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ELRCPartially AllowedCause No 64 of 2012· [2013] KEELRC 920 (KLR)

Anthony Mkala Chitavi v Malindi Water & Sewerage Company Ltd [2013] KEELRC 920 (KLR)

Industrial Court of Kenya
6 December 2013
RSRadido Stephen
6,301 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court ruled an MD's dismissal fair in procedure but unfair in substance, awarding him three months' pay because his employer never proved its reasons.

What this practically means

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Executive summary

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The Claimant, formerly Chief Executive Officer of the Respondent and later Managing Director of Mombasa Water Supply, was redeployed by the Ministry of Water and Irrigation to the Respondent as Managing Director under a new three-year contract signed on 3 November 2008. Following a Ministry report on alleged mismanagement, the Respondent's Board formed a Select Special Audit Committee, sought the Claimant's written explanations, and invited him before the Board. After he walked out of the meeting, he was summarily dismissed on 15 October 2009 for gross misconduct and abuse of office. He claimed Kshs 1,102,000/- salary arrears, damages for unlawful dismissal, damages for breach of contract, costs and interest. The Court framed four issues: continuity of employment, constructive dismissal, procedural and substantive fairness, and relief. It held the 3 November 2008 contract was a new contract with a distinct juristic person, breaking continuity, so salary arrears failed. Constructive dismissal failed because the Claimant never resigned. Procedurally, the dismissal complied with section 41 of the Employment Act: the Claimant was informed of the charges, given time to respond in writing, and offered an oral hearing. Substantively, however, none of the multiple reasons for dismissal — excessive mileage, irregular tendering, training assessment failures, irregular recruitment, procedural changes, or budget excesses — was proved with material evidence, rendering the termination substantively unfair. The Court awarded compensation equivalent to three months' gross wages (Kshs 672,000/-) under section 49 of the Employment Act, refused salary arrears and damages for breach of contract, declined costs due to the Claimant's non-compliance with filing directions, and made no order as to costs.

Key legal issues

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01

Continuity of employment between successive contracts with different employers

Holding

The contract with the Respondent dated 3 November 2008 was a new contract, not a continuation of the Mombasa Water Supply contract; continuity was broken.

Reasoning

Mombasa Water Supply and the Respondent are distinct juristic persons. The new contract commenced on 3 November 2008, made no reference to the previous contract, and the redeployment letter was explicit that a new contract would be signed. The Claimant did not lay any evidential, contractual or statutory basis for continuity, and the Ministry of Water would have been a necessary party on that question.

p. 5
02

Constructive dismissal

Holding

Not a case of constructive dismissal; the Claimant never resigned and underwent a disciplinary process before dismissal.

Reasoning

The doctrine of constructive dismissal, though without explicit statutory underpinning in Kenya, is applicable given Article 41 of the Constitution. Resignation must be prompt, but here the Claimant did not resign at all; he was taken through a disciplinary process and dismissed, so he cannot claim repudiation by intolerable conduct.

p. 5
03

Procedural fairness of the dismissal

Holding

The dismissal was procedurally fair and in compliance with section 41 of the Employment Act.

Reasoning

The Respondent informed the Claimant of the charges by letter dated 14 September 2009 enclosing the audit reports, gave him nearly two weeks to respond in writing, invited him to appear before the Board on 13 October 2009, and offered an oral hearing. The Claimant responded in writing but walked out of the Board meeting without justification for seeking only one more day after three weeks' notice.

p. 7
04

Substantive fairness of the dismissal

Holding

The termination was substantively unfair because the Respondent failed to prove the reasons for dismissal and that they were valid and fair.

Reasoning

None of the multiple reasons — excessive mileage, irregular/fraudulent tendering, failure to carry out training impact assessments, irregular recruitment, procedural changes, and excessive budget allocations — was proved with material evidence. The Special Audit Committee report was not placed before the Court, no mileage policy was produced, and no particulars of irregular tenders were given.

p. 9
05

Relief for substantively unfair termination

Holding

Compensation equivalent of three months gross wages (Kshs 672,000/-) awarded; salary arrears and damages for breach of contract refused.

Reasoning

Section 49 of the Employment Act caps compensation at twelve months gross wages and subjects it to thirteen factors. The contract had about 25 months remaining, provided 31% gratuity on successful completion, and the Claimant, an engineer, had reasonable prospects of alternative employment. Three months' wages on his Kshs 224,000/- salary was just.

p. 10

Legal principles established

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  • Continuity of employment and presumption of continuity must be with the same dismissing employer; there can be no presumption of continuity between successive employments by different juristic persons.
  • Section 41 of the Employment Act, 2007 makes procedural fairness (notice of charges, opportunity to prepare and be heard, and hearing of representations) part of every employment contract in Kenya.
  • The employer bears the statutory burden of proving reasons for termination and that those reasons are valid and fair.
  • A claimant seeking compensation under section 49(1)(c) of the Employment Act must lay a basis for the exercise of the court's discretion.

Court orders

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  1. 1.Award of 3 months gross wages as compensation of Kshs 672,000/- for substantively unfair termination
  2. 2.No order as to costs

Authorities

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Legislation

  • Anti-Corruption and Economic Crimes Actsection 46
  • Public Procurement and Disposals Regulations Act / Public Procurement and Disposal Regulations2006; First Schedule Threshold Matrix; section 16(4)
  • Employment Actsections 10(2)(h) and (7), 40, 41, 43, 43(2), 45, 47(5), 49, 49(1)(c), 49(4)
  • Industrial Court Actsection 12(3)(v) and (vi)
  • Constitution of KenyaArticle 41
  • Redundancy Payments Act (England)1965
  • Trade Unions and Labour Relations Act (England)1974
  • Employment Rights Act (United Kingdom)1996

Cases cited (6)

  • Secretary of State for Employment v Globe Elastic Thread Co. Ltd
    (1979) IRLR 327 HL
  • Pretoria Society for the Care of the Retarded v Loots
    [1997] 6 BLLR 721
  • Western Excavations v Sharp
    (1978) IRLR 27
  • St. Cuthbert's Co-operative Association Ltd
    (1974) 188 NIRC
  • Patterson v Messrs Bracketts
    (1977) IRLR 137
  • Anthony Mkala Charo Chitavi v Republic & 2 others
    Nairobi High Court Petition No. 103 of 2009
Jurisdiction invoked
Sections 12(3)(v) and (vi) of the Industrial Court Act; Employment Act, 2007 (ss. 40, 41, 43, 45, 47(5), 49)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (25)

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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, "Anthony Mkala Chitavi v Malindi Water & Sewerage Company Ltd [2013] KEELRC 920 (KLR)", Case Analysis (2013). Cause No 64 of 2012. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2013/920/eng@2013-12-06

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