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Court of AppealPartially AllowedCivil Appeal No. 199 of 2013· [2015] KECA 775 (KLR)

CMC Aviation Limited v Mohammed Noor [2015] KECA 775 (KLR)

Court of Appeal of Kenya
24 April 2015
WKW. KaranjaDMD.K. MusingaSKS. Gatembu Kairu
5,608 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 even a justified dismissal becomes unfair if the employer skips the mandatory hearing, and slashed the damages award from US$108,000 to about one month's pay.

What this practically means

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Executive summary

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This appeal, and the respondent's cross-appeal, arose from an Industrial Court award in favour of Captain Mohammed Noor, a Chief Pilot employed by CMC Aviation on a two-year contract terminable by one month's notice. The trial court found his summary dismissal for allegedly using abusive language towards the Human Resources Manager to be an unfair labour practice contrary to sections 41, 44 and 45 of the Employment Act, and also held that his demotion to Line Training Pilot with a salary reduction from US$9,000 to US$5,075 was unlawful. It awarded one month's salary in lieu of notice at US$9,000, twelve months' gross salary of US$108,000, and 5.25 days' accrued leave. The Court of Appeal allowed the appeal in part. It held that the employer bore the burden of justifying the summary dismissal under section 47(5), had failed to specify or prove the abusive words alleged, and had conceded that no hearing was given as required by section 41(2); the dismissal was therefore unfair. However, the demotion and salary reduction were lawful since the respondent had accepted them in writing following a performance evaluation. The award of US$108,000 was set aside because the trial court neither applied the section 49(4) factors nor explained its choice of remedy, and because compensation should reflect the respondent's actual salary; one month's salary in lieu of notice at US$5,075 plus 5.25 days' leave for 2010 was substituted. The cross-appeal for US$33,000 in salary arrears and additional leave failed. Each party was ordered to bear its own costs of the appeal, the cross-appeal and the proceedings below.

Key legal issues

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01

Whether the summary dismissal was justified under section 44(4)(d) of the Employment Act

Holding

The dismissal was unfair because the appellant neither specified the abusive words allegedly used nor proved the misconduct, and it failed to follow the mandatory hearing procedure under section 41(2)

Reasoning

Section 44(4)(d) permits summary dismissal for abusive or insulting language towards a person in authority. The dismissal letter did not specify the words uttered, and no oral evidence was taken so the Human Resources Manager could not be cross-examined. The burden of justifying the grounds of termination rests on the employer under section 47(5), and the appellant did not discharge it. Counsel conceded no opportunity to be heard was given, contrary to section 41(2).

p. 8
02

Whether the demotion and salary reduction from US$9,000 to US$5,075 was lawful

Holding

The demotion and salary reduction were lawful because the respondent accepted the new position and reduced salary in writing following a performance evaluation

Reasoning

The Staff Policies and Procedures Manual required yearly performance evaluation, which was conducted in September 2008. The Managing Director's letter of 24th September 2008 communicated the re-assignment and the respondent signed it in acceptance on 6th October 2008, thereafter being paid the reduced salary until March 2010. The trial judge erred in invalidating the reduction on the basis of an undated evaluation form.

p. 10
03

Whether the award of US$108,000 (twelve months' gross salary) was justified

Holding

The award was set aside; compensation should have been one month's salary in lieu of notice at US$5,075, the respondent's actual last salary

Reasoning

The trial court computed compensation on the former Chief Pilot salary of US$9,000 although the respondent's last salary was US$5,075. The court also failed to explain why it chose the section 49(1)(c) remedy or consider the section 49(4) factors, including the respondent's prior warning for a similar incident. Given the one-month notice term, one month's salary in lieu of notice was reasonable compensation.

p. 10
04

Whether the respondent was entitled to US$33,000 in underpaid salary and leave for 2008-2009

Holding

The cross-appeal failed: the demotion was lawful so no salary arrears lay, and only 5.25 days' proportionate leave for 2010 was due

Reasoning

Having held the demotion lawful, arrears of the salary differential cannot be claimed. The respondent had used his 2009 annual leave, and having been dismissed on 30th March 2010 he was entitled only to proportionate leave for 2010, which the trial court had already granted.

p. 10

Legal principles established

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  • The burden of justifying the grounds for termination or summary dismissal rests on the employer; an employer who fails to specify and prove the alleged misconduct has not discharged that burden
  • Dismissal without affording the employee an opportunity to be heard in accordance with section 41(2) of the Employment Act amounts to unfair termination
  • Unfair termination involves breach of statute, while wrongful dismissal involves breach of the employment contract; procedural non-conformity with a statute renders termination unfair even where a fair reason exists
  • In exercising the remedial discretion under section 49(1)(c) of the Employment Act, the deciding court must be guided by the factors in section 49(4) and state its reasons for the remedy chosen
  • An employee redeployed to a lower position who accepts the new position and the attendant reduced salary in writing cannot later claim the salary of the former position

Court orders

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  1. 1.The respondent's dismissal is reduced to a normal termination
  2. 2.The award of US$9,000 as one month's pay in lieu of notice is set aside and substituted with US$5,075
  3. 3.The award of US$108,000 is set aside in its entirety
  4. 4.The respondent is awarded one month's salary in lieu of notice in the sum of US$5,075 and commensurate payment of 5.25 days' salary for accrued leave for the year 2010
  5. 5.Each party bears its own costs of the appeal, the cross appeal and of the proceedings in the Industrial Court

Authorities

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Legislation

  • Employment ActSection 44 (including 44(4)(d))
  • Employment ActSection 41(1) and 41(2)
  • Employment ActSection 43(1)
  • Employment ActSection 45 (including 45(2))
  • Employment ActSection 47(5)
  • Employment ActSection 49 (including 49(1)(a)-(c) and 49(4))
  • Employment ActSection 50
  • Labour Institutions ActSection 15
  • Employment Act (as referenced in the Service Agreement)Section 17

Cases cited (5)

  • GATIRAU PETER MUNYA v DICKSON MWENDA KITHINJI & 2 OTHERS
    [2014] eKLR
  • McKINLEY v BC TEL
    [2001] 25.C. 161
  • POLKEY v A.E. DAYTON SERVICES LTD
    [1988] A.C. 344
  • KENYA UNION OF COMMERCIAL FOOD AND ALLIED WORKERS V MERU NORTH FARMERS SACCO LIMITED
    [2013] eKLR
  • MARY CHEMWENO KIPTUI v KENYA PIPELINE COMPANY LIMITED
    [2014] eKLR
On appeal from
Industrial Court of Kenya at Nairobi
Industrial Cause No. 919 of 2010
Jurisdiction invoked
First appellate appeal from the Industrial Court under the Employment Act and Labour Institutions Act framework (statute not expressly cited in the judgment)

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, "CMC Aviation Limited v Mohammed Noor [2015] KECA 775 (KLR)", Case Analysis (2015). Civil Appeal No. 199 of 2013. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2015/775/eng@2015-04-24

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