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ELRCPartially AllowedIndustrial Court Cause (Nairobi) – Memorandum of Claim filed 3rd April 2012· [2012] KEELRC 264 (KLR)

SHANKAR SAKLANI V DHL GLOBAL FORWARDING (K) LIMITED [2012] KEELRC 264 (KLR)

Industrial Court of Kenya
23 November 2012
BOByram Ongaya
4,516 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Industrial Court ruled that even summary dismissal for gross misconduct requires a hearing first, awarding the employee over USD 89,000 in compensation.

What this practically means

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Executive summary

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The Industrial Court at Nairobi, per Byram Ongaya J, determined a claim by Shankar Saklani, Trade Lane Manager India, summarily dismissed by DHL Global Forwarding (K) Limited on 26 January 2012 after a show cause letter issued only the previous day. The case proceeded by written submissions under Rule 21 of the Industrial Court (Procedure) Rules, 2010. Two issues were framed: whether the summary dismissal was fair and lawful, and whether the Claimant was entitled to the remedies claimed. The Court held that under Section 41 of the Employment Act, 2007, notification and hearing are mandatory before termination on grounds of misconduct, poor performance or physical incapacity, and that gross misconduct justifying summary dismissal under Section 44 remains 'misconduct' attracting those protections. Save for daily-wage contracts, Section 44(1) does not permit termination without notice; the employer's only leeway in gross misconduct cases is a shorter notice. Relying on Article 47 of the Constitution and Wednesbury principles, the Court found the dismissal unfair because the Claimant was never heard. The two days' absence was explained by ill health, the contract did not require daily reporting, no loss was shown, and the designated supervisor made no adverse performance report. On remedies, the Court awarded 12 months' gross salary (USD 73,200) under Section 49(1)(c) including allowances, USD 12,000 in lieu of notice, USD 4,000 relocation costs and KShs 193,871.13 withheld salary with interest; the claim for other statutory entitlements failed as ambiguous and unsubstantiated. Judgment was entered for the Claimant with a declaration that the dismissal was unfair, and costs to the Claimant.

Key legal issues

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01

Whether notice and hearing are mandatory in summary dismissal

Holding

Yes, save for daily-wage contracts; Section 41 applies to summary dismissal and gross misconduct

Reasoning

The Court read Sections 41 and 44 of the Employment Act together and held Section 41's requirements are mandatory in scope and application. Gross misconduct is a species of misconduct attracting notification and hearing. Section 44(1) only permits termination without notice for daily-wage contracts; in gross misconduct cases the employer's only leeway is shorter notice. Following its earlier decisions in Linus Barasa Odhiambo v Wells Fargo and KUDHEIHA, the Court held the employer must hear the employee.

p. 6
02

Whether the summary dismissal was fair and lawful

Holding

Unfair and unlawful - no hearing was given and the alleged absence was not gross misconduct

Reasoning

The show cause letter issued on 25 January 2012 was answered the same day, yet the Claimant was summarily dismissed on 26 January without a hearing as required by Section 41. The Court applied Article 47 and Wednesbury unreasonableness, finding the Respondent failed to take into account the relevant matter of the statutory right to be heard. The two days' absence was explained by ill health (sick sheet), the contract did not require daily reporting, and no loss was shown; nor did the designated supervisor make any adverse performance report.

p. 7
03

Whether the Claimant is entitled to the remedies claimed

Holding

Entitled to 12 months' gross salary compensation (USD 73,200), 3 months' notice pay (USD 12,000), relocation costs of USD 4,000 and KShs 193,871.13 withheld salary; statutory entitlements claim failed

Reasoning

Under Section 49(1)(c) compensation is based on gross monthly wage including allowances (USD 6,100), so the Claimant got USD 73,200 for 12 months. Notice pay followed the contractual 3 months' basic salary. Relocation costs were limited to the USD 4,000 pleaded and evidenced by the Respondent. The underpayment claim was supported by pay slips showing payment in Kenyan currency against dollar-denominated contractual rates. The statutory entitlements claim failed for lack of basis and submissions.

p. 8

Legal principles established

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  • Hearing and notification by the employer are mandatory before termination on grounds of misconduct, poor performance or physical incapacity, including summary dismissal for gross misconduct
  • Gross misconduct justifying summary dismissal is still 'misconduct' for which notification and hearing under Section 41 are necessary
  • Section 44(1) only entitles an employer to terminate without notice where the contract is to pay wages daily; otherwise the leeway is only a shorter notice on account of gross misconduct
  • Managerial decisions by employers, including in the private sector, are administrative actions subject to Article 47 of the Constitution
  • Gross monthly salary including allowances is the basis of compensation under Section 49(1)(c), displacing earlier authority excluding allowances

Court orders

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  1. 1.a declaration that the summary dismissal was unfair
  2. 2.The respondent to pay the Claimant USD.89,200.00 plus Kshs.193,871.13 together with interest at court rates from the date of the judgment till full payment
  3. 3.Respondent to pay costs of the case

Authorities

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Legislation

  • Constitution of Kenya, 2010Article 47; Article 10
  • Employment Act, 2007Sections 35, 35(1)(a), 41, 41(1), 41(2), 42(1), 44(1), 44(2), 44(3), 44(4), 44(4)(a), 44(4)(b), 45(5), 49(1)(c)
  • Industrial Court (Procedure) Rules, 2010Rule 21

Cases cited (6)

  • Linus Barasa Odhiambo – Vs Wells Fargo Limited
    Industrial Court Cause No. 275 of 2012
  • KUDHEIHA Workers Union – vs- Board of Governors, Kerugoya Boys Secondary
    Industrial Court Cause No. 1040 of 2010 at Nairobi
  • Kenneth Njiru Njorani – versus Dodhia Packaging Limited
    Cause No. 431 of 2010 at Nairobi
  • Associated Provincial Picture Houses Ltd – Vs – Wednesbury Corporation
    (1947) 1 KB 223
  • Short – Versus – Poole Corporation
    (1926) Ch. 66
  • Wanjohi – versus – Mitchell Cotts Kenya Limited
    (2002) 2 KLR
Jurisdiction invoked
Employment contract subject to Kenyan law; clause sixteen of the letter of appointment provided Kenyan courts shall have exclusive jurisdiction; Industrial Court (Procedure) Rules, 2010 Rule 21

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (5)

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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, "SHANKAR SAKLANI V DHL GLOBAL FORWARDING (K) LIMITED [2012] KEELRC 264 (KLR)", Case Analysis (2012). Industrial Court Cause (Nairobi) – Memorandum of Claim filed 3rd April 2012. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2012/264/eng@2012-11-23

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