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ELRCPartially AllowedNot stated in judgment· [2014] KEELRC 1005 (KLR)

Kenya Petroleum Oil Workers Union v Petro Oil Kenya Limited [2014] KEELRC 1005 (KLR)

Industrial Court of Kenya (now Employment and Labour Relations Court)
23 May 2014
1,574 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 that an internal audit cannot replace the fair hearing employers must give employees before dismissing them for misconduct.

What this practically means

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Executive summary

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The Grievant, employed as Station Manager by Petro Oil Kenya Ltd two months before his summary dismissal on 5 July 2011, claimed through the Kenya Petroleum Oil Workers Union that he had been unlawfully declared redundant and sought terminal dues. The Court treated the claim as one for unfair termination/wrongful dismissal because the dismissal letter was clear and the Respondent admitted summarily dismissing him for misconduct over an alleged shortage of Kshs 28,000/-. Applying sections 41, 43, 45 and 47(5) of the Employment Act, and following its earlier decision in Anthony Mkala Chitavi v Malindi Water & Sewerage Co. Ltd, the Court examined procedural fairness. It found no material demonstrating that the Respondent framed the allegations against the Grievant, informed him that disciplinary action was contemplated, or heard his representations before dismissing him. The Zonal Manager's spot audit report could not substitute the hearing required by section 41, and a meeting with a director in Mombasa took place only after the dismissal. The dismissal was therefore procedurally unfair, and in terms of section 45(2)(c) it was unnecessary to decide whether the reasons for dismissal were valid and fair. On relief, the Court awarded one month's pay in lieu of notice, June 2011 salary (the employer failing to discharge its burden of proving payment), outstanding leave days under section 10(7), and five months' gross pay as compensation under section 49(4), considering his short service as Manager and six years as an ordinary employee. Costs were assessed at Kshs 20,000/-, partly because the Respondent filed submissions out of time. A Certificate of Service was ordered. The claim for salary arrears for May and June 2011 failed for want of proof. Total award: Kshs 149,524/-.

Key legal issues

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01

Procedural fairness under section 41 of the Employment Act

Holding

The dismissal was procedurally unfair as the Respondent did not inform the Grievant of the charges or hear his representations before dismissal

Reasoning

The Court applied section 41 and its own prior articulation of procedural fairness in Chitavi: the employer must inform the employee of contemplated charges, give an opportunity to prepare and be heard, and consider representations before dismissal. The Grievant's 7 June 2011 letter could not satisfy this since what prompted it was unclear, the spot audit could not substitute a hearing, and the Mombasa meeting occurred after the dismissal.

p. 2
02

Characterisation of the claim - redundancy versus unfair termination

Holding

The Court treated the claim as one for unfair termination/wrongful dismissal despite it being pleaded as redundancy, because the Respondent admitted summarily dismissing the Grievant for misconduct

Reasoning

Though the Union pleaded redundancy, the dismissal letter was clear and the Respondent in its Response admitted summary dismissal for misconduct, and the issue was taken up in testimony and submissions. The Court therefore examined substantive and procedural fairness under sections 41, 43, 45 and 47(5).

p. 1
03

Whether the Respondent proved valid and fair reasons for dismissal

Holding

It was unnecessary to determine this given the finding of procedural unfairness under section 45(2)(c)

Reasoning

Having found the dismissal procedurally unfair, the Court invoked section 45(2)(c) and declined to consider whether the Respondent proved valid and fair reasons, despite material placed before it on alleged fraud in March 2011 and the alleged loss of Kshs 28,000/-.

p. 2
04

Remedies for unfair termination

Holding

The Grievant was awarded one month's notice pay, June 2011 salary, outstanding leave days and five months' gross pay as compensation, plus costs and a certificate of service

Reasoning

Sections 35 and 36 entitled the Grievant to notice pay; sections 10(7) and 20 shifted the burden to the employer on unpaid wages; section 10(7) supported the leave claim; section 51 entitled him to a certificate of service. On the discretionary twelve-month compensation under section 49(4), the Court considered his roughly two months' service as Manager and six years as an ordinary employee and awarded five months' gross pay.

p. 3

Legal principles established

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  • The burden of demonstrating procedural fairness in a dismissal for misconduct rests on the employer
  • An audit or investigation into alleged misconduct cannot substitute the hearing that section 41 of the Employment Act obligates an employer to conduct
  • An employer must inform an employee in clear and unambiguous language of the charges against him and that disciplinary action is contemplated, and seek his response
  • The employer bears the burden of proving payment of wages under sections 10(3), (7) and 20 of the Employment Act

Court orders

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  1. 1.Respondent to pay one month pay in lieu of notice (Kshs 17,499/-)
  2. 2.Respondent to pay salary for June 2011 (Kshs 7,931/-)
  3. 3.Respondent to pay outstanding leave days (Kshs 87,495/-)
  4. 4.Respondent to pay five months' compensation for unfair termination (Kshs 20,000/- included in costs line; total award Kshs 149,524/-)
  5. 5.Respondent to pay costs assessed at Kshs 20,000/-
  6. 6.Respondent to issue a Certificate of Service to the Grievant
  7. 7.Claim for salary arrears for May and June 2011 dismissed

Authorities

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Legislation

  • Employment Actsection 41
  • Employment Actsection 43
  • Employment Actsection 45
  • Employment Actsection 47(5)
  • Employment Actsection 45(2)(c)
  • Employment Actsections 35 and 36
  • Employment Actsections 10(3), 10(7) and 20
  • Employment Actsection 51
  • Employment Actsection 49(4)
  • Legal Notice No. 64 of 2011gazetted minimum wages

Cases cited (1)

  • Anthony Mkala Chitavi v Malindi Water & Sewerage Co. Ltd
    (2013) eKLR
Jurisdiction invoked
Employment Act, 2007 (sections 35, 36, 41, 43, 45, 47(5), 49(4), 51, 10 and 20)

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Kenya Petroleum Oil Workers Union v Petro Oil Kenya Limited [2014] KEELRC 1005 (KLR)", Case Analysis (2014). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2014/1005/eng@2014-05-23

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