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Court of AppealPartially AllowedNot stated in the judgment

Package Insurance Brokers Limited v Gichuru (Civil Appeal 307 of 2018) [2019] KECA 477 (KLR)

Court of Appeal of Kenya
19 July 2019
5,223 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~21 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal found no discrimination against a sick employee but confirmed that dismissing him without a hearing was unfair.

What this practically means

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Executive summary

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This was a first appeal to the Court of Appeal (Waki, Makhandia and Sichale, JJA) against the decision of Ndolo J awarding Simon Gitau Gichuru a consolidated sum of Kshs 7,781,450 plus costs and interest for discrimination and unlawful termination by Package Insurance Brokers Ltd. The respondent, an Operations Manager, underwent treatment in India for a spinal cord tumour, resumed duty in February 2014, was sent home in April 2014 to recuperate, was suspended on medical grounds in June 2014, and was summarily dismissed on 1st August 2014 for alleged gross incompetence and negligence without a hearing. The trial judge found discrimination and unfair termination, awarding Kshs 5 million for discrimination and twelve months' salary as compensation. Allowing the appeal in part, the Court held there was no discrimination: the respondent was treated as he was because of his genuine ill-health and impaired performance, and being the only sick employee he could not show differential treatment on a prohibited ground. The award of Kshs 5 million for discrimination was set aside. However, the summary dismissal was unfair: the respondent was blamed for financial misappropriation but was given no opportunity to defend himself and no disciplinary process was undertaken. The Court nonetheless found the maximum compensation of twelve months' salary unwarranted given the employer's demonstrated goodwill and the progressive nature of events, substituting eight months' salary (Kshs 1,589,400). The awards of one month's salary in lieu of notice and July 2014 salary were upheld. Each party was directed to bear its own costs.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the appellant discriminated against the respondent on the basis of his health status in violation of Article 27 of the Constitution and section 5 of the Employment Act
  2. 2.Whether the summary dismissal of the respondent was lawful and fair
  3. 3.Whether the respondent was entitled to the remedies awarded by the trial court, including the quantum of damages

Key legal issues

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01

Whether sending an ailing employee home and ultimately terminating his employment constitutes discrimination on the ground of health status under Article 27(4) of the Constitution and section 5(3) of the Employment Act

Holding

No discrimination was established; the respondent was treated as he was because of his actual ill-health and impaired performance, not because of a protected status, and he was the only sick employee so no differential treatment from comparable employees was shown

Reasoning

The court reviewed the sequence of events: the employer paid full salary throughout hospitalisation, increased the salary on resumption, and sought medical appraisal before acting. The respondent's reduced productivity flowed from his illness itself. Discrimination requires differential treatment on a prohibited ground; an employer acting on an employee's genuine incapacity, however insensitively, is not thereby discriminating. The trial judge's contrary finding could not stand.

p. 11
02

Whether the summary dismissal of 1st August 2014 for gross incompetence and negligence was fair and lawful

Holding

The dismissal was unfair because the respondent was not given an opportunity to defend himself against the allegations and was not subjected to any disciplinary process, contrary to sections 43 and 45 of the Employment Act

Reasoning

The letter of termination pronounced a final verdict of summary dismissal without a hearing. Under section 43(1) the employer must prove valid reasons, and under section 45(2) a fair procedure. The court adopted the Kenfreight authority requiring that an employee be told the reasons for contemplated termination and be heard before the decision is taken. Due process was not followed, hence unfair termination.

p. 12
03

What compensation was appropriate for the unfair termination

Holding

Twelve months' salary, the statutory maximum, was not warranted; the court substituted eight months' salary (Kshs 1,589,400), while upholding one month's salary in lieu of notice and July 2014 salary

