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Court of AppealPartially AllowedCivil Appeal No. 64 of 2018· [2018] KECA 188 (KLR)

Chai Trading Co. Ltd v Joseph Kimathi Ikiamba [2018] KECA 188 (KLR)

Court of Appeal of Kenya
8 November 2018
WKW. KaranjaMartha Karambu KoomeM. K. KoomeJOJ. Otieno-Odek
3,235 words in judgment
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The bottom line

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A Kenyan employer lost its unfair termination appeal because it never told the employee he could bring a colleague to the disciplinary hearing.

What this practically means

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Executive summary

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The Court of Appeal at Mombasa (Karanja, Koome and Otieno-Odek, JJ.A) disposed of a first appeal by Chai Trading Co. Ltd against a judgment of O.N. Makau J. of the Employment and Labour Relations Court at Mombasa, which had declared the termination of the respondent, a former warehouse assistant, unfair and awarded him Kshs. 908,466.24, including 12 months' salary as compensation. The appellant conceded, and the record showed, that the respondent was given a show-cause letter, a hearing before a disciplinary committee and an internal appeal, but the trial Judge found partial compliance with Section 41 of the Employment Act because the respondent was not informed of his right to be accompanied by a fellow employee or union representative. The Court of Appeal declined to disturb that finding, noting the appellant produced no trial evidence identifying any accompanying employee or representative and could not fill the gap by submissions on appeal. On compensation, the Court applied the Mbogo v Shah discretion principles and held the trial Judge erred in awarding the statutory maximum of 12 months' salary without reasons, given the employer's substantial procedural compliance and the respondent's responsibility for the security lapse that led to the loss of tea worth over Kshs. 17 million. The Court allowed the appeal in part, set aside the judgment of 15th December 2017, and substituted an award of Kshs. 363,384, comprising two months' salary in lieu of notice, leave pay for 2014/2015, and 3 months' salary as compensation for wrongful dismissal, plus pension under the scheme rules. Being an employment dispute, no orders as to costs were made.

Key legal issues

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01

Procedural fairness under Section 41 of the Employment Act

Holding

Partial compliance with Section 41 — giving a notice to show cause and a disciplinary hearing but failing to inform the employee of the right to be accompanied by a fellow employee or union representative — amounts to failure to follow due process, justifying a finding of unfair termination.

Reasoning

The employer gave the respondent a show-cause letter, a written explanation was submitted, a disciplinary committee heard him, and an appeal was mounted. However, the trial Judge found the respondent was not informed of his right under Section 41 to be accompanied by a fellow employee of his choice. The Court of Appeal found no evidence at trial identifying any employee or union representative present at the disciplinary meeting, and held that submissions on appeal could not cure that evidential gap. The finding of partial procedural unfairness therefore stood.

p. 3
02

Exercise of discretion in awarding compensation under Section 49(1) of the Employment Act

Holding

The maximum award of 12 months' salary was excessive in circumstances where the employer had substantially complied with procedure and the employee's own negligence contributed to the loss; the Court substituted an award equivalent to 3 months' salary.

Reasoning

The trial Judge acknowledged only partial compliance by the employer yet awarded the statutory maximum of 12 months' salary without giving reasons. The appellate court, applying the Mbogo v Shah principles, held it could interfere where the judge failed to weigh prevailing circumstances — the substantial procedural compliance, the notice and leave awards already made, and the respondent's responsibility for security lapses leading to a loss exceeding Kshs. 17 million. The maximum award was therefore not proportionate and was reduced to 3 months' salary.

p. 4

Legal principles established

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  • An employer terminating employment on grounds of misconduct must not only hear the employee but must also inform the employee of the right to have a fellow employee or shop floor union representative of their choice present during the explanation; failure to do so is non-compliance with Section 41 of the Employment Act.
  • An appellate court will not interfere with a trial judge's award of compensation under Section 49(1) of the Employment Act unless it is shown there is no evidence to support the conclusion, or the judge failed to appreciate the weight of prevailing circumstances, or plainly went wrong; a maximum award without reasons may be reduced.
  • On a first appeal, the Court of Appeal has a duty to evaluate afresh the evidence recorded before the trial court and reach its own independent conclusion, while not lightly differing with the trial court on findings of fact.
  • The burden of proving unfair termination rests on the employee, while the burden of justifying the grounds for termination rests on the employer under Section 47(5) of the Employment Act.
  • A party cannot establish facts at the appellate stage by way of submissions that were not proved by evidence at trial.

Court orders

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  1. 1.The judgment dated 15th December, 2017 is set aside and substituted with an award of Kshs. 121,128 being two months' salary in lieu of notice
  2. 2.Kshs. 60,564 as leave pay for the year 2014/2015
  3. 3.Kshs. 181,692 as compensation for wrongful dismissal, being 3 months' salary
  4. 4.Pension payable to the respondent according to the rules of the scheme
  5. 5.No orders as to costs, this being a dispute over employment

Authorities

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Legislation

  • Employment ActSection 41
  • Employment ActSection 43(1)
  • Employment ActSection 45(2)
  • Employment ActSection 47(5)
  • Employment ActSection 49(1)
  • Employment ActSection 49 read with Section 50

Cases cited (4)

  • S. M. Vs E. N. B.
    [2015] eKLR
  • Mbogo Vs Shah
    [1968] E.A. 93
  • George Gikubu Mbuthia Vs Consolidated Bank of Kenya
    Civil Appeal No 72 of 2014
  • Bamburi Cement Ltd Vs William Kilonzi
    Civil Appeal No. 62 of 2015
On appeal from
Employment and Labour Relations Court at Mombasa
Industrial Cause No. 260 of 2016
Jurisdiction invoked
First appeal to the Court of Appeal under the Court of Appeal's appellate jurisdiction (the judgment states: 'This is a first appeal, it is therefore the duty of this Court imposed by law to evaluate afresh by way of a retrial the evidence recorded before the trial court')

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (5)

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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, "Chai Trading Co. Ltd v Joseph Kimathi Ikiamba [2018] KECA 188 (KLR)", Case Analysis (2018). Civil Appeal No. 64 of 2018. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2018/188/eng@2018-11-08

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