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ELRCPartially AllowedCivil Suit No. 5483 of 2008 (originally filed before the Chief Magistrate's Court at Nairobi)· [2016] KEELRC 104 (KLR)

Terry Maina v East African Portland Cement Company Limited [2016] KEELRC 104 (KLR)

Employment and Labour Relations Court
18 November 2016
2,562 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 HR officer over Kshs.3.5 million because her employer never gave her a fair hearing before firing her.

What this practically means

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Executive summary

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This first-instance judgment of the Employment and Labour Relations Court at Nairobi, delivered by Mathews Nderi Nduma, Principal Judge, on 18th November 2016, determined a suit originally filed as Civil Suit No. 5483 of 2008 before the Chief Magistrate's Court at Nairobi. The plaintiff, a Human Resources Officer employed on permanent and pensionable terms from 27th September 2000, was dismissed by letter dated 31st July 2003 effective 1st August 2003 on charges of leasing staff houses without competitive bidding and contrary to Government Housing Policy. She denied the charges, asserting her role was only to identify houses while leasing decisions were collective management decisions. The court framed four issues: validity of reason and fairness of procedure, proof of the liquidated claims, any set-off, and costs. It found the respondent produced no evidence to discredit the plaintiff's account, that she was never summoned before the Human Resources Committee, and that the termination breached Section 41 of the Employment Act, 2007 and the company's own disciplinary procedure. The claim that leasing was against Government Housing Policy failed because the respondent was an autonomous entity with its own housing policy. The court awarded Kshs.3,598,400 comprising three months' arrear salary, three months' house rent, school fees benefits, notice pay, leave pay, and ten months' salary as maximum compensation under Section 49(1)(c), with interest, and directed the respondent to facilitate access to pension benefits from Alexander Forbes. No set-off was allowed; costs followed the outcome.

Key legal issues

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01

Whether the termination was for a valid reason and by fair procedure

Holding

Termination was wrongful and procedurally unfair; no offence was proved and the plaintiff was never summoned before the Human Resources Committee

Reasoning

The plaintiff's role was limited to identifying houses for staff; the respondent produced no evidence to discredit this. She was not summoned before the Human Resources Committee to answer the charges, contrary to Section 41 of the Employment Act and the company's own disciplinary procedure requiring that charges be read to the employee and adequate opportunity to defend himself be given. The second charge concerning Government Housing Policy was untenable since the respondent was an autonomous corporate entity with its own housing policy.

p. 5
02

Whether the liquidated claims were proved

Holding

Salary for May-July 2003 (Kshs.544,590), house rent for three months (Kshs.105,000), school fees benefits (Kshs.589,000), three months' notice pay (Kshs.544,590) and thirty days' leave pay (Kshs.181,530) were all awarded

Reasoning

The plaintiff was not paid salary for May, June and July 2003 despite termination dating 1st August 2003. She was removed from company housing during the disciplinary process despite the contract providing housing or payment in lieu. School fees benefits and accrued leave entitlements were unpaid at termination. Summary dismissal entitled her to payment in lieu of three months' notice under the contract.

p. 5
03

Whether the defendant was entitled to set-off for monies allegedly owed

Holding

No set-off allowed; no counterclaim or statement of account was filed and the defendant's claim against the plaintiff had already been struck out

Reasoning

RW1 testified the plaintiff owed car loan, other loans and salary advances, but no counterclaim was filed, no statement of account was produced, the monies had been written off as bad debt, and the company's earlier claim against the plaintiff was struck out and not appealed. The defendant's witness had no personal knowledge and the plaintiff's personal file had gone missing.

p. 4
04

What compensation is payable for wrongful and unfair termination

Holding

Ten months' salary (Kshs.1,815,300) awarded as maximum compensation under Section 49(1)(c) of the Employment Act

Reasoning

No offence was properly proved against the plaintiff and she did not contribute to the termination. She was prematurely removed from company housing, paid no terminal benefits, not even salary for days worked, and lost a good job without notice in a cruel manner that violated her dignity and that of her children. The court considered the maximum compensation under Section 49(1)(c) appropriate.

p. 6

Legal principles established

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  • Before summarily dismissing or terminating an employee, an employer must allow the employee to appear and be heard with a colleague of choice, as mandated by Section 41 of the Employment Act, 2007
  • An employee proves wrongful and unfair termination on a balance of probability under Section 47(5) of the Employment Act, read with Sections 43(1) and 45
  • An employer who fails to file a counterclaim or statement of account cannot rely on unsubstantiated allegations of employee indebtedness or set-off

Court orders

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  1. 1.Arrear salary of three (3) months Kshs.544,590
  2. 2.Arrear rental three (3) months Kshs.105,000
  3. 3.School fees benefits Kshs.589,000
  4. 4.Payment in lieu of notice Kshs.544,590
  5. 5.Payment in lieu of leave Kshs.181,530
  6. 6.Ten (10) months compensation for wrongful and unfair termination Kshs.1,815,300
  7. 7.Total award Kshs.3,598,400
  8. 8.Interest on items (a)-(e) at court rates from the date of termination till payment in full
  9. 9.Interest on the compensation award at court rates from date of filing suit till payment in full
  10. 10.Respondent directed to provide the plaintiff with necessary clearance documents to access her pension in the sum of Kshs.680,590 plus accrued interest since date of termination from Alexander Forbes
  11. 11.Costs to follow the outcome

Authorities

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Legislation

  • Employment Act, 2007Section 41
  • Employment Act, 2007Section 43(1)
  • Employment Act, 2007Section 45(1)(2)(a)(b) & (c)
  • Employment Act, 2007Section 47(5)
  • Employment Act, 2007Section 49(1) as read with 49(1)(c) and 49(4)
Jurisdiction invoked
Suit transferred from the Chief Magistrate's Court at Nairobi (Civil Suit No. 5483 of 2008) and determined by the Employment and Labour Relations Court under the 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, "Terry Maina v East African Portland Cement Company Limited [2016] KEELRC 104 (KLR)", Case Analysis (2016). Civil Suit No. 5483 of 2008 (originally filed before the Chief Magistrate's Court at Nairobi). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2016/104/eng@2016-11-18

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