Ufanisi Freighters (K) Limited v Nyamai (Civil Appeal 105 of 2019) [2023] KECA 297 (KLR)
The bottom line
#Kenya's Court of Appeal upheld an unfair dismissal ruling against Ufanisi Freighters but cut the compensation award, confirming awards are based on gross salary.
What this practically means
#Executive summary
#Key legal issues
#Whether the termination of the respondent's employment was unlawful and unfair
Yes. The trial court's finding that the respondent was verbally dismissed on July 22, 2015 and that the disciplinary process was an afterthought was supported by the evidence; the employer failed to prove the reason for dismissal or to afford a hearing before dismissal
The employer's own chronology showed a memo reassigning duties on July 22, 2015, an acknowledged demand letter alleging dismissal, and a show-cause letter and dismissal only after the demand letter. The employer never replied to the demand letter nor proved service of the memo. Under sections 43 and 45 of the Employment Act, the employer must prove the reason for termination on a balance of probabilities; failure renders termination unfair.
Whether the award of five months' gross salary as compensation was justified
No. The trial court's premise of a fixed-term contract with six months remaining had no evidential foundation; the Court reduced compensation to two months' gross salary
Neither the pleadings, witness statements, nor the demand letter referred to a fixed term contract or a remaining term. The claimant himself sought 12 months' pay as compensation without reference to a remaining contract term. Given the roughly eleven months of employment, two months' gross salary was held adequate compensation under section 49(1)(c).
Whether the award should be computed on gross or net salary
Section 49(1)(c) pegs the award on gross monthly salary; statutory deductions are the employer's responsibility at the point of payment under section 49(2)
The Court held that section 49(1)(c) specifically provides that the guiding figure is the gross monthly wage or salary, and that the employer makes statutory deductions at the point of payment. The one month's salary in lieu of notice was also justified since no notice of termination was given.
Whether the salary deductions were justified
No. The payslips showed deductions only as 'personal accounts' and the employer proved no contractual term allowing the deductions or their manner of calculation
The Court agreed with the trial Judge that the payslips did not explain the purposes of the deductions, and the appellant did not produce evidence of a contractual term permitting deductions for diesel recovery or their mode of calculation. The refunds of two amounts confirmed some deductions were unjustified.
Legal principles established
#- A first appellate court must reconsider and evaluate the evidence and draw its own conclusions, departing from trial findings only where they are not based on the evidence, rest on wrong principles of law, or where discretion was exercised injudiciously
- Once parties agree under rule 21 of the ELRC (Procedure) Rules, 2016 to dispose of a suit on documents and submissions without examination of witnesses, the veracity of the statements and documents filed is deemed not in question
- An employer bears the burden of proving the reason or reasons for termination on a balance of probabilities; failure to do so renders the termination unfair under section 45 of the Employment Act
- Salary in lieu of notice under section 49(1)(a) is independent of, and additional to, compensation under section 49(1)(b) or (c); quantum under section 49(1)(c) is pegged on gross salary, with statutory deductions made by the employer at the point of payment under section 49(2)
Court orders
#- 1.Set aside the award of 5 months' gross salary of Kshs 133,350/= as compensation for unfair termination
- 2.Substituted an award of two months' gross salary of Kshs 53,300/= as compensation for unfair termination
- 3.Affirmed and upheld all other findings and awards of the trial court, subject to the qualifications in the judgment
- 4.Each party to bear their own costs of the appeal
- On appeal from
- Employment and Labour Relations Court
- Not stated in judgment
- Jurisdiction invoked
- First appellate jurisdiction under the Employment and Labour Relations Court Act / Court of Appeal jurisdiction over appeals from the ELRC (not expressly stated in the judgment)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Ufanisi Freighters (K) Limited v Nyamai (Civil Appeal 105 of 2019) [2023] KECA 297 (KLR)", Case Analysis (2023). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2023/297/eng@2023-03-17
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.