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ELRCPartially AllowedCause 696 of 2010· [2013] KEELRC 523 (KLR)

THOMAS SHEM ONDUSO V KENYA BROADCASTING CORPORATION & 2 OTHERS [2013] KEELRC 523 (KLR)

Industrial Court of Kenya
16 January 2013
MNMathews N. Nduma
4,120 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 KBC unlawfully fired a senior manager because only the Board could dismiss him and no fair hearing was held.

What this practically means

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Executive summary

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The claimant, employed by Kenya Broadcasting Corporation as Manager Technical Services (Job Group SS BE2) on a three-year contract effective 2nd June 2009, was terminated by the Managing Director on 30th April 2010 (effective 1st June 2010) for poor work performance. The matter proceeded by written submissions by consent. The court framed four issues: the Managing Director's authority, valid reason, fair procedure, and remedies. On the first issue, the court held that under Section B.1(i) of the KBC Code of Regulations dated 29th June 2009, only the Board could discipline and separate staff on SS BA3 and above, and it had no authority to delegate that power to the Managing Director; the minute relied on by the respondent disclosed no Board decision or delegation. The termination was therefore unlawful and null and void. On reason and procedure, although the claimant had received a warning letter and memoranda on poor performance and had been given six months to improve, the employer failed to prove a valid reason and fair procedure because no appraisal and no disciplinary hearing before a Board-constituted panel were held, contrary to Section 45(2)(a) and (c) of the Employment Act 2007. On remedies, reinstatement was not sought as three years had elapsed. The court declined damages for the unserved contract period, holding the Section 49 remedies sufficient, and awarded a total of Kshs.3,213,832.70 comprising one month's gross salary in lieu of notice, two months' basic salary travel and transport allowance, service gratuity, outstanding leave, and ten months' gross salary as compensation, subject to PAYE, with interest at court rates from filing, plus costs of the suit.

Key legal issues

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01

Authority of the Managing Director to terminate a senior manager's contract

Holding

The termination was unlawful and null and void because the Code of Regulations vested discipline and separation powers for staff above SS BA4 in the Board, which could not delegate them, and no valid Board decision or delegation was shown.

Reasoning

Section B.1(i) of the Code of Regulations reserved appointments, discipline and separations for staff on SS BA3 and above to the Board, with delegation to the Managing Director limited to posts on SS BA4 and below. The claimant was in Job Group SS BE2. The minute relied on (Minute No.23/20) contained no Board decision to discipline or terminate nor any delegation. The Managing Director could only convey a Board decision, which the documents did not show.

p. 6
02

Valid reason and fair procedure for termination

Holding

Although there were genuine performance concerns, the employer failed to prove a valid reason and fair procedure because no appraisal or disciplinary hearing before a Board-constituted panel was held.

Reasoning

The six-monthly appraisal due on 26th November 2009 never took place. The claimant received a warning letter and time to improve, but the performance matters were never placed before a disciplinary hearing panel duly constituted by the Board, denying him an opportunity to defend himself. The termination decision was therefore neither validly founded nor procedurally fair under Section 45(2)(a) and (c).

p. 7
03

Appropriate remedies for unlawful and unfair termination

Holding

The claimant was awarded notice pay, travelling allowance, gratuity for the period served, outstanding leave, and 10 months' gross salary as compensation, but not damages for the unserved contract period.

Reasoning

Section 49 of the Employment Act 2007 permits, among others, the equivalent of up to twelve months' wages as compensation. Considering that the termination was by an unauthorised person, no disciplinary process was held, the claimant lost career advancement, and as a senior manager equivalent employment was hard to find, 10 months' gross salary was appropriate. Contract-term damages would duplicate the statutory compensation.

p. 9

Legal principles established

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  • Where staff rules mandate the Board to discipline and terminate employment of senior staff (SS BA3 and above), the Board has no authority to delegate that responsibility to the Managing Director, and a termination by an unauthorised officer is unlawful and null and void.
  • An employer must prove both a valid reason and a fair procedure (including a disciplinary hearing) for a termination to withstand challenge under Section 45(2)(a) and (c) of the Employment Act.
  • Compensation and payment in lieu of notice are based on gross pay, not basic pay, and contracts providing otherwise should be corrected.
  • Where a contract contemplates termination by one month's notice, remedies for unlawful or unfair termination lie under Section 49 of the Employment Act rather than damages for the unserved contract period.

Court orders

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  1. 1.One month's gross salary in lieu of notice (Kshs.207,035.00)
  2. 2.Two months' basic salary for travel and transport (Kshs.414,070.00)
  3. 3.Service gratuity (90,335x12x31%) (Kshs.336,046.20)
  4. 4.Outstanding leave days 207,035 x 27/30 (Kshs.186,331.50)
  5. 5.10 months gross salary as compensation for unlawful and unfair termination (Kshs.2,070,350.00)
  6. 6.Total award of Kshs.3,213,832.70 subject to PAYE with interest at court rates from the date of filing the suit to the date of payment
  7. 7.Costs of the suit

Authorities

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Legislation

  • Employment Act, 2007Section 49(1)(a),(b),(c)
  • Employment Act, 2007Section 35
  • Employment Act, 2007Section 45(2)(a) and (c)
  • Employment Act, 2007Section 50
  • Industrial Court Act, 2011Section 12(3)
  • Kenya Broadcasting Corporation Code of Regulations (COR)29th June 2009, Section B.1(i) and Sec. B(ii)
Jurisdiction invoked
Industrial Court Act, 2011, Section 12(3); Employment Act, 2007

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, "THOMAS SHEM ONDUSO V KENYA BROADCASTING CORPORATION & 2 OTHERS [2013] KEELRC 523 (KLR)", Case Analysis (2013). Cause 696 of 2010. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2013/523/eng@2013-01-16

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