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ELRCPartially AllowedCause Number 254 of 2012· [2013] KEELRC 137 (KLR)

Francis Chege Njugia v Fariji Savings And Credit Co-Operative Society Limited [2013] KEELRC 137 (KLR)

Industrial Court of Kenya at Nairobi
18 September 2013
2,183 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~9 min to read original · ~4 min brief

The bottom line

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A Kenyan court ruled an employee was unfairly sacked without valid reasons or a hearing, awarding him a year's salary in compensation.

What this practically means

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Executive summary

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The Claimant, employed by the Respondent Co-operative Society (formerly Kagwe Christian Development Fund and Savings and Credit Co-operative Society Limited) as Accountant from 23rd October 2007, alleged that his employment was unfairly and unlawfully terminated on 18th July 2008 without reason, warning or hearing. He claimed outstanding July 2008 salary, three months' notice pay, pro-rata leave, provident fund contributions and 12 months' compensation, totalling Kshs. 512,200. The Respondent denied the Claim, asserting the Claimant irregularly hired a Debt Collector and Printer without Management Committee authority, misapplied himself, and took an ineligible loan; it counterclaimed Kshs. 80,229.89 for the outstanding staff loan balance. The Court found the only reason in the termination letter - failure to deliver improvement of the Society - was unsupported by any appraisal documents, benchmarks or targets, and amounted to vacuous verbiage. Grounds advanced at trial were afterthoughts; hiring staff was the Management Committee's role and the loan ineligibility allegation was not an employment offence. There were no charges, no invitation to respond and no disciplinary hearing, so procedural fairness was disregarded, contrary to Sections 41, 43 and 45 of the Employment Act 2007. The Court awarded 12 months' compensation (Kshs. 360,000), July 2008 salary (Kshs. 19,000) and one month's notice pay (Kshs. 30,000), rejected the leave and provident fund prayers, allowed the Counterclaim at the initially pleaded Kshs. 80,229.89 without post-termination interest, and ordered payment of the offset balance of Kshs. 328,770 within 30 days, with no order on costs and interest.

Key legal issues

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01

Substantive justification for termination

Holding

The stated reason (failure to deliver improvement of the Society) was unsupported and invalid

Reasoning

The termination letter referred to a work assessment but no appraisal documents were availed, no benchmarks, financial records, projections or targets were exhibited, and it was unclear what the Claimant was to have done. Grounds later advanced in evidence (hiring a Debt Collector, a Printer, and an ineligible loan) were not in the termination letter and were treated as afterthoughts.

p. 3
02

Procedural fairness

Holding

Termination without any disciplinary process was procedurally unfair

Reasoning

No charges were laid, the Claimant was not invited to respond to any allegations, and there was no disciplinary hearing; he was simply handed a termination letter on a Saturday afternoon and told to hand over the same day.

p. 3
03

Remedies for unfair termination

Holding

Claimant awarded 12 months' salary compensation plus July 2008 salary and one month's notice pay

Reasoning

The Court found the termination contrary to the minimum statutory standards in Sections 41, 43 and 45 of the Employment Act 2007 and granted maximum compensation of 12 months' salary, together with the July 2008 salary of Kshs. 19,000 and one month's salary in lieu of notice at Kshs. 30,000; other prayers were rejected.

p. 4
04

Counterclaim on staff loan

Holding

Counterclaim allowed at the initially pleaded sum of Kshs. 80,229.89 without post-termination interest

Reasoning

The Respondent wavered on the exact amount owed, with figures of Kshs. 80,229.89, 83,589.89 and 108,589.89 appearing at different stages. The Court froze the balance at termination, holding it unreasonable to charge interest on a staff loan after the employee has left employment.

p. 4

Legal principles established

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  • A termination reason must be stated and supported by evidence; afterthought grounds pleaded later cannot justify termination
  • Vague performance-based reasons without benchmarks or appraisal records do not amount to valid termination grounds
  • Termination without charges, an invitation to respond or a disciplinary hearing breaches procedural fairness
  • Interest should not continue accruing on a staff loan after the employee has left employment; the balance should be frozen at termination

Court orders

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  1. 1.Declaration that termination of the Claimant's contract of employment was unfair
  2. 2.Respondent to pay compensation of Kshs. 360,000 (12 months' salary)
  3. 3.Respondent to pay July 2008 salary of Kshs. 19,000 and 1 month salary in lieu of notice at Kshs. 30,000, totalling Kshs. 409,000
  4. 4.Respondent's Counterclaim allowed at Kshs. 80,229.89
  5. 5.Upon offset, Respondent to pay Claimant Kshs. 328,770 within 30 days of delivery of the Award
  6. 6.No order on costs and interest

Authorities

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Legislation

  • Employment Act 2007Sections 41, 43 and 45
Jurisdiction invoked
Employment and labour relations dispute before the Industrial Court; Employments Act 2007 (Sections 41, 43 and 45) applied

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, "Francis Chege Njugia v Fariji Savings And Credit Co-Operative Society Limited [2013] KEELRC 137 (KLR)", Case Analysis (2013). Cause Number 254 of 2012. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2013/137/eng@2013-09-18

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