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Court of AppealPartially AllowedCivil Appeal No. 15 of 2014· [2015] KECA 732 (KLR)

Rafiki DTM (K) Ltd v Julius Ng’ang’a Mbugua [2015] KECA 732 (KLR)

Court of Appeal of Kenya
19 March 2015
HOH. M. OkwenguASAsike-MakhandiaFSF. Sichale
3,483 words in judgment
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The bottom line

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Kenya's Court of Appeal cut a Kshs.480,000 unfair termination award, holding employers must give hearings but courts cannot award relief nobody asked for.

What this practically means

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Executive summary

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The Court of Appeal at Malindi (Okwengu, Makhandia and Sichale, JJ.A.) partly allowed an appeal against the judgment of Makau, J. of the Industrial Court at Mombasa, which had declared the summary dismissal of the respondent, a former Relationship Officer of the appellant, unlawful and unfair and awarded him Kshs.534,666.70. The appellant contended the dismissal was justified on grounds of non-performance, insubordination and gross misconduct, and that the trial court had awarded unpleaded relief. The Court found the show cause letter's response deadline preceded its own date, that the respondent had explained his delay in responding to the manager's email summons, and that the manager had favourably endorsed his transfer request, undermining the insubordination charge. Critically, the respondent was not given a hearing before termination and had no companion present, contrary to section 41(1) of the Employment Act, 2007. The Court therefore affirmed the awards of one month's salary in lieu of notice and salary for 7 days worked, but set aside the award of twelve months' salary as compensation for unfair termination because that relief had not been pleaded, depriving the appellant of an opportunity to contest it in breach of natural justice. The net award was Kshs.33,532.05 after deducting the respondent's admitted debt, bearing interest from the date of filing suit. Claims for severance pay and leave allowance were not revived, the trial court not having awarded them and no cross-appeal having been filed. Each party was directed to bear their own costs. The judgment binds lower courts on the mandatory hearing requirement in section 41 and the bar on awarding unpleaded relief.

Key legal issues

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01

Fair hearing before termination

Holding

The termination was unfair because the respondent was neither given an opportunity to be heard nor accompanied by another person as required by section 41(1) of the Employment Act

Reasoning

The show cause letter's dates were internally inconsistent, making a timely response impossible. The email summons of 29th May was received when the respondent was in the field; he met the manager who postponed the meeting, and the manager favourably endorsed his transfer request, contradicting the insubordination claim. The dismissal letter, though written earlier, was delivered only on 11th June, meaning the respondent was not heard before termination.

p. 5
02

Award of unpleaded compensation

Holding

The trial judge erred in awarding twelve months' salary for unfair termination when no such relief was pleaded, as this deprived the appellant of the chance to controvert the claim

Reasoning

The judge reasoned that the unrepresented claimant may not have known to plead compensation, but the appellate court held this wrong: parties are bound by pleadings and the award arose for the first time at judgment stage, which was unfair and prejudicial to the appellant, contrary to the audi alteram partem principle endorsed in Pashito Holdings.

p. 6
03

Entitlement to salary in lieu of notice and 7 days' salary

Holding

The respondent was entitled to one month's salary in lieu of notice and salary for 7 days worked in June 2013, less the amount owed to the appellant

Reasoning

Having found the termination unfair for want of a hearing, the court affirmed the one month's notice pay. The 7 days' salary (though pleaded as 7 days, the trial judge awarded 11 days) was confined to what the respondent sought in the statement of claim, and the admitted debt to the appellant was deducted.

p. 6

Legal principles established

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  • An employer must, before terminating employment on grounds of misconduct, poor performance or incapacity, explain the reasons to the employee and accord the employee a hearing, with another person of the employee's choice present; failure to do so renders the termination unfair
  • A court cannot award relief that was not pleaded; a party is only entitled to the prayers sought, and introducing unpleaded relief at judgment stage without affording the other side an opportunity to respond is a breach of natural justice
  • Where an employee has been confirmed into a contributory pension scheme, severance pay is not payable

Court orders

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  1. 1.The appeal allowed in part; judgment of the lower court varied
  2. 2.Respondent awarded one month's salary in lieu of notice (Kshs.40,000) and salary for 7 days worked (Kshs.9,100), less Kshs.15,567.95 owed to the appellant, total Kshs.33,532.05
  3. 3.The sum awarded to bear interest from the date of filing the statement of claim
  4. 4.The award of twelve months' salary for unfair termination set aside
  5. 5.Each party to bear their own costs

Authorities

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Legislation

  • Constitution of KenyaArticle 164(3)
  • Industrial Court ActSection 17
  • Employment Act, 2007 (Act No. 11 of 2007)Section 41(1)
  • Employment Act, 2007 (Act No. 11 of 2007)Sections 44(4)(a), (c) and (e)
  • Employment Act, 2007 (Act No. 11 of 2007)Section 42(1)
  • Employment Act, 2007 (Act No. 11 of 2007)Section 43
  • Employment Act, 2007 (Act No. 11 of 2007)Section 45
  • Employment Act, 2007 (Act No. 11 of 2007)Sections 49 and 50
  • International Labour Convention of 1982Article 4

Cases cited (2)

  • Herman P. Steyn vs. Charles Thys
    [1997] eKLR
  • Pashito Holdings Limited and another v Paul Nderitu Ndu'ngu and two others
    Civil Appeal Number 138 of 1997
On appeal from
Industrial Court (High Court of Kenya) at Mombasa
H.C. Ind. Case No. 180 of 2013
Jurisdiction invoked
Section 17 of the Industrial Court Act, appeals lying to the Court of Appeal on matters of law 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 (2)

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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, "Rafiki DTM (K) Ltd v Julius Ng’ang’a Mbugua [2015] KECA 732 (KLR)", Case Analysis (2015). Civil Appeal No. 15 of 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2015/732/eng@2015-03-19

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