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ELRCPartially AllowedCause No. 2297 of 2012· [2015] KEELRC 658 (KLR)

David Adema Lugongo v New Kenya Co-operative Creameries Limited [2015] KEELRC 658 (KLR)

Employment and Labour Relations Court
23 July 2015
1,693 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 awarded a dismissed employee Kshs.759,000 because his employer could not prove the misconduct allegations or show he received a fair disciplinary hearing.

What this practically means

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Executive summary

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The Claimant, employed by the Respondent on 25 February 2010 as a Sales Marketing Representative on a monthly salary of Kshs.44,000, was suspended on 19 November 2010 over allegations of irregularly handling products sold to the Kenya Dairy Board and misusing company resources, and was dismissed by letter dated 22 June 2011 under Clause 27.2.8 of the Company Code of Regulations for fraudulent deals, misuse of company resources and failure to report road accidents involving company vehicles. He was also surcharged Kshs.194,946 for repairs to a company vehicle involved in an accident. He claimed wrongful dismissal and terminal dues. The Respondent defended the dismissal as warranted, contending the Claimant committed fraudulent acts, misused the vehicle and was accorded a hearing. The court framed three issues: validity of the reasons for dismissal, procedural fairness, and remedies. On the first, it found the Respondent led no evidence to prove the allegations; the supervisor and investigating team were not called as witnesses and corroborating statements were never taken. On procedure, no minutes of a disciplinary hearing were produced and the Respondent failed to prove a hearing occurred, contrary to Section 41 of the Employment Act. The dismissal was therefore unfair under Section 45. The court awarded three months' notice pay, house allowance for 15 months and twelve months' salary as damages, totaling Kshs.759,000 less statutory deductions, ordered a certificate of service, and awarded costs to the Claimant. Service pay was refused as the Claimant contributed to NSSF, and the surcharge claim failed for want of proof of payment.

Key legal issues

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01

Whether there were valid reasons for the Claimant's dismissal

Holding

The allegations of fraudulent deals and misuse of company resources were not established on evidence

Reasoning

The dismissal letter cited fraudulent deals, misuse of company resources and breach of company regulations. The Respondent annexed an internal report, but the legal officer noted that corroborating statements from two persons were needed and these were never taken. The Claimant's supervisor and the investigating team were not called as witnesses, leaving a gap in the accusations. The allegations, if proved, would have warranted dismissal, but they were not established.

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02

Whether due process was followed before dismissal

Holding

No fair hearing under Section 41 of the Employment Act was proved; the dismissal was procedurally unfair

Reasoning

The Claimant testified that a disciplinary committee sat once and ended in disarray without reconvening. No minutes of a disciplinary hearing were exhibited and there was no proof a hearing took place. The Claimant denied being given a hearing, shifting the onus to the Respondent, which failed to discharge it. In the absence of a proper hearing the dismissal was unfair within the meaning of Section 45 of the Employment Act.

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03

What remedies the Claimant is entitled to

Holding

Notice pay, house allowance and 12 months' salary as damages for unlawful termination awarded; service pay refused

Reasoning

The court awarded three months' salary in lieu of notice per the appointment letter, house allowance computed at 15% of basic salary for 15 months, and the equivalent of 12 months' salary as damages for unlawful termination. Service pay was denied because the Claimant contributed to NSSF. The surcharge claim failed for want of proof of payment. A certificate of service was ordered.

p. 4

Legal principles established

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  • The burden lies on the employer to prove the reasons for termination, failing which the termination is unfair
  • Before terminating an employee for misconduct, the employer must explain the reasons and hear the employee's representations as required by Section 41 of the Employment Act

Court orders

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  1. 1.3 months salary in lieu of notice: 3 x 44,000 = Kshs.132,000
  2. 2.House allowance at 15% of basic salary for 15 months = Kshs.99,000
  3. 3.12 months salary as damages for unlawful termination: 12 x 44,000 = Kshs.528,000
  4. 4.Total award of Kshs.759,000 less statutory deductions
  5. 5.Claim of surcharge not awarded as there is no proof that it was effected
  6. 6.Respondent to issue Claimant with a Certificate of Service
  7. 7.Respondent to meet costs of the suit
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over employment disputes (Employment Act 2007)

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, "David Adema Lugongo v New Kenya Co-operative Creameries Limited [2015] KEELRC 658 (KLR)", Case Analysis (2015). Cause No. 2297 of 2012. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2015/658/eng@2015-07-23

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