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Court of AppealDismissedCivil Appeal No. 47 of 2014· [2015] KECA 900 (KLR)

Rift Valley Railways (K) Limited v Kiya Kalakhe Boru [2015] KECA 900 (KLR)

Court of Appeal of Kenya
26 February 2015
HOH. M. OkwenguASAsike-MakhandiaFSF. Sichale
4,394 words in judgment
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The bottom line

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Kenya's Court of Appeal confirmed that retrenching an employee with pending disciplinary proceedings is unfair, and that employees must prove unclaimed allowances.

What this practically means

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Executive summary

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This was an employer's appeal, and an employee's cross-appeal, against the judgment of Makau, J. of the Industrial Court at Mombasa, which had declared the retrenchment of an Assistant Station Master unlawful and unfair and awarded him Kshs.600,000/- (12 months' gross salary) as compensation but declined night-shift allowance. The appellant contended the trial court decided undisputed issues without a fair hearing, rewrote the contract, and erred in the compensation award; the respondent cross-appealed on the refused night-shift allowance. The Court of Appeal, confined by rule 17 of the Industrial Court Rules to matters of law, held that although the trial court erred in interrogating the undisputed redundancy procedure, the finding of unfair termination stood on independent grounds: the retrenchment was effected while disciplinary proceedings evaluating the respondent's competence were pending, and the Section 40(1)(c) criteria of seniority, skill, ability and reliability were ignored. The 12-month award was a proper exercise of discretion under Section 49(1)(c), with severance pay being a mandatory separate entitlement, subject to statutory deductions. The cross-appeal failed because the night-shift claim was unproved: time-sheets showed only 32 days and basic pay was not evidenced, Section 74 imposing only a record-keeping duty, not a litigation burden. The appeal and cross-appeal were both dismissed with each party bearing their own costs, leaving the compensation award intact.

Key legal issues

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01

Whether the trial court erred by determining the redundancy procedure when it was not an issue in dispute

Holding

The trial court erred in canvassing and determining the undisputed procedure issue, but this alone did not vitiate the ultimate finding of unfairness, which was sustainable on the reasons and seniority considerations.

Reasoning

The parties had agreed that the procedure and facts of the redundancy were not in dispute and narrowed the issues to the fairness of termination. The trial court nonetheless interrogated the notice period and procedure without inviting submissions. The court relied on its prior decision in Kalume Karisa Mbithe v Bromine Investment Ltd on the danger of framing issues at judgment stage. However, the unfairness finding was independently supported by the pending disciplinary proceedings and disregard of seniority under Section 40(1)(c).

p. 5
02

Whether the retrenchment was unfair and wrongful

Holding

The retrenchment was unfair because it was effected while disciplinary proceedings evaluating the respondent's competence were pending, and because Section 40(1)(c) criteria of seniority, skill, ability and reliability were ignored.

Reasoning

Although the respondent did not challenge the process, the court agreed with the High Court that fairness could be enforced. The disciplinary case was investigating the very competence cited as a retrenchment criterion, disadvantaging the respondent in selection. The internal memo of 15th November 2012 showing restructuring was unchallenged, but redundancy had to be fashioned along Section 40; retrenchment should have awaited the conclusion of the disciplinary proceedings and selection criteria had to be observed.

p. 6
03

Whether the award of 12 months' gross salary as compensation under Section 49 was excessive

Holding

The award was a proper exercise of discretion under Section 49(1)(c), considering the appellant's position as sole railway operator and the respondent's bleak re-employment prospects; severance pay is a mandatory statutory entitlement and not deductible from the award.

Reasoning

Section 49(1)(c) gives the court discretion on the number of months' wages, capped at twelve. The trial court considered relevant factors: sole railway operator, only two of twelve station masters retrenched. Severance pay under Section 40 is mandatory and separate. Payments under Section 49 are subject to statutory deductions. Applying the principle against interfering with discretionary awards, the court found no injudicious exercise of discretion.

p. 7
04

Whether the respondent was entitled to night-shift allowance (cross-appeal)

Holding

The claim failed for want of proof: the time-sheets showed only 32 days of night-shift work and basic pay for the claimed period was not evidenced; Section 74 does not shift the burden of proof to the employer in court.

Reasoning

The contract created separate overtime and shift allowances, but the claim was unparticularised. The respondent's assertion of 79 months of night-shift work was contradicted by his own testimony and the time-sheets totalling only 32 days. Section 74 imposes a record-keeping duty, not a litigation burden of production; discovery was the proper avenue. The uncontroverted but insufficient evidence could not discharge the respondent's burden under the rule that he who alleges must prove.

p. 4

Legal principles established

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  • On a first appeal, the appellate court must reconsider and re-evaluate the evidence afresh and reach its own conclusions, though appeals from the Industrial Court are restricted to matters of law under rule 17 of the Industrial Court Rules.
  • A trial court should not interrogate and determine undisputed issues that the parties did not frame or canvass, as that deprives the parties of an opportunity to ventilate their positions.
  • Redundancy must strictly follow the requirements of Section 40 of the Employment Act; any departure renders the retrenchment unfair under Section 45 and attracts Section 49 remedies.
  • A retrenchment carried out while an employee's disciplinary proceedings evaluating his competence are pending, and without regard to seniority in time and to skill, ability and reliability, is unfair.
  • Section 74 of the Employment Act obliges an employer to keep employment records but does not place on the employer the onus to produce them in court; the ordinary rule that he who alleges must prove applies.
  • An appellate court will not interfere with the trial court's exercise of discretion in awarding damages under Section 49 unless exercised injudiciously, on extraneous considerations, wrong principles, or the award is manifestly high or inordinately low.

Court orders

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  1. 1.The appeal is dismissed
  2. 2.The cross-appeal is dismissed
  3. 3.Each party to bear their own costs

Authorities

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Legislation

  • Constitution of Kenya, 2010Article 27
  • Constitution of Kenya, 2010Article 50(1)
  • Constitution of Kenya, 2010Article 159
  • Employment ActSection 2
  • Employment ActSection 3
  • Employment ActSection 40(1)
  • Employment ActSection 43
  • Employment ActSection 45
  • Employment ActSection 49(1)(c)
  • Employment ActSection 49(2)
  • Employment ActSection 74
  • Evidence ActSection 119
  • Industrial Court RulesRule 17

Cases cited (5)

  • Malawi Railways Ltd v Nyasulu
    (1998) MWSC 3
  • National Bank of Kenya Ltd v Pipe Plastic Samkolit (K) Limited & Anor.
    (2002) 2 E.A 503
  • Selle & Another v Associated Motor Boat Company Ltd & Others
    [1968] EA 123
  • Kalume Karisa Mbithe & Another v Bromine Investment Ltd
    Malindi C.A No. 26 of 2013 (UR)
  • Kemfro Africa Ltd & Anor v Lubia
    (1987) KLR 30
On appeal from
High Court of Kenya at Mombasa (Industrial Court)
Mombasa ICC Claim No. 246 of 2013
Jurisdiction invoked
Appeal to the Court of Appeal under the Industrial Court Rules, restricted to matters of law (rule 17 of the Industrial Court Rules)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (8)

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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, "Rift Valley Railways (K) Limited v Kiya Kalakhe Boru [2015] KECA 900 (KLR)", Case Analysis (2015). Civil Appeal No. 47 of 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2015/900/eng@2015-02-26

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