Reasoning

The court noted the employer had shown substantial goodwill (paying salary throughout illness, raising salary, facilitating treatment) which waned over time, partly through the respondent's failure to avail a medical report. The progressive nature of the circumstances made the maximum award disproportionate. The contractual entitlement to one month's notice pay and the unpaid July 2014 salary were upheld as the respondent remained employed until 1st August 2014.

p. 13
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The mandate of a first appellate court re-evaluating trial evidence

Holding

A first appeal is by way of retrial; the appellate court must reconsider and evaluate the evidence and draw its own conclusions while making allowance for not having seen or heard the witnesses

Reasoning

Relying on Selle v Association of Motor Boats, the court restated that it is not bound by the trial judge's findings of fact where the judge failed to take account of particular circumstances or probabilities, or where impressions based on demeanour are inconsistent with the evidence generally. This framed the court's re-evaluation of both the discrimination finding and the quantum.

p. 10

Legal principles established

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  • An employer who blames an employee for misconduct and summarily dismisses him without according him an opportunity to defend himself or subjecting him to a disciplinary process terminates unfairly, and the maximum compensation of twelve months' salary is not automatic
  • Where the employer fails to prove a valid and fair reason for termination, the termination is deemed unfair under section 45 of the Employment Act

Court orders

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  1. 1.Appeal partially allowed
  2. 2.Set aside the award of Kshs 5,000,000 being damages for discrimination
  3. 3.Substituted twelve months' salary in compensation with eight (8) months' salary, a sum of Kshs 1,589,400
  4. 4.Affirmed entitlement to one (1) month's salary in lieu of notice and salary for the month of July 2014
  5. 5.Each party to bear his/its own costs

The bench

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One judgment of the whole court — no separate or dissenting opinions.

majority
majority
majority
On appeal from
Employment and Labour Relations Court
Not stated in the judgment
Jurisdiction invoked
First appellate jurisdiction over the decision of the Employment and Labour Relations Court (the judgment describes the appeal as 'a first appeal')

Relief refused

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Respondent's claim for damages for discrimination of Kshs 5,000,000

The court found no discrimination; the differential treatment flowed from the respondent's ill-health, not from any prohibited ground

p. 11

Appellant's contention that 12 months' salary compensation was proper

The court held the maximum award unjustified on the facts and reduced it to eight months' salary

p. 13

Costs

Each party shall bear his/its own costs - 'Given the circumstances of this case, we direct that each party shall bear his/its own costs.'

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

The upshot of the above is that we partially allow the appeal and set aside the award of Kshs 5,000,000 being damages for discrimination. In place of twelve months’ salary in compensation, we substitute therefor eight (8) months’ salary, a sum of Kshs 1,589,400.
p. 13Final orders - partial allowance and substitution of quantum
Given the circumstances of this case, we direct that each party shall bear his/its own costs. It is so ordered.
p. 13Costs order
The respondent was not given difierential treatment from other sick employees, and being the only one who was sick, he cannot be heard to say he was discriminated against. In our view, there was no discrimination.
p. 11No discrimination on ground of health status
in the letter of termination issued on 1st August, 2014, it was clear that although the respondent was blamed for financial misappropriation, he was not given an opportunity to defend himself. He was also not subjected to a disciplinary process.
p. 12Unfair termination for want of due process
this court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in this respect.
p. 10Duty of a first appellate court

Issues in the judgment

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minor

Internal inconsistency in dates: the judgment first states the respondent was admitted to Max Health Care in India on 16th November, 2014, yet elsewhere states he was diagnosed in November 2013 and resumed duties on 10th February 2014, indicating 2014 is an evident typographical error for 2013

minor

The judgment states the respondent's salary on resumption was increased to Kshs 198,675 whereas the earlier narrative records an increase to Kshs 138,675 plus a Kshs 60,000 allowance, which are internally inconsistent figures

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, "Package Insurance Brokers Limited v Gichuru (Civil Appeal 307 of 2018) [2019] KECA 477 (KLR)", Case Analysis (2019). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2019/477/eng@2019-07-19

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