Stephen Ongoya v Nairobi Academy (H) Limited [2014] KEELRC 907 (KLR)
The bottom line
#A Kenyan court ruled an employer's dismissal unfair because the accountant was never given a proper hearing, even though fraud was suspected.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether there was unfair termination of the claimant's employment
- 2.Whether the counter-claim has been proved
- 3.Whether there are any remedies due
Key legal issues
#Whether the claimant's termination was procedurally unfair
The termination was procedurally unfair because the claimant, though suspended to allow investigations, was never given a hearing under section 41 nor allowed back to the premises before termination
Section 41 of the Employment Act obliges an employer to explain the reasons for termination and to hear the employee's representations in the presence of a fellow employee or representative of choice. Section 43 as read with section 45 obliges the employer to prove the reasons for termination. The claimant was suspended on 30 July 2007, sent written explanations, but no physical meeting or hearing was ever held before his dismissal on 30 October 2007. These provisions are mandatory and failure to comply renders the dismissal unfair even where gross misconduct is suspected.
Whether the respondent proved its counter-claim for Kshs.341,000.00
The counter-claim failed because the exact loss attributable to the claimant was not established and the respondent lost a crucial limb of proof by failing to hold a hearing or report the matter to the police
Fraud and misappropriation are serious charges amounting to grounds for summary dismissal under section 44(4) and criminal acts reportable to the police. The respondent's own witnesses gave inconsistent figures (Kshs.341,909.00 versus Kshs.507,000.00), losses spanned several years under the supervision of the Director, Financial Controller and Auditor, and no annual audits for 2005-2007 were produced. Once investigations concluded, the claimant was never called to a hearing and no police report was made, so the respondent could not attribute the whole loss to the claimant.
What remedies flow from the finding of unfair termination
Salary for the suspension period, one month's notice pay, unpaid leave days and one month's pay as compensation were awarded; service pay and reinstatement were declined
Because the claimant was not paid from suspension to termination, salary for August, September and October 2007 was due. No notice having been given, one month's pay in lieu was awarded. The leave claim was not materially opposed. However, the claimant's payslips showed NSSF and NHIF registration, triggering section 35(6)(d), so service pay was not due. Reinstatement under section 49 is exceptional and inappropriate in an acrimonious relationship with a private business; compensation of one month's pay was granted instead.
Legal principles established
#- Sections 41, 43 and 45 of the Employment Act mandatorily require an employer to give an employee a hearing, in the presence of another employee or representative of their choice, and to prove the reasons for termination before summary dismissal or termination
- Even in a serious case of gross misconduct warranting summary dismissal, the procedural requirements of section 41 must be followed
- Where an employer fails to meet the procedural requirements of the Employment Act, the termination is fundamentally flawed and unfair, irrespective of the substance of the misconduct
- Suspension is only the commencement of the disciplinary process; the employee remains entitled to a hearing after investigations conclude
- A party alleging fraud or misappropriation must prove the exact loss attributable to the employee; unquantified or ambiguous losses cannot be visited on the employee
Court orders
#- 1.A declaration that the termination of the claimant's employment was unfair
- 2.One month salary in compensation amounting to Kshs.45,585.00
- 3.Salary not paid for August, September and October 2007 amounting to Kshs.136,755.00
- 4.Notice pay amounting to Kshs.45,585.00
- 5.Dismissal of the respondent's counter-claim for Kshs.341,000.00
- 6.Each party to bear their own costs
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
- Jurisdiction invoked
- Industrial Court of Kenya jurisdiction over employment and labour relations disputes
Relief refused
#Service pay
The claimant was registered with NSSF and NHIF with statutory deductions, so section 35(6)(d) of the Employment Act applies and service pay does not arise
Reinstatement without loss of benefits
Reinstatement under section 49 is specific performance to be granted only in the rarest of cases; the relationship ended acrimoniously and the respondent is a private business, making compensation the fairer remedy
Damages for lost opportunities due to lack of a Certificate of Service
The respondent produced a certificate of service posted to an address similar to that used by the claimant, with a certificate of posting
Costs
Each party will bear their own costs.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
Even in a serious case of gross misconduct which warrants summary dismissal, the provisions of section 41 apply. An employee faced with a dismissal or a termination must be given a hearing and in the presence of a fellow employee of their own choice.
Where an employer fails to meet procedural requirements as outlined in law, any dismissal or termination is fundamentally flawed and unfair.
Fraud and misappropriation of funds by an employee are very serious charges. Under the employment law they are tantamount to a reason for summary dismissal as under section 44(4) of the Employment Act and beyond these provisions, these are serious criminal acts that should be addressed by a report to the police.
This is a provision for specific performance which should only be granted in the rarest of cases.
the counter-claim herein is dismissed and this Court enters judgement for the claimant in the following terms
The termination of the claimant's employment was unfair.
Each party will bear their own costs.
Issues in the judgment
#The court expressly awards leave days at Kshs.77,114.60, but this award is omitted from the final orders listed at the disposition
Inconsistent witness names: the accountant appears as 'Naomi Njeri Nyaga' and 'Nancy Nyaga', and the director appears as 'Francis Mwangi Kirugu', 'Kirubu' and 'Mr Kirubu'
The compensation figure appears as Kshs.45,585.60 in the remedies discussion but Kshs.45,585.00 in the final orders
Name of the second cited authority is garbled, reading 'Kenya Commercial Food and Allied Workers Union'
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (1)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Mustafa Abas Misri v Akiyda 2000 Limited [2014] KEELRC 1152 (KLR)[2014] KEELRC 1152 (KLR)7 May 2014followed
Cite this brief
#Cite this brief
Caselaw, "Stephen Ongoya v Nairobi Academy (H) Limited [2014] KEELRC 907 (KLR)", Case Analysis (2014). Cause No. 701 of 2010. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2014/907/eng@2014-02-04
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.