Harambee Co-operative Savings and Credit Society Limited v Nyongesa & another (Civil Appeal 176 of 2018) [2023] KECA 837 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed a SACCO manager's removal was unfair, but cut his compensation to about Kshs 4 million, ruling that payouts cannot exceed the contract actually served.
What this practically means
#Executive summary
#Key legal issues
#Jurisdiction of the ELRC over removal of a SACCO officer
The ELRC had exclusive jurisdiction; the dispute was essentially an employment dispute notwithstanding its regulatory genesis.
Section 12 of the Employment and Labour Relations Court Act read with Article 162(2)(a) of the Constitution confers exclusive jurisdiction on the ELRC over employment disputes. The show-cause directive merely triggered the disciplinary process culminating in removal from employment. The claim was neither a complaint over administrative procedure warranting judicial review nor a Co-operative Tribunal dispute under section 76 of the Co-operative Societies Act.
Whether removal amounted to unfair termination
Yes; the process was unfair and amounted to unfair termination under section 45(2) of the Employment Act.
The employer must prove both a valid and fair reason and fair procedure. The regulator took over the process, leaving no room for the appellant to conduct its own disciplinary proceedings, and the 1st respondent was not invited to any oral hearing as contemplated by section 41. He was not obligated to submit to a process driven by the regulator, who was not his employer. The employer failed to meet section 45(2) requirements.
Whether the Judge considered extraneous facts
No; the ground fails.
No evidence was adduced to show the appellant complied with section 45(2); the Judge could reasonably conclude that no internal disciplinary proceedings were conducted. Nothing in the record suggested the judgment was founded on matters introduced by the Judge on her own motion.
Excessiveness of awards and reliefs not sought
Awards matched the pleadings, but the awards for the unexpired contract, full gratuity and 12 months' damages were excessive and set aside, with 3 months' salary substituted as compensation.
Two months' salary in lieu of notice accorded the contract; withheld salary was correctly computed; gratuity is payable only pro-rata for the term served. General damages for wrongful termination are not awardable as of right; applying section 49(4) factors and precedent, three months' salary suffices as compensation in addition to contractual entitlements.
Legal principles established
#- The ELRC has exclusive jurisdiction over employment disputes even where the removal process originated from a regulator's directive; the employee's remedy lies in the ELRC, not the Co-operatives Tribunal or judicial review.
- Where a regulator directs removal of an employee and takes over the process, the employer must still afford the employee procedural fairness under sections 41 and 45 of the Employment Act; failure renders the termination unfair.
- An appellate court will not disturb a damages award unless it proceeds on a wrong principle or is so inordinately high or low as to be an entirely erroneous estimate.
- General damages for unfair termination are ordinarily equivalent to salary for the notice period, subject to the section 49(4) factors; salary for the unexpired remainder of the contract is not recoverable, and gratuity is payable only pro-rata for the term served where the contract is unfairly terminated before maturity.
Court orders
#- 1.The Judgment and Decree of the Employment and Labour Relations Court (H. Wasilwa, J.) delivered 30th November 2017 set aside and substituted with awards to the 1st respondent against the appellant totalling Kshs 4,050,743/70, comprising Kshs 479,536 (two months' salary in lieu of notice), Kshs 2,877,232 (salary withheld), Kshs 454,207/70 (gratuity for period served) and Kshs 719,304 (equivalent of 3 months' salary as damages for wrongful termination)
- 2.The sum of Kshs 4,050,743/70 to bear interest at court rates with effect from 30th November 2017 until payment in full, less all sums (if any) paid on account of the impugned decree
- 3.Each party to bear their own costs of the appeal and of the 2nd respondent's cross-appeal
- On appeal from
- Employment and Labour Relations Court of Kenya at Nairobi
- ELRC Cause No. 789 of 2013
- Jurisdiction invoked
- First appeal to the Court of Appeal under the Court of Appeal's appellate jurisdiction; proceedings below founded on Article 162(2)(a) of the Constitution and section 12 of the Employment and Labour Relations Court Act, 2011
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Harambee Co-operative Savings and Credit Society Limited v Nyongesa & another (Civil Appeal 176 of 2018) [2023] KECA 837 (KLR)", Case Analysis (2023). Civil Appeal (ELRC) from ELRC Cause No. 789 of 2013. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2023/837/eng@2023-07-07
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.