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Court of AppealPartially AllowedCivil Appeal 125 of 2019· [2022] KECA 783 (KLR)

Hakika Transport Services Ltd v Mwariwa & 3 others

Court of Appeal
10 June 2022
6,066 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
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The bottom line

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Kenya's Court of Appeal confirmed the workers were unfairly dismissed but cut their compensation from ten months' salary to four months each.

What this practically means

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Executive summary

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The Court of Appeal at Mombasa (Kairu, Nyamweya and Lessit, JJA) dismissed in part an appeal by Hakika Transport Services Ltd against an ELRC judgment awarding four respondents terminal dues and compensation for unfair dismissal. The respondents, who declined to sign new written contracts replacing their oral terms, were issued show-cause letters for insubordination and absenteeism; only the 3rd respondent was actually heard at a disciplinary meeting. The appellant's sole witness, the Personnel Officer, admitted in his statement and evidence that the appellant terminated the respondents' services. The Court held that the Employment Act is incapable of waiver, that section 41's mandatory notification and hearing steps were not complied with, and that the reasons for termination - insubordination and absenteeism - were a creation of the appellant, interlinked with the refusal to sign new contracts, and therefore neither valid nor fair, amounting to constructive termination. It rejected the appellant's complaint that the trial judge failed to determine who terminated the employment, holding the issue was subsumed in the agreed issues and that a party who consented to the issues is estopped from raising others on appeal. On quantum, the Court upheld one month's salary in lieu of notice but found the ten months' compensation excessive given the respondents' 5 to 9 years of service, clean records, non-contribution to the termination, and partial re-employment, substituting four months' salary for each respondent. Each party was ordered to bear its own costs of the appeal, the appeal having partially succeeded.

Key legal issues

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01

Whether the respondents' contracts of service were unlawfully terminated

Holding

Yes - the termination was procedurally unfair under section 41 and based on reasons that were neither valid nor fair under section 45; it amounted to constructive termination by the appellant.

Reasoning

The appellant's Personnel Officer admitted the appellant terminated the employment. Section 41's mandatory steps - explanation of reasons in the presence of a chosen colleague and hearing of representations - were not followed for the 1st, 2nd and 4th respondents. The show-cause letters were interlinked with the refusal to sign new contracts, so the cited misconduct was a creation of the appellant and failed the validity test.

p. 9
02

Whether the awards made by the ELRC were reasonable and should stand

Holding

Partially - the one month's salary in lieu of notice was upheld, but the ten months' compensation was set aside and replaced with four months' salary for each respondent.

Reasoning

Compensation under section 49 is discretionary and must be justified by the section 49(4) factors. On the record the respondents had 5 to 9 years of service, clean disciplinary records, did not contribute to the termination, and some had secured other employment. Ten months, being near the statutory maximum, was very high and not justified by those facts; four months was adequate.

p. 11
03

Whether the trial judge erred in failing to determine whether the appellant terminated the respondents' employment

Holding

No - the issue was subsumed in the agreed issue of whether the termination was fair and lawful, and the appellant was estopped from raising issues outside the agreed framework.

Reasoning

The issues tried were those adopted by consent of the parties, including the appellant's own counsel before the ELRC. The question of who terminated was subsumed in the fairness issue. Further, an appellate court's jurisdiction is confined to issues presented to the trial court; a court cannot err on an issue never argued before it.

p. 4

Legal principles established

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  • The Employment Act is incapable of being waived; employers must comply with its mandatory termination procedures.
  • Termination passes the test of fairness only where the employer proves a valid and fair reason and a fair procedure.
  • A party who agreed on the issues before the trial court is estopped from raising on appeal issues outside those placed before the court.
  • Compensatory damages for unfair termination are discretionary and must be exercised judiciously on the section 49(4) factors.

Court orders

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  1. 1.Upheld the finding by the ELRC that the respondents' contracts of service were unlawfully terminated
  2. 2.Upheld the awards for one month's salary in lieu of notice
  3. 3.Set aside the awards of ten months' salary as compensation for wrongful termination of employment
  4. 4.In substitution, awarded each respondent an equivalent of four months' salary
  5. 5.Each party to bear their own costs of the appeal

Authorities

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Legislation

  • Employment ActSection 3(1) and (3)
  • Employment ActSection 41(1) and (2)
  • Employment ActSection 42(1)
  • Employment ActSection 43
  • Employment ActSection 44(3) and (4)
  • Employment ActSection 45(1) and (2)
  • Employment ActSection 49(1)(a), (b), (c) and (4)
  • Evidence ActSection 17
  • Evidence ActSection 18(1)
  • Court of Appeal RulesRule 29

Cases cited (15)

  • Selle & Another vs Associated Motor Boat Company Limited & Others
    (1968) EA 123

    First appellate court's duty to re-appraise evidence and draw its own conclusions.

  • Jabane vs Olenja
    [1986] KLR 661

    Departure from trial court findings only where not based on evidence or on wrong principles; caution in interfering with findings of fact.

  • Samuel Osoro Nyamwaro and 2 others vs Boniface Kamau and another
    [1995] eKLR

    Cited by appellant: failure to determine all pleaded issues is a miscarriage of justice.

  • Mary Kitsao Ngowa & 36 Others vs Krystalline Limited
    (2015) eKLR

    Appellate jurisdiction is confined to issues presented before the trial court.

  • Pius Machafu Isindu vs Lavington Security Guards Limited
    [2017] eKLR

    Fairness of termination requires valid and fair reason plus fair procedure.

  • Janet Nyandiko vs Kenya Commercial Bank Limited
    [2017] eKLR

    Summary of section 41 and 45 procedures and parameters for fair termination.

  • Standard Group Limited vs Jenny Luesby
    [2018] eKLR

    Importance of hearing an employee before dismissal; termination without hearing is unfair and unlawful.

  • CMC Aviation Limited vs Mohammed Noor
    Civil Appeal No. 199 of 2013

    Right to a hearing before dismissal; termination without hearing is unfair and unlawful.

  • Ol Pejeta Ranching Limited v. David Wanjau Muhoro
    (2017) eKLR

    Section 49 remedies are discretionary; maximum awards must be justified on sound judicial principles.

  • Ethics and Anti-Corruption Commission vs Nicholas Mwenda Mtwaruchiu & 8 Others
    (2018) eKLR

    Cited by appellant in support of its position on compensation for termination.

  • Victoria De Meo v. Abdullahi H. Khalil & Another
    (1994) eKLR

    Cited by respondents: duty of the court when determining awards of damages.

  • Jackson Muiruri Wathigo T/A Murtown Supermarket vs Lillian Mutune
    (2021) eKLR

    Cited by respondents: duty of the court when determining awards of damages.

  • National Social Security Fund vs Grace K. Kazungu & another
    [2018] eKLR

    Confirmed Ol Pejeta Ranching on judicial exercise of discretion in compensation awards.

  • Freight In Time Limited vs Rosebell Wambui Munene
    [2018] eKLR

    Confirmed Ol Pejeta Ranching on judicial exercise of discretion in compensation awards.

  • Munyu Maina v Hiram Gathiha Maina
    [2013] eKLR

    Interference with findings of fact by the trial court must not be based on flimsy grounds.

On appeal from
Employment and Labour Relations Court at Mombasa
ELRC Cause No. 673 of 2016 (Consolidated with ELRC 674, 675, & 676 2016)
Jurisdiction invoked
First appeal under Rule 29 of the Court of Appeal Rules

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Hakika Transport Services Ltd v Mwariwa & 3 others", Case Analysis (2022). Civil Appeal 125 of 2019. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2022/783/eng@2022-06-10

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