 49(1)(c)
  • Employment ActSection 50
  • Employment and Labour Relations Court ActSection 17
  • Employment and Labour Relations Court ActSection 17(2)
  • Employment and Labour Relations Court ActSection 12(3)(vi)
  • Statute Law (Miscellaneous Amendments) ActSection 34A(3)
  • Constitution of KenyaArticle 164(3)
  • Constitution of KenyaArticle 259
  • Constitution of KenyaArticle 163(5)

Cases cited (11)

  • Selle v Associated Motor Boat Company Ltd
    [1968] E.A. 123
  • Williamson Diamonds Ltd v Brown
    [1970] E.A. 1
  • Hermanus Phillipus Steyn v Giovanni Gnecchi Ruscone - Application No. 4 of 2012
  • Nampak Corrugated Wadeville v Khoza (JA14/98) [1998] ZALAC 24
    [1998] ZALAC 24
  • CMC Aviation Ltd v Captain Mohammed Noor - Civil Appeal No. 199 of 2003 (2015) eKLR
    (2015) eKLR
  • Anthony Mkala Chitavi v Malindi Water & Sewerage Co. Ltd - Mombasa Industrial Cause No. 64 of 2012 (2013) eKLR
    (2013) eKLR
  • British Leyland UK Ltd v Swift
    [1981] IRLR 91
  • David Wanjau Muhoro v Ol Pejeta Ranching Ltd - Industrial Cause No. 1813 of 2011 (2014) eKLR
    (2014) eKLR
  • D.K Njagi Marete v Teachers Service Commission - Industrial Cause No. 379 of 2009 (2013) eKLR
    (2013) eKLR
  • Southern Highlands Tobacco v McQueen
    (1960) EA 490
  • Kemfro Africa Ltd & Another v Lubia & Another (No.2)
    (1987) KLR 30
On appeal from
Employment and Labour Relations Court at Nyeri
Industrial Cause No. 47 of 2014
Jurisdiction invoked
Section 17 of the Employment and Labour Relations Court Act, in accordance with Article 164(3) of the Constitution

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (25)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Iyego Farmers Co-operative Sacco v Kenya Union of Commercial Food and Allied Workers [2015] KECA 302 (KLR)", Case Analysis (2015). Civil Appeal No. 12 of 2015. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2015/302/eng@2015-10-28

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.