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ELRCPartially AllowedCause No. 1001 of 2012· [2014] KEELRC 913 (KLR)

Fredrick Odongo Owegi v Cfc Life Assurance Limited [2014] KEELRC 913 (KLR)

Industrial Court of Kenya at Nairobi
31 March 2014
MMM. Mbaru
12,704 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~51 min to read original · ~4 min brief

The bottom line

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Kenya's Industrial Court ruled CFC Life unfairly fired a manager for poor performance without a fair hearing, and ordered his reinstatement with full back pay until retirement.

What this practically means

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Executive summary

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The claimant, employed by the respondent since 1978 and rising to Manager of the Premium Processing Department, was cautioned in November 2011 over performance concerns, suspended on 6th February 2012 pending investigations into loss of premiums following a forensic audit that uncovered irregular cancellation of receipts by a cashier, taken through a disciplinary enquiry on 22nd February 2012, issued a Notice to Show Cause on 9th March 2012, and terminated on 28th March 2012 for 'lack of attention in discharging' his duties. He claimed the termination was procedurally and substantively unfair, malicious, and sought reinstatement or, alternatively, compensation, severance pay, salaries and benefits to retirement, and other dues. The respondent maintained that the claimant neglected his duties, causing losses of over Kshs.1 million and reputational damage, and that fair procedure under section 41 of the Employment Act was followed. The court held that the disciplinary process only commenced with the NTSC; the claimant was never thereafter heard in the presence of an employee of his choice nor given a right of appeal; the charge in the termination letter differed from the suspension grounds; and no review of his performance following the caution ever occurred. The termination was found substantively and procedurally unfair. Reinstatement with back salary, allowances and benefits was ordered with effect from 1st April 2014 until legal retirement; failing reinstatement, 12 months' compensation with all dues plus three years' basic salary. The claim for salaries to retirement as damages failed for want of a breach-of-contract claim. Costs and interest were awarded to the claimant, with mention set to confirm compliance.

Key legal issues

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01

Whether the termination was procedurally fair under sections 41 and 43 of the Employment Act

Holding

The termination was procedurally unfair: the charge for which the claimant was dismissed was not put to him at the disciplinary enquiry, he was not heard in the presence of an employee of his choice after the NTSC, and he was not given a right of appeal.

Reasoning

The court traced the sequence: caution of 2 November 2011 with a review due after two months that never occurred; suspension to facilitate investigations; a disciplinary enquiry which was not a hearing on a disciplinary notice; the NTSC of 9 March 2012 which only then commenced the disciplinary process; and termination without a hearing in the presence of a fellow employee of the claimant's choice and without an appeal. This violated the mandatory provisions of sections 41 and 43 and natural justice.

p. 16
02

Whether the claimant was terminated for poor performance or for misconduct (negligence)

Holding

The reason in the termination letter was lack of attention to duties (poor performance), yet the respondent defended the dismissal as misconduct/negligence; the charge was never properly put to the claimant and the processes were disconnected.

Reasoning

The court distinguished poor performance (incapacity) from misconduct per Professor Jordaan's article, noting different requirements for substantive and procedural fairness. The claimant's appraisal, caution and termination reasons were unrelated; no review of improvement was done, no support or training shown, and no opportunity to respond to the negligence charge at a hearing. Elevating the charge without notice was unfair.

p. 15
03

What remedies follow from a finding of unfair termination

Holding

Reinstatement is the primary statutory remedy and was granted; alternatively 12 months' compensation plus dues and three years' basic salary if reinstatement is not effected.

Reasoning

Under section 45 read with section 49 of the Employment Act, where termination is substantively unfair the court must grant reinstatement or re-employment unless impracticable. Given the claimant's 33 years of service and 9 years to retirement, and that no permanent replacement was shown, reinstatement with back salary and benefits was ordered, with compensation in the alternative.

p. 18

Legal principles established

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  • Where an employee is terminated for poor performance, the employer must demonstrate awareness of performance standards, support, and opportunity to improve with reviews; non-performance alone is not a valid ground for termination.
  • The disciplinary process only commences upon issuance of a Notice to Show Cause, after which section 41 of the Employment Act requires a hearing in the presence of a fellow employee or union representative of the employee's choice, plus a right of appeal.
  • It is not fair to elevate a charge from poor performance to misconduct during disciplinary proceedings and rely on the lack of prospects of restoring employment to justify dismissal as a sanction.

Court orders

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  1. 1.A declaration that the termination of the claimant by the respondent was unlawful and unfair
  2. 2.The claimant is reinstated to his job or an equally suitable job with the respondent, with all his back salary, allowances, benefits, and any other legal dues
  3. 3.Reinstatement or re-engagement with effect from 1st April 2014 until legal retirement, or in the alternative compensation of twelve (12) months' salary, all salaries, allowances, benefits and other legal dues from 29th March 2012 to 31st March 2014, and three (3) years' basic salary within 30 days from 1st April 2014
  4. 4.Mention within 35 days to confirm compliance
  5. 5.Amounts payable shall attract interest
  6. 6.Costs awarded to the claimant

Authorities

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Legislation

  • Employment Actsection 41
  • Employment Actsection 41(1)
  • Employment Actsection 41(2)
  • Employment Actsection 43
  • Employment Actsection 45
  • Employment Actsection 45(2)(b)
  • Employment Actsection 49(1)(c)
  • Employment Actsection 49(4)
  • Employment Actsection 35
  • Industrial Court Actsection 12

Cases cited (13)

  • Peter Mureithi Ngatia versus the AG
    Cause No. 716 of 2011
  • Zachary Ochaka versus KBC
    Cause No 1510 of 2010
  • Alphonse Machanga Mwachaya versus Operation 680 Limited
    [2013] eKLR
  • Kenneth Karisa Kasemo versus Kenya Bureau of Standards
    Court of Appeal No. 19 of 2012
  • D.K. Njagi Marete versus the Teachers Service Commission
    [2013] eKLR
  • Jane Frances Ominde Munyakoh versus Imaging Solutions Limited
    Cause No. 1491 of 2011
  • Ivetta Mkala versus Nation Media Group
    Cause No. 2367 of 2012
  • David Witachita Luhombo versus Kenital Solar Limited
    Cause No. 833 of 2010
  • Avril Elizabeth Home for the Mentally Handicapped v Commission for Conciliation, Mediation and Arbitration & others
    (2006) 27 ILJ 1644 (LC)
  • Landsec and Another v Commission for Conciliation, Mediation and Arbitration and Others
    (JR 819/07) [2009] ZALC 12
  • CUSA v Tao Ying Metal Industries
    2009 (2) SA 204 (CC)
  • Minister of Health and Another v New Clicks South Africa (Pty) Ltd and Others
    2006 (2) SA 311 (CC)
  • Equity Aviation Services (Pty) Ltd v CCMA and Others
Jurisdiction invoked
Industrial Court Act, section 12; Employment Act 2007 unfair termination jurisdiction

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, "Fredrick Odongo Owegi v Cfc Life Assurance Limited [2014] KEELRC 913 (KLR)", Case Analysis (2014). Cause No. 1001 of 2012. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2014/913/eng@2014-03-31

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