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ELRCPartially AllowedMemorandum of Claim filed 24.10.2013 (Cause; number not stated in judgment)· [2014] KEELRC 1042 (KLR)

Alex Semutwa v Kenya Seed Company Limited [2014] KEELRC 1042 (KLR)

Industrial Court of Kenya (Employment and Labour Relations Court)
6 June 2014
2,268 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Employment Court ruled an employer must prove the real reason for dismissal, and a cleared employee gets paid for time spent suspended.

What this practically means

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Executive summary

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The claimant, employed by the respondent from 2009 and confirmed on permanent and pensionable terms as Sales Representative II in 2011, was suspended in March 2012 over a fraudulent transaction involving a fictitious Catholic Diocese Secretariat that led to loss of seed worth Kshs.4,563,250.00, and was summarily dismissed on 12.11.2012. He claimed 12 months' salary for unfair termination, unpaid salary for the nine-month suspension, service gratuity, interest and costs. The respondent maintained the dismissal was lawful and fair. The court analysed the standard operating manual, loading instructions and the respondent's investigation report, and found that verification of payment was the function of the finance and accounts department, not the claimant; the claimant had followed the prescribed steps for a new customer account, and police investigations yielded no charges against him. The court held the termination unfair under section 43 of the Employment Act because the reason was not valid. Under section 49 it awarded six months' gross salary (Kshs.360,000.00), considering his three years of service and subsequent alternative employment. Following its prior decisions in Grace Gacheru Muriithi and Kenya Union of Printing, it held that an exculpated employee is entitled to pay during suspension, awarding Kshs.193,000.00 for the suspension period. The service gratuity claim failed for want of established basis. Judgment was entered for the claimant with a declaration of unfair termination, total damages of Kshs.553,000.00 payable by 1.7.2014 with interest in default, and costs of the suit.

Key legal issues

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01

Validity of the reason for termination

Holding

The termination was unfair because the respondent did not genuinely establish that the claimant occasioned the loss; verification of payment was the role of the finance/accounts department, not the claimant

Reasoning

The court analysed the standard operating manual, loading instructions and investigation report. Loading proceeded against signatures of the claimant and one Plapan for the chief accountant; confirming payment at the bank was the accountant's role. The claimant took the steps required for a new customer account, and police investigations resulted in no charges against him.

p. 3
02

Remedies for unfair termination

Holding

Six months' gross salary awarded as compensation under section 49 of the Employment Act, given three years' service and alternative employment obtained

Reasoning

The claimant served three years, one on permanent and pensionable terms, and had expectations of long service, but obtained alternative employment after termination. The court therefore exercised its discretion under section 49 to award six months' gross salary (Kshs.360,000.00) rather than the 12 months claimed.

p. 4
03

Unpaid salary during suspension

Holding

An exculpated employee is entitled to salary for the suspension period; Kshs.193,000.00 awarded

Reasoning

Applying the court's prior decisions in Grace Gacheru Muriithi and Kenya Union of Printing, the court held that denial of pay during suspension would be an unfair labour practice where the employee is exculpated. Since the suspension and dismissal were based on an invalid reason, the claimant was entitled to the suspended period's salary as prayed.

p. 4

Legal principles established

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  • An employer bears the burden under section 43 of the Employment Act of proving a valid reason for termination; where the reason is invalid the termination is unfair
  • Whether an employee will be paid during suspension or interdiction depends on the outcome of the disciplinary proceedings; an exculpated employee is entitled to pay for the suspension period
  • Where termination or suspension is based on an invalid reason, the employee is entitled to salaries due for the suspension period

Court orders

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  1. 1.A declaration that the termination of the claimant's employment by the respondent was unfair
  2. 2.The respondent to pay the claimant Kshs.553,000.00 by 1.7.2014, in default, interest at court rates from the date of judgment till full payment
  3. 3.The respondent to pay costs of the suit
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over employment disputes (Employment Act; Industrial Court Act) - not expressly cited in the judgment

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, "Alex Semutwa v Kenya Seed Company Limited [2014] KEELRC 1042 (KLR)", Case Analysis (2014). Memorandum of Claim filed 24.10.2013 (Cause; number not stated in judgment). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2014/1042/eng@2014-06-06

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