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ELRCPartially AllowedIndustrial Cause (Statement of Claim dated 23rd November 2012 - number not stated in judgment)· [2016] KEELRC 588 (KLR)

Fredrick Kibwana Elabonga v Build Africa Kenya [2016] KEELRC 588 (KLR)

Industrial Court of Kenya (Employment and Labour Relations Court)
21 September 2016
HWHellen Wasilwa
4,350 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 firing an employee without a proper investigation and disciplinary hearing is unfair, awarding 12 months' salary.

What this practically means

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Executive summary

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The Claimant, formerly Director of Resources of the Respondent, was summarily terminated by letter dated 11th April 2012 for negligence leading to poor performance, arising from a Kshs. 4 million hole in the 2011 Kenyan budget. He sued for gratuity, telephone allowance, monthly cushion, damages for unfair termination, severance pay, general damages, interest and a Certificate of Service. The Respondent defended the termination as substantively and procedurally justified on grounds of negligence and misappropriation, and counterclaimed for Kshs. 50,000.00 being a cheque allegedly cashed without authority. The Court framed four issues: validity of reasons, procedural fairness, the counterclaim, and remedies. On the first issue, it found under Section 43 of the Employment Act that the employer failed to prove the reason: the 4 million budget hole was never conclusively investigated, both the statutory and forensic audits did not capture it, and the Claimant's explanation of a UK-designed template formula error (mirrored by a KES 51 million error in Build Africa Uganda) was unrebutted. On procedure, the Court found no formal disciplinary hearing was held as required by Section 41, no minutes existed, and the failure contravened Article 50(1) of the Constitution and the Respondent's own HR Manual, rendering the termination unfair under Section 45(2). The counterclaim failed for want of proof that the Claimant used office money for himself. The Court awarded the Claimant 12 months' salary as compensation (Kshs. 3,942,144), service pay of Kshs. 492,768 for three years, a Certificate of Service, and costs of the suit against the Respondent, subject to statutory deductions. Gratuity, telephone allowance, cushion and general damages were not granted. Judgment delivered by Hellen Wasilwa J on 21st September 2016.

Key legal issues

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01

Whether there were valid reasons for the termination

Holding

No valid reason was established; the alleged Kshs. 4 million budget hole was never conclusively investigated and may have been caused by a template error originating in the UK.

Reasoning

The termination letter cited negligence leading to poor performance over a Kshs. 4m budget hole. The Claimant attributed the hole to a budget template formula error designed in the UK, evidenced by a similar KES 51 million error in Build Africa Uganda. Both the statutory audit (RW3) and the forensic audit (RW4) did not capture the 4m gap, and the promised investigation by Oliver was never shown to have been done. Section 43 places the burden of proving reasons on the employer.

p. 8
02

Whether due process was followed before termination

Holding

No formal disciplinary hearing was held as required by Section 41 of the Employment Act; no minutes of any alleged hearing were produced, so the termination was procedurally unfair and violated Article 50(1) of the Constitution.

Reasoning

The Claimant was summoned and handed a termination letter. RW1 admitted discussing the matter with the Claimant but no minutes of any hearing were recorded. Section 41 requires the employer to explain the reasons and hear and consider the employee's representations before termination on grounds of misconduct or poor performance. The Respondent also flouted its own HR Manual and the law on fair administrative action.

p. 8
03

Whether the Counter-claim is proved

Holding

The counterclaim for Kshs. 50,000.00 failed for want of proof that the Claimant appropriated the funds.

Reasoning

The Respondent claimed Kshs. 50,000.00 being a cheque (No. 102087) cashed without proper authority. The Claimant explained he used to take imprest from the office, the cheque was requested by Teresia Munyuri and countersigned by Mwaniki/Benson Thuku, and monies were handed over. The Court found no evidence the Claimant used office money for his own use.

p. 9
04

What remedies to grant

Holding

The Claimant was awarded 12 months' salary as compensation for unfair termination, service pay for three years, a Certificate of Service, and costs; the award was subject to statutory deductions.

Reasoning

Having found the termination both substantively and procedurally unfair, the Court exercised its discretion under Section 49 of the Employment Act to award the maximum 12 months' gross salary, plus service pay computed at half a month's salary for each of the three years worked, and ordered issuance of the Certificate of Service under Section 51.

p. 9

Legal principles established

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  • An employer bears the burden of proving the reason for termination, failing which the termination is deemed unfair.
  • Termination without a formal disciplinary hearing as envisaged under Section 41 of the Employment Act and contrary to Article 50(1) of the Constitution is procedurally unfair.
  • A counterclaim unsupported by evidence that the employee appropriated funds must fail.

Court orders

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  1. 1.Respondent to pay the Claimant 12 months' salary as compensation for unlawful termination, i.e. 12 x Kshs. 328,512 = Kshs. 3,942,144/=.
  2. 2.Respondent to pay service pay at half month's salary for each year worked, i.e. 1/2 x 328,851 x 3 years = Kshs. 492,768/=.
  3. 3.Total award of Kshs. 4,434,912/= less statutory deductions.
  4. 4.The Claimant be issued with a Certificate of Service.
  5. 5.The Respondent will pay costs of this suit.
  6. 6.Counterclaim dismissed (no evidence the Claimant used office money for his own use).

Authorities

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Legislation

  • Employment Act, 2007Section 41
  • Employment Act, 2007Section 42
  • Employment Act, 2007Section 43(1) and (2)
  • Employment Act, 2007Section 44(2), (3) and (4)
  • Employment Act, 2007Section 45(2) and 45(4)(b)
  • Employment Act, 2007Section 51
  • Constitution of Kenya, 2010Article 50(1)
  • Industrial Court (Procedure) Rules, 2010on exemplary or punitive damages

Cases cited (6)

  • Mary Chemweno Kiptui vs. Kenya Pipeline Company Limited
    [2014] eKLR
  • Ajusa Magomere vs. Kenya Nut Company Limited
  • Abraham Gumba vs. Kenya Medical Supplies Authority
  • Emily Muhonja vs. Ken-Knot (K) Limited
    [2016] eKLR
  • Walter Ogal Anuro vs. Teachers Service Commission
    (2013) eKLR
  • Linus Barasa Odhiambo vs. Wells Fargo Limited
    Industrial Cause No 275 of 2012
Jurisdiction invoked
Employment and labour relations dispute before the Industrial Court pursuant to Article 162(2) of the Constitution and the Employment Act 2007 (Sections 41, 42, 43, 44, 45 and 51 considered)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Fredrick Kibwana Elabonga v Build Africa Kenya [2016] KEELRC 588 (KLR)", Case Analysis (2016). Industrial Cause (Statement of Claim dated 23rd November 2012 - number not stated in judgment). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2016/588/eng@2016-09-21

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