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ELRCPartially AllowedCause No. 342 of 2015· [2016] KEELRC 1242 (KLR)

Jason Mogaka Otiso v Shadrack Obuga Mukanda [2016] KEELRC 1242 (KLR)

Employment and Labour Relations Court of Kenya at Nairobi
7 April 2016
MMM. Mbaru
3,481 words in judgment
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The bottom line

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A Kenyan court ruled that denying an employee's existence doesn't defeat their claim; employers who withhold records and wages face heavy penalties.

What this practically means

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Executive summary

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The Claimant, a security guard, sued the Respondent alleging wrongful and unfair termination and non-payment of terminal dues. He claimed notice pay, leave, salary arrears, service pay, underpayments contrary to the applicable Wage Order, house allowance and 12 months' compensation. The Respondent denied employing the Claimant, asserting the claim disclosed no case and that the Claimant deserted duty while drunk, warranting summary dismissal under section 44 of the Employment Act. The court found the Respondent's denial dishonest and a sham, noting the employer was the custodian of work records which it failed to produce. Invoking section 20(4) of the Employment and Labour Relations Court Act, the court required Ufundi Sacco to furnish records, which confirmed the Respondent deposited the Claimant's salary. The court held an employment relationship existed; that any dismissal or forced resignation without compliance with the mandatory section 41 procedural requirements was unfair, amounting to constructive termination and an unfair labour practice; and that non-payment of wages violated the Claimant's constitutional rights to a livelihood and dignity. The Regulation of Wages (Protective Security Service) Order, 1998 applied, and underpayments were awarded unchallenged. Judgment was entered for the Claimant with awards totalling over Kshs.300,000, including Kshs.100,000 damages representing the statutory fine under section 25 of the Employment Act for wrongful wage withholding, a Certificate of Service within 14 days, and referral of the Respondent's malpractices to the Commissioner for Labour for investigation. The judgment was delivered by M. Mbaru, J on 7 April 2016.

Key legal issues

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01

Existence of employment relationship

Holding

An employment relationship existed between the Claimant and the Respondent

Reasoning

The Claimant's evidence and that of his supervisor confirmed employment; salary deposits by the Respondent were confirmed by Ufundi Sacco; the Claimant wore the Respondent's uniform and worked under its supervision, control and management for a monthly salary. The Respondent's director's denial was found dishonest and a sham.

p. 4
02

Procedural fairness in summary dismissal

Holding

The Respondent did not comply with mandatory section 41 procedures before dismissal

Reasoning

Allegations of drunkenness and desertion warranted warnings or summary dismissal subject to section 41(2) requirements of a hearing. The Respondent conceded no hearing or warning was given. Non-payment of wages also rendered any resignation a constructive termination amounting to unfair labour practice.

p. 4
03

Application of Wage Orders and underpayment

Holding

The Regulation of Wages (Protective Security Service) Order, 1998 applied and underpayments were due

Reasoning

The Respondent's witness confirmed the Respondent engaged in security services; the Wage Orders apply to persons employed in guarding and escort services. The underpayment claims were unchallenged and therefore awarded in full.

p. 4
04

Penalty for withholding wages

Holding

The Respondent's withholding of due salaries warranted the statutory penalty under section 25 of the Employment Act, awarded as damages

Reasoning

Section 25 prescribes a fine not exceeding Kshs.100,000 or imprisonment for breach of the Part on wages. The court, under section 12 of the ELRC Act and the Claimant's general prayer, converted the fine payable into damages of Kshs.100,000 payable to the Claimant.

p. 5

Legal principles established

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  • The employer is the custodian of work records and failure to produce them where the employment relationship is challenged disadvantages the employer
  • Procedural fairness under section 41 of the Employment Act is mandatory even in cases of gross misconduct warranting summary dismissal
  • A resignation induced by the employer's failure to pay wages amounts to constructive termination and is an unfair labour practice
  • The court may invoke section 20(4) of the Employment and Labour Relations Court Act to compel production of records where a party withholds documents in its custody to defeat justice

Court orders

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  1. 1.Declaration that the termination of the Claimant's employment was procedurally unfair
  2. 2.Compensation of Kshs.97,800.00 (10 months gross pay)
  3. 3.Damages of Kshs.100,000.00 for wrongful withholding of salaries
  4. 4.Notice pay of Kshs.9,780.00
  5. 5.Salary for 11 days worked in June 2014 of Kshs.3,586.00
  6. 6.Service pay of Kshs.4,890.00
  7. 7.Underpayment of Kshs.52,931.00
  8. 8.House allowance of Kshs.41,079.00
  9. 9.The Respondent to issue the Claimant a Certificate of Service within 14 days
  10. 10.The Registrar to serve the Commissioner for Labour with the judgment for investigations of the Respondent's malpractices

Authorities

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Legislation

  • Employment Actsections 18(2), 18(4), 18(5), 25(1), 28, 35, 41, 41(2), 44, 73, 74
  • Employment and Labour Relations Court Actsections 12, 20(4)
  • The Regulation of Wages (Protective Security Service) Order, 1998Wages Orders

Cases cited (3)

  • Christine Adot Lopeiyio versus Wycliffe Pere
    Cause No.1688 of 2012
  • Kenya Union of Commercial Food and Allied Workers versus Meru North Farmers Sacco Limited
    [2014] eklr
  • Henry Ondari versus Top Security Systems Limited
    Cause No.572 of 2011
Jurisdiction invoked
Section 12 of the Employment and Labour Relations Court Act read together with section 20(4) of that Act and the Employment Act

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (6)

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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, "Jason Mogaka Otiso v Shadrack Obuga Mukanda [2016] KEELRC 1242 (KLR)", Case Analysis (2016). Cause No. 342 of 2015. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2016/1242/eng@2016-04-07

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