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ELRCPartially AllowedCause Number 76 of 2012 (Consolidated with Cause Number 428 of 2013)· [2015] KEELRC 98 (KLR)

Katembe Kirongo Mtumwa & another v Steel Makers Limited [2015] KEELRC 98 (KLR)

Industrial Court of Kenya
9 December 2015
3,863 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Even when an employee is caught stealing, Kenyan employers must still hold a proper hearing and pay all earned terminal benefits.

What this practically means

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Executive summary

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Two former employees of Steel Makers Limited - Katembe Kirongo Mtumwa, a Dresser employed in 1995, and Stephen Wafula, a Storekeeper employed in 1992 - claimed their summary dismissals on 25th August 2012 were unfair and unlawful. They were dismissed after Mtumwa was found peeling copper wires in the refractory store, allegedly on Wafula's instructions to peel and sell them, amounting to attempted theft. Both claimed notice pay, August 2012 salary, annual leave pay, gratuity under the CBA and 12 months' compensation for unfair termination. The Respondent maintained the dismissals were for gross misconduct and justified. The Court found ample evidence of valid reason for dismissal: Mtumwa was found alone in a store he was not assigned to, peeling wires contrary to his role, and Wafula gave inconsistent explanations. However, the dismissal was procedurally flawed: no charges were leveled and no disciplinary hearing was held under Section 41 of the Employment Act 2007 between suspension and dismissal; investigation alone was insufficient. The Court held that Section 18para 4 of the Employment Act obliges employers to pay summarily dismissed employees their terminal dues, rendering the CBA clause denying terminal benefits on summary dismissal unenforceable. The Court awarded each Claimant 3 months' gross salary as compensation for the procedural violation, August 2012 salary, annual leave pay and gratuity, and Certificates of Service. Notice pay was rejected as unavailable for gross misconduct, and declaratory orders were refused. Each party was ordered to bear its own costs.

Key legal issues

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01

Substantive justification for summary dismissal

Holding

There was valid reason - the Claimants were found peeling copper wires they were not assigned to peel, in circumstances evidencing attempted theft

Reasoning

Mtumwa was found alone in a store where he was not ordinarily assigned, peeling cables, a role belonging to the foundry department. Prasanna had not requested peeling. Wafula gave inconsistent explanations for sending Mtumwa to the store. The inconsistency strengthened the Respondent's evidence that the Claimants were attempting to steal copper wires. Mtumwa's confession that Wafula instructed him was consistently given by Respondent witnesses and accepted.

p. 6
02

Procedural fairness under Section 41 of the Employment Act

Holding

Dismissal was procedurally unfair - no charges were leveled and no disciplinary hearing was held between suspension and dismissal

Reasoning

Suspension, investigations and engagement of the Shop Steward did not satisfy Section 41. No charges were leveled, the Claimants were not called to answer charges or to a hearing accompanied by workmates or union representatives of their choice. Between suspension on 17th August 2012 and dismissal on 25th August 2012 there was no hearing of any shade. The Court awarded minimal compensation of 3 months' gross salary each, weighed against the finding of substantive justification.

p. 6
03

Terminal benefits of summarily dismissed employees and the CBA clause denying them

Holding

Terminal benefits are payable regardless of the manner of termination; the CBA clause denying terminal benefits on summary dismissal is unenforceable

Reasoning

Section 18para 4 creates minimum standards that parties cannot contract out of, whether individually or collectively. Clause 24 of the CBA, denying terminal benefits to summarily dismissed Employees, is inconsistent with Section 18para 4 and unenforceable. Terminal benefits are earned; an Employer may deduct proven losses under Section 19 but may not decline paying terminal dues altogether. The CBA entitlements to annual leave, notice and gratuity were noted, notice pay being disallowed for gross misconduct.

p. 6

Legal principles established

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  • Section 18para 4 of the Employment Act 2007 requires Employers to pay summarily dismissed Employees all moneys, allowances and benefits due up to the date of dismissal; parties cannot contract out of this minimum standard
  • Investigation alone is not sufficient; the employer must hold a disciplinary hearing in the mode prescribed under Section 41 of the Employment Act before dismissal
  • Employees need not request a hearing; the law demands they are heard without having to make a request

Court orders

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  1. 1.Declaration that summary dismissal was based on valid reason but procedurally flawed
  2. 2.Katembe Kirongo Mtumwa to be paid Kshs. 43,875 as 3 months' gross salary for unfair termination; Kshs. 14,062 as salary for 25 days worked in August 2012; Kshs. 14,625 as 26 days annual leave pay for 2011/2012; and gratuity of Kshs. 153,000 at 16 days' salary for 17 completed years - total Kshs. 255,562
  3. 3.Stephen Wafula to be paid Kshs. 72,165 as 3 months' gross salary for unfair termination; Kshs. 23,129 as salary for 25 days worked in August 2012; Kshs. 24,055 as 26 days annual leave pay for 2011/2012; and gratuity of Kshs. 281,258 at 16 days' salary for 19 completed years - total Kshs. 400,607
  4. 4.The Claimants to be issued their respective Certificates of Service
  5. 5.Parties to meet their own costs of the Claim

Authorities

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Legislation

  • Industrial Court [Procedure] Rules 2010Rule 27[1][a]
  • Employment Act 2007Sections 18, 18[4], 19, 41, 43, 44, 44[1], 45, 49
  • Employment and Labour Relations Court ActSection 12

Cases cited (2)

  • Loice Otieno v. KCB
    Cause Number 1050 of 2011 at Nairobi
  • Asiema v. Kivi Milimani Hotel
    Cause Number 1197 of 2011 at Nairobi
Jurisdiction invoked
Industrial Court [Procedure] Rules 2010, Rule 27[1][a]; Section 12 of the Employment and Labour Relations Court Act

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, "Katembe Kirongo Mtumwa & another v Steel Makers Limited [2015] KEELRC 98 (KLR)", Case Analysis (2015). Cause Number 76 of 2012 (Consolidated with Cause Number 428 of 2013). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2015/98/eng@2015-12-09

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