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ELRCPartially AllowedIndustrial Cause (as lodged at Industrial Court of Kenya, Nairobi, 27 September 2010; transferred to Mombasa)· [2014] KEELRC 877 (KLR)

Kenya Petroleum Oil Workers Union v Kenya Shell Limited [2014] KEELRC 877 (KLR)

Industrial Court of Kenya
21 March 2014
RSRadido Stephen
3,704 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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What this practically means

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Executive summary

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The Union, on behalf of two grievants (Bernard Mkungo and Faustin Righa), former Tank Farm Foremen of Kenya Shell Ltd, challenged the termination of their employment on 17 November 2008 following an alleged loss of about 90,000 litres of product from the Kipevu tank farm in July 2008. Both grievants had received notices of disciplinary hearings with two charges and their rights, attended hearings on 24 September 2008 represented by union officials, and were summarily dismissed for neglect of duty causing loss. The Respondent justified the dismissals on negligence in breaching tank dipping and sealing procedures. The Court, per Radido Stephen J, framed two issues: whether the terminations were unfair, and the appropriate remedies. On procedure, the Court held the Respondent complied with section 41 of the Employment Act, as charges were communicated and hearings were held with representation. On substance, the Court found the terminations substantively unfair: the Respondent failed to prove valid and fair reasons, having not rebutted the 1st Grievant's off-duty defence with attendance records, and having failed to clarify the role of outsourced Cyka staff who took dips, while system weaknesses, accessible seals and dilatory investigations were unexplained. Six months' gross wage compensation was awarded to each grievant (Kshs 296,196 and Kshs 248,538 respectively). Reinstatement and terminal dues claims were dismissed; certificates of service were ordered, and costs of Kshs 20,000 were awarded against the Respondent for late filing of submissions.

Key legal issues

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01

Procedural fairness under section 41 of the Employment Act

Holding

The Respondent complied with section 41: notices with charges and rights were served, hearings were held about 12 days later, both Grievants were represented by union representatives, and minutes were produced

Reasoning

The Court traced the pre-2007 position where employers could dismiss without a hearing, and held that section 41 changed this by importing natural justice into the employment contract. The obligation is on the employer to demonstrate procedural fairness. The notices informed the Grievants of the charges and their rights, hearings were held with union representation, and minutes were annexed, satisfying the statutory requirements.

p. 4
02

Substantive fairness for the 1st Grievant

Holding

Termination substantively unfair; the Respondent failed to prove valid and fair reasons

Reasoning

The 1st Grievant consistently maintained he was off duty from 16 July 2008 when the loss occurred. The Respondent never dealt with this defence, never produced attendance or dipping records to show the loss occurred during his duty, and its witness conceded he 'must have been on duty' but needed to check records. The Court held the Respondent failed to prove the reasons or that they were valid and fair under sections 43 and 45.

p. 5
03

Substantive fairness for the 2nd Grievant

Holding

Termination substantively unfair and not in accord with justice and equity

Reasoning

Although the 2nd Grievant had overall responsibility as Tank Farm Foreman, the Respondent did not deny system weaknesses: accessible seals, colossal loss (90,000 litres), dilatory investigations, and an unexplained third-party (Cyka) role. The disciplinary minutes did not establish falsification of readings. He had served nearly 27-28 years with a clean record.

p. 6
04

Appropriate remedies

Holding

Six months' gross wage compensation awarded to each Grievant; reinstatement and terminal dues refused; certificates of service granted

Reasoning

Reinstatement was barred by the three-year lapse and section 12(3)(vii) of the Industrial Court Act. In exercising the discretion under section 49, the Court considered long service with clean records and loss of terminal dues, but also the Respondent's compliance with procedural fairness, settling on six months' gross wages for each Grievant.

p. 6

Legal principles established

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  • Section 41 of the Employment Act, 2007 has made procedural fairness (audi alteram partem) part of every employment contract in Kenya, and the employer bears the burden of demonstrating compliance
  • The ingredients of procedural fairness are informing the employee of the charges, a proper opportunity to prepare and be heard, and hearing and considering representations before dismissal
  • Where a defence (such as not being on duty) is raised from the outset, the employer must deal with it and produce relevant records; failure means the employer has not justified the termination
  • Even where third parties customarily take dips and readings, overall responsibility remains with the Foremen, but unexplained operational weaknesses can defeat a finding of valid and fair reason
  • An employee is entitled to a certificate of service as of right
  • Costs do not follow the event in the Industrial Court, but late filing of submissions may attract a costs order against the non-complying party

Court orders

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  1. 1.Six months wages equivalent compensation of Kshs 296,196/- to the 1st Grievant
  2. 2.Six months wages equivalent compensation of Kshs 248,538/- to the 2nd Grievant
  3. 3.The claims for reinstatement and terminal dues are dismissed
  4. 4.The Respondent is ordered to issue the Grievants with certificates of service
  5. 5.The Respondent to pay the Claimant costs assessed at Kshs 20,000/-

Authorities

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Legislation

  • Employment Act, 2007section 47(5)
  • Employment Act, 2007sections 40 and 41
  • Employment Act, 2007section 43
  • Employment Act, 2007section 45, including 45(4)(b) and 45(5)(b) and (f)
  • Employment Act, 2007section 49(4)(c)
  • Industrial Court Actsection 12(3)(vii)
Jurisdiction invoked
Jurisdiction of the Industrial Court over trade disputes/unfair termination (Employment Act, 2007 and Industrial Court Act); no specific provision invoked

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (4)

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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, "Kenya Petroleum Oil Workers Union v Kenya Shell Limited [2014] KEELRC 877 (KLR)", Case Analysis (2014). Industrial Cause (as lodged at Industrial Court of Kenya, Nairobi, 27 September 2010; transferred to Mombasa). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2014/877/eng@2014-03-21

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