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Court of AppealDismissedCivil Appeal 163 of 2017· [2019] KECA 1067 (KLR)

New Kenya Co-op Creameries Limited v Adede

Court of Appeal
20 December 2019
Martha Karambu KoomeM. K. KoomeHOHannah M. OkwenguSKS. Ole Kantai
3,071 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 firing an employee without a face-to-face hearing is unfair, even when there is a good reason for dismissal.

What this practically means

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Executive summary

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The Court of Appeal (Koome, Okwengu and Ole Kantai, JJA) dismissed an appeal by New Kenya Co-op Creameries Limited against a judgment of the Employment and Labour Relations Court (Maureen Onyango, J) which had found that the summary termination of Olga Auma Adede's employment was unfair and awarded her Kshs. 1,590,000 as six months' compensation and Kshs. 739,350 as gratuity. The appellant contended that the respondent had been given ample opportunity to defend herself through written correspondence and an investigation committee interview, and that gratuity was not payable because she had not completed one year under the renewed contract. The court held that section 41 of the Employment Act is mandatory: its repeated use of 'shall' and the requirement that the employee and a chosen companion be 'present during this explanation' mean the hearing must be an oral one involving physical interaction. Written exchanges of letters and an interview by an investigation committee did not satisfy this; only the Board or a properly designated disciplinary committee could take the decision and conduct the required hearing. Applying CMC Aviation, procedural non-conformity with a statute amounts to unfair termination even where a fair reason exists. The court also declined to disturb the compensation award, finding no misdirection or plain wrongness in the exercise of discretion, and upheld the gratuity award on the basis that the termination was the employer's unfair act, making it neither fair nor just to deny gratuity. The appeal was dismissed with costs.

Key legal issues

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01

Mandatory nature of section 41 hearing

Holding

The hearing under section 41 must be an oral hearing with the employee and a person of their choice present; written correspondence cannot substitute

Reasoning

The repeated use of 'shall' in section 41 makes it mandatory. Section 41(1) requires an oral explanation with the employee and a chosen companion present; section 41(2) requires their representations to be heard and considered. Here the Board acted only on an audit report and written exchanges, with no physical interaction, so the termination was procedurally unfair.

p. 3
02

Burden of proving fair termination

Holding

The employer bears the burden of proving both valid reason and fair procedure; the employee need only assert unfair termination

Reasoning

Relying on Kenfreight and section 43, the court reiterated that the employer must demonstrate that the reason for termination is valid and fair and that the procedure was fair. Section 43(1) deems a termination unfair where the employer fails to prove the reasons. The burden on the employee is limited to asserting that unfair termination occurred.

p. 4
03

Interference with discretionary award of compensation

Holding

The six months' compensation award was a proper exercise of discretion and would not be disturbed

Reasoning

Applying the settled principles in Mbogo v Shah and related authorities, the court found no misdirection, no irrelevant or ignored considerations, and nothing plainly wrong in the trial judge's assessment of compensation under section 49 of the Employment Act, so the award of Kshs. 1,590,000 stood.

04

Entitlement to gratuity

Holding

Gratuity was payable notwithstanding that the second contract had not run for one year, because the termination was the employer's unfair action

Reasoning

The contract dated 1st December 2009 was a second contract, and the termination was not voluntary on the employee's part but resulted from the employer's unfair termination. Following Bamburi Cement, where dismissal is unjustified and wrongful, the employee is awarded gratuity if provided for in the contract. Denying gratuity would be neither fair nor just.

p. 6

Legal principles established

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  • Section 41 of the Employment Act is mandatory and requires an oral hearing with physical interaction in the disciplinary process before termination on grounds of misconduct
  • Procedural non-conformity with a statute amounts to unfair termination even where a fair reason exists
  • The Court of Appeal will not interfere with a lower court's exercise of discretion absent misdirection, irrelevant considerations, or plain wrongness

Court orders

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  1. 1.The appeal is dismissed with costs

Authorities

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Legislation

  • Employment Actsection 26
  • Employment Actsection 41
  • Employment Actsection 42(1)
  • Employment Actsection 43
  • Employment Actsection 44(3) and (4)
  • Employment Actsection 45
  • Employment Actsection 49

Cases cited (8)

  • Kenfreight (E.A.) Limited v Benson K. Nguti
    [2016] eKLR

    Employer must prove valid reason and fair procedure; burden under section 43

  • Postal Corporation of Kenya v Andrew K. Tanui
    [2019] eKLR

    Four elements of fair procedure under section 41

  • CMC Aviation Limited v Mohammed Noor
    [2015] eKLR

    Procedural non-conformity with statute amounts to unfair termination

  • Kenfreight EA Limited v Benson K. Nguti
    [2019] eKLR

    Remedies for unfair termination fall under section 49 of the Employment Act

  • Pithon Waweru Maina v Thuka Mugiria
    [1983] eKLR

    Principles for interfering with exercise of discretion

  • Mbogo v Shah
    [1968] EA 93

    Appellate court will not interfere with discretionary decision unless plainly wrong

  • Kenya Shell Co. Ltd. v Charles
    [2003] eKLR

    Interference with discretion requires misdirection or plain wrongness

  • Bamburi Cement Limited v William Kilonzi
    [2016] eKLR

    Definition of gratuity; gratuity payable where dismissal is unjustified and wrongful

On appeal from
Employment and Labour Relations Court (formerly Industrial Court) at Nairobi
Industrial Cause No. 87 of 2011
Jurisdiction invoked
First appellate jurisdiction over appeals from the Employment and Labour Relations Court

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, "New Kenya Co-op Creameries Limited v Adede", Case Analysis (2019). Civil Appeal 163 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2019/1067/eng@2019-12-20

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