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Court of AppealPartially AllowedCivil Appeal No. 146 of 2013· [2016] KECA 78 (KLR)

United States International University v Outa (Civil Appeal 146 of 2013) [2016] KECA 78 (KLR)

Court of Appeal
2 December 2016
AVAlnashir VisramGKG. B. M. KariukiSKS. ole Kantai
3,854 words in judgment
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The bottom line

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Kenya's Court of Appeal confirmed a university wrongfully sacked its finance chief but cut his payout from 12 months' salary to 3 and cancelled reinstatement.

What this practically means

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Executive summary

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The respondent, Eric Rading Outa, was employed by United States International University as Deputy Vice Chancellor, Finance and Administration. On 3rd January 2010 he was given an ultimatum to resign or be sacked; he refused and his services were terminated the same day without notice or any show-cause process. The Industrial Court (Mukunya, J.) found the termination wrongful and ordered reinstatement plus compensation of twelve months' salary (Kshs. 4,862,400/=). The university appealed to the Court of Appeal at Nairobi (Visram, G.B.M. Kariuki and Kantai, JJ.A.). As a first appellate court, it re-evaluated the evidence and agreed that the termination was wrongful: the Vice Chancellor ignored the elaborate disciplinary procedure in the Staff Handbook, and the respondent's performance had been positively evaluated and his salary increased shortly before termination. However, the Court held that reinstatement was inappropriate because the respondent's senior position had been redesigned and occupied by a Chief Accountant, no comparable redeployment position existed, and his relationship with the Vice Chancellor had broken down; that part of the judgment was set aside. On damages, the Court found the maximum award of twelve months' salary excessive because the trial judge assigned no reasons, and noted a trend of unexplained maximum awards by the Employment and Labour Relations Court. It substituted an award of three months' salary. The appeal thus partially succeeded, with each party ordered to bear their own costs here and below. The judgment is binding on subordinate courts and tribunals on the duty of a first appellate court, the mandatory nature of contractual disciplinary procedures, the limits of reinstatement, and the need to give reasons for maximum compensation awards.

Key legal issues

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01

Whether termination of the respondent's employment was wrongful

Holding

Termination was wrongful because the employer ignored the elaborate disciplinary procedure in the Staff Handbook and gave the employee no notice or opportunity to show cause

Reasoning

The Court found that the Vice Chancellor summoned the respondent and gave an ultimatum to resign or be sacked, without notice or show-cause for alleged minor misconduct, contrary to the disciplinary process the parties had contracted to abide by. The respondent's performance had been positively evaluated twice and his salary increased, undermining the non-performance justification. The termination therefore breached both the Staff Handbook and the Employment Act, and the trial judge's finding to that effect was affirmed.

p. 4
02

Whether the order of reinstatement was appropriate

Holding

The reinstatement order was set aside; the trial judge failed to evaluate evidence that the position had been redesigned, occupied by another officer, and that no comparable position existed

Reasoning

The respondent held a senior position reporting directly to the Vice Chancellor. There was direct evidence that his position had been redesigned and was occupied by a Chief Accountant, no evidence of any similar position for redeployment, and evidence that the relationship with the Vice Chancellor had broken down. The trial judge did not evaluate this evidence; the appellate court concluded reinstatement was inappropriate and set aside that part of the judgment.

p. 5
03

Whether the award of 12 months' salary as compensation was excessive

Holding

The maximum award was excessive because the trial judge assigned no reasons; substituted with an award of 3 months' salary

Reasoning

Although the Employment Act permits up to 12 months' salary as compensation, the trial judge made the maximum award without assigning any reason or considering relevant factors. Applying the settled principles in Kemfro Africa and Mbogo v Shah on interference with discretionary awards, the Court found the award an erroneous estimate, noted a worrying trend of unexplained maximum awards by the ELRC, and substituted an award of 3 months' salary.

p. 6

Legal principles established

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  • On a first appeal the court must re-evaluate and reappraise the evidence and come to its own conclusion, bearing in mind it did not see or hear the witnesses
  • An employer must follow its own contractual disciplinary procedure and the Employment Act before terminating employment; failure renders termination wrongful
  • Reinstatement is not appropriate where the position held has been redesigned and occupied by another officer and there is no comparable position to which the employee can be redeployed
  • A maximum award of 12 months' salary for wrongful termination must be justified with reasons; courts should not make maximum awards without assessing principles on damages

Court orders

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  1. 1.Setting aside the order of reinstatement of the respondent
  2. 2.Setting aside the award of 12 months' salary as compensation for wrongful termination
  3. 3.Substituting an award of 3 months' salary last earned by the respondent
  4. 4.Each party to bear their own costs here and below

Authorities

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Legislation

  • Employment ActSections 35 and 36
  • Employment Act2007 (remedies for unfair termination, including reinstatement and compensation not exceeding twelve months)

Cases cited (5)

  • Selle & Another v Associated Motor Boat Company Limited
    [1968] E.A. 123
  • Mbogo & Another v Shah
    [1968] EA 93
  • Kemfro Africa Ltd v Lubia & Another (No. 2)
    1987 KLR 30
  • Peter M. Kariuki v Attorney General
    [2014] eKLR
  • Johnson Evan Gicheru v Andrew Morton & Anr
    [2005] eKLR
On appeal from
Industrial Court (now Employment and Labour Relations Court) at Nairobi
Industrial Cause No. 82 of 2011
Jurisdiction invoked
First appeal to the Court of Appeal under the Court of Appeal's appellate jurisdiction

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (6)

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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, "United States International University v Outa (Civil Appeal 146 of 2013) [2016] KECA 78 (KLR)", Case Analysis (2016). Civil Appeal No. 146 of 2013. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2016/78/eng@2016-12-02

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