Lawrence Nyamichaba Ondari v National Hospital Insurance Fund
The bottom line
#Kenya's Court of Appeal upheld NHIF's dismissal of a senior finance manager, confirming employers need only genuinely believe their termination reasons were valid.
What this practically means
#Executive summary
#Key legal issues
#Whether the respondent had valid reasons for terminating the appellant's contract
Yes. The interdiction letter, internal audit report and EMU report implicated the appellant for negligence and loss of public funds, satisfying section 43(2)'s genuine-belief test.
The Court interpreted section 43(2) as a partly subjective test requiring only that the employer genuinely believed the reasons existed at termination. Three investigations - the preliminary audit, internal audit and the EMU investigation - all implicated the appellant in acts and omissions causing loss of public funds of Kshs. 26,596,878. The termination letter recited these reasons. The Court held that where an employee's negligence causes loss of funds, no more is required.
Whether the trial judge erred in holding that it is not for the court to audit the truth of the reasons for termination
No. The Court agreed the court has no supervisory role and need not interrogate or substitute the employer's reasons where valid reasons exist and due process was followed.
Following its own precedents, including Kenya Airways Ltd v Aviation & Allied Workers Union, the Court held the court is not required to substitute the thoughts of an employer where there is a valid reason and due process was followed. The reasons were genuine and grounded in the audit reports; the court's duty is not to audit their truth but to test their validity and fairness within section 45.
Whether the termination procedure was fair under section 41 and section 45 of the Employment Act
Yes. The appellant was furnished with reports, given opportunities for written and oral representations, heard by the board, and had an appeal considered under the HR Procedure Manual.
The Court traced the chronology: the November 2013 audit report was discussed in the appellant's presence; he was interdicted with reasons and given the preliminary report; he made written representations on 2nd December 2013; he received the EMU report and appeared before the board on 25th February 2014; he answered a show-cause letter on 28th February 2014 and was heard on 10th March 2014; and his appeal was considered and declined. This satisfied sections 41 and 45.
Legal principles established
#- Section 43(2) of the Employment Act imposes a partly subjective test: the employer need only prove the reasons it genuinely believed to exist at the time of termination.
- Where an employer has a valid reason to terminate employment and due process has been followed, the court has no supervisory role and must not substitute its own view for that of the employer.
- The employer bears the statutory burden under section 43 to prove both that the reason for termination was valid and fair and that the termination followed fair procedure.
Court orders
#- 1.Appeal dismissed
- 2.Costs of the appeal awarded to the respondent
- On appeal from
- Employment and Labour Relations Court (trial court)
- Jurisdiction invoked
- First appeal under the Court of Appeal's appellate jurisdiction ( Employment and Labour Relations Court decision; no specific constitutional provision cited)
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (4)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Maina v Article 19 Eastern Africa (Cause 105 of 2019) [2025] KEELRC 2650 (KLR)[2025] KEELRC 2650 (KLR)26 Sept 2025followed
- Owino v Kenya Power & Lighting Co. Limited (Employment and Labour Relations Cause E047 of 2022) [2025] KEELRC 2169 (KLR)[2025] KEELRC 2169 (KLR)24 Jul 2025distinguished
- Munyae v Freedom Airline Express (Cause 114 of 2017) [2025] KEELRC 1595 (KLR)[2025] KEELRC 1595 (KLR)23 May 2025followed
- Muli v ABSA Bank Kenya PLC (Cause 536 of 2019) [2025] KEELRC 1514 (KLR)[2025] KEELRC 1514 (KLR)23 May 2025applied
Cite this brief
#Cite this brief
Caselaw, "Lawrence Nyamichaba Ondari v National Hospital Insurance Fund", Case Analysis (2025). Court of Appeal Civil Appeal (Employment and Labour Relations) – memorandum of appeal dated 20th February 2019 (number not stated in judgment). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2025/687/eng@2025-04-11
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.