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ELRCPartially AllowedCause Number 606 [N] of 2009· [2014] KEELRC 558 (KLR)

Andrew K. Tanui v Postal Coprporation of Kenya [2014] KEELRC 558 (KLR)

Industrial Court of Kenya
31 March 2014
JRJames Rika
11,343 words in judgment
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The bottom line

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Kenya's Industrial Court ruled that firing an employee without sharing the audit evidence behind the charges is unfair, awarding him over Kshs. 5.9 million.

What this practically means

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Executive summary

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The Claimant, employed on 2nd October 2007 as General Manager Finance and Strategy of the Respondent State Corporation on a three-year fixed-term contract, was sent on compulsory leave on 30th April 2009 following a forensic audit of the PostaPay EFT product run with Afripayments. After answering eight charges in a show-cause letter and a brief Board appearance, he was summarily dismissed on 22nd July 2009 for gross misconduct, some fifteen months before his contract expired. He claimed reinstatement, salary arrears, damages, terminal benefits and maximum compensation. Rika J found the dismissal substantively unjustified: the charges traced to a flawed Afripayments contract concluded before the Claimant's employment and to the Respondent's own systemic failures - no accounting software, no separate bank account, poor due diligence - which the Claimant had worked to remedy, including recovering substantial debts. His favourable appraisals, and the fact that he himself detected the unexplained Kshs. 44.7 million debtor balance, negatived negligence. Procedurally, the dismissal was also unfair: he was never given the Forensic Audit Report underpinning the charges, was not told of his right to be accompanied, and the Board hearing lasted about five minutes. Reinstatement, salary arrears, anticipatory salaries and duplicative contractual damages were declined. The Court awarded twelve months' gross salary in compensation (Kshs. 4,266,000), gratuity for 21 months served (Kshs. 1,139,250), leave pay (Kshs. 279,252) and one month's notice pay (Kshs. 217,000), totalling Kshs. 5,901,502, payable within 30 days, with no order on costs and interest.

Key legal issues

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01

Substantive justification for dismissal

Holding

The reasons given (negligence of duty and mismanagement of PostaPay) were not valid; the charges rested on a flawed Afripayments contract concluded before the Claimant's employment and on systemic failures of the Respondent

Reasoning

The Court examined each of the eight charges against the evidence. The contract with Afripayments predated the Claimant and could not be undone by him; he pursued debts, gave advice, initiated automation and detected the unexplained debtor balance himself. Charges such as 'doing business with a firm of doubtful financial stability' were 'hollow' since the choice of partner was the Respondent's. The Board minutes corroborated his explanations, and his appraisals rated him very good.

p. 14
02

Procedural fairness of the dismissal

Holding

The dismissal procedure was flawed: the Claimant was not availed the Forensic Audit Report, was not advised of his right to be accompanied under Section 41, and the Board hearing was a perfunctory appearance of about five minutes

Reasoning

Although the Claimant answered the show-cause letter comprehensively and appeared before the Board, no significant hearing took place. The Employer must explain charges, produce documentary evidence, allow questioning of witnesses and the employee's own evidence. The Forensic Audit forming the backbone of the charges was never supplied to him before the hearing. The procedure failed the test under Sections 41, 43 and 45 of the Employment Act.

p. 15
03

Remedies for unfair termination

Holding

Reinstatement, salary arrears, anticipatory salaries and duplicate contractual damages were refused; the Claimant received maximum statutory compensation of 12 months' gross salary, proportionate gratuity, notice pay and leave pay

Reasoning

Reinstatement was impracticable given the expired fixed term and passage of nearly five years. Anticipatory salaries would unjustly enrich the Claimant. Because dismissal was not for gross misconduct, notice pay and gratuity for 21 months served were due. Statutory compensation under Section 49 of the Employment Act and Section 15 of the repealed Part 3 of the Labour Institutions Act was granted at the maximum 12 months, given the injury to his employability.

p. 16

Legal principles established

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  • An employer must show valid and fair reasons for termination under Sections 43 and 45 of the Employment Act 2007, and institutional or systemic failures of the employer cannot be laid at the doorstep of an employee who advised, followed up and acted reasonably within his docket
  • A disciplinary hearing must be a genuine opportunity to be heard: the employer must explain the charges, produce the evidence relied on (including audit reports), allow the employee to question witnesses and to adduce his own evidence; a perfunctory appearance is insufficient
  • An employee should be availed an audit report relied on as the backbone of charges against him before being called upon to defend the charges
  • An employee should not obtain multiple remedies (contractual damages and statutory compensation) for the same wrong of dismissal; one form of remedy is sufficient absent exceptional circumstances
  • Anticipatory salaries for the unexpired term of a contract would amount to unjust enrichment and violate the principle of a fair go all round
  • Where an employee is found not to have been dismissed for gross misconduct, he is entitled to pay in lieu of notice and proportionate gratuity for the period actually served

Court orders

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  1. 1.A declaration that the Dismissal of the Claimant from Employment was unfair
  2. 2.The Respondent shall pay to the Claimant 12 months' gross salary in compensation at Kshs. 4,266,000
  3. 3.Gratuity pay for 21 months at 25% of the basic pay at Kshs. 1,139,250
  4. 4.Kshs. 279,252 in annual leave pay
  5. 5.1 month basic salary in notice pay at Kshs. 217,000 (total award Kshs. 5,901,502)
  6. 6.Payment within 30 days of delivery of the Award
  7. 7.No order on the costs and interest

Authorities

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Legislation

  • Employment ActSections 41, 43, 45, 49
  • Labour Institutions ActPart 3, Section 15 (repealed Part 3)

Cases cited (2)

  • Fred Odhiambo v. the Postal Corporation & the Attorney General
    [2013] e-KLR
  • Maria Kagai Ligaga v. Coca Cola East and Central Africa Limited
    (UR)
Jurisdiction invoked
Employment and labour relations dispute referred to the Industrial Court under the Labour Institutions Act; unfair termination claim

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (10)

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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, "Andrew K. Tanui v Postal Coprporation of Kenya [2014] KEELRC 558 (KLR)", Case Analysis (2014). Cause Number 606 [N] of 2009. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2014/558/eng@2014-03-31

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