Thomas Babu Mwaniki v Nassefu Co-operative Savings & Credit Society Limited [2016] KEELRC 986 (KLR)
The bottom line
#A Kenyan court ruled that even a CEO blamed for huge financial losses must be given a hearing before dismissal, or the dismissal is unfair.
What this practically means
#Executive summary
#Key legal issues
#Whether the claim was time barred under Section 90 of the Employment Act 2007
The claim was not time barred because the applicable law at the time of dismissal (November 2007) was the repealed Employment Act, with limitation governed by the Limitation of Actions Act (Cap 22) providing 6 years for contract claims; a claim filed in 2011 was within time.
The Claimant was dismissed on 5 November 2007, before the Employment Act 2007 came into force on 2 June 2008. The repealed Act had no limitation period; Cap 22 provided a 6-year limitation for contract claims. The claim, filed in November 2011, fell within that period, so the Respondent's limitation objection under Section 90 of the 2007 Act failed. The 2007 Act could not apply retrospectively.
Whether there were valid reasons to terminate the Claimant's services
Yes. The Respondent proved valid reasons: as Chief Executive Officer, the Claimant was culpable for the massive financial losses (Kshs. 19,987,915.48) incurred through fraud during his tenure, having been found to have authorised payment of full salary to a suspended employee and to have kept open a closed account for fictitious transactions.
Under Section 45(2) of the Employment Act the employer must prove that the reason for termination is valid and fair. The Claimant, as CEO of the Respondent, was responsible for safeguarding its resources, and losses of Kshs. 19,987,915.48 occurred under his watch following an inquiry by the Commissioner for Co-operative Development. His whistle-blower claim did not absolve him as he was directly implicated in dealings with a fraudulent account.
Whether due process was followed before the Claimant's dismissal
No. Although the then Employment Act did not mandatorily require a hearing, the general rules of natural justice still applied and the Claimant ought to have been heard before dismissal; this was ignored.
The court held that notwithstanding the absence of a statutory hearing requirement under the then-applicable repealed Employment Act, the rules of natural justice required that the employee be afforded an opportunity to be heard before dismissal. The Respondent's failure to hear the Claimant meant the dismissal was procedurally unfair and unjust, entitling him to relief despite the validity of the substantive reasons.
Legal principles established
#- Where the cause of action pre-dates the Employment Act 2007 (in force 2 June 2008), the repealed Employment Act applies, which had no limitation period, and limitation is governed by the Limitation of Actions Act (Cap 22) providing 6 years for contract claims.
- An employer must prove valid reasons for termination under Section 45(2) of the Employment Act; gross financial losses occurring under a Chief Executive Officer's watch constitute a valid reason for dismissal.
- Even where the then-subsisting Employment Act did not mandatorily require a hearing before termination, the general rules of natural justice required that the employee be heard before dismissal; failure to hear the employee renders the dismissal unfair.
Court orders
#- 1.1 month's salary in lieu of notice of Kshs. 87,862.50
- 2.Unpaid salary for July to October 2007 of Kshs. 351,450
- 3.Leave for 2007 of Kshs. 52,618.50
- 4.Total of Kshs. 491,930 less loan of Kshs. 274,075, leaving a balance of Kshs. 217,853 payable to the Claimant
- 5.Costs to the Claimant
- 6.Counter-claim dismissed
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction over employment disputes; claim filed under the Employment Act regime
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (1)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Danson Mbubi Mutabi v Konza Ranching & Farming Co-operative Society Limited [2018] KEELRC 273 (KLR)[2018] KEELRC 273 (KLR)20 Dec 2018
Cite this brief
#Cite this brief
Caselaw, "Thomas Babu Mwaniki v Nassefu Co-operative Savings & Credit Society Limited [2016] KEELRC 986 (KLR)", Case Analysis (2016). Cause No. 1911 of 2011. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2016/986/eng@2016-06-28
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.