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ELRCPartially AllowedCause No. 572 of 2011· [2016] KEELRC 1243 (KLR)

Henry Ondari v Top Security Systems Ltd [2016] KEELRC 1243 (KLR)

Employment and Labour Relations Court of Kenya at Nairobi
24 March 2016
MMM. Mbaru
4,191 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 that even with proper notice, an employer must still hear an employee before termination, or the dismissal is unfair.

What this practically means

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Executive summary

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The claimant, an accountant employed by the respondent since 2005 at a gross salary of Kshs.65,426.00, was terminated on 21 October 2010 following a dispute in which he paid terminal dues of Kshs.14,000.00 to an employee of the respondent's sister company, Doughnut Ltd, for 10 days where the managing director, Mr Arusi, contended only 9 days were due. A shouting match ensued; the respondent issued a letter of termination with one month's notice and paid Kshs.100,000.00 on account of terminal dues, leaving a disputed balance. The claimant sought compensation for unfair termination, service pay, unpaid leave, October salary, loss of income to retirement age, loss of earning capacity and incorporeal loss for alleged assault. The respondent defended the termination as lawful, alleging the claimant failed to work diligently, demanded to be released, and later moonlighted for rival company Leading Locks Ltd, sharing business secrets, including diverting a Safaricom tender. The court held that under sections 41 and 43 of the Employment Act the burden lay on the employer to prove genuine reasons and to afford a hearing even where notice is given; since no hearing was accorded, the termination was procedurally unfair under section 45. The moonlighting evidence, not being the reason for termination and un-counterclaimed, went to compensation and remedies. Loss of income and lost earnings claims failed as the claimant served the notice and did not rebut the disloyalty evidence; service pay was denied because statutory deductions had been made. Unpaid leave of Kshs.80,512.00 and October salary of Kshs.47,960.00 were confirmed, and compensation of six months' gross pay (Kshs.329,556.00) was awarded, less Kshs.100,000.00 already paid, subject to section 49(2) of the Employment Act, with costs to the claimant.

Key legal issues

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01

Procedural fairness under section 41 of the Employment Act

Holding

The termination was procedurally unfair because the Respondent did not afford the Claimant a hearing before termination, despite issuing one month's notice.

Reasoning

Although the Respondent issued 30 days' notice and alleged a misunderstanding and overpayment as reasons, section 41 requires a hearing of the employee's defence even where notice is issued. The section is mandatory; no hearing or modalities for one (policy or HR manual) were shown. The requirement safeguards natural justice at the shop floor. Its breach rendered the termination procedurally unfair under section 45, entitling the Claimant to compensation.

p. 6
02

Burden of proof on reasons for termination (section 43)

Holding

The reasons at the time of termination were the misunderstanding and overpayment; grounds arising later (moonlighting) cannot justify the termination.

Reasoning

Section 43 requires the employer to prove reasons that genuinely existed at the time of termination. The termination letter cited a misunderstanding and overpayment of salary. The later-discovered moonlighting for Leading Locks Ltd was not the reason for termination, and the Respondent neither counter-claimed for business losses nor sought any remedy on that basis. The court however took the moonlighting evidence into account in assessing compensation and in rejecting lost earnings claims.

p. 6
03

Whether the process of termination was mutual (resignation by the Claimant)

Holding

The termination was not mutual; it was the Respondent who terminated the Claimant despite his angry offer to leave.

Reasoning

The Respondent argued the Claimant demanded to be let go. The court found that although in temper the Claimant asked to be terminated, he did not resign or retire; the termination letter was authored by the Respondent and issued on 21 October 2010. The process was therefore an employer-initiated termination subject to the Employment Act's procedural requirements, not a consensual parting.

p. 6
04

Loss of income and lost earnings claims

Holding

These claims failed because the Claimant was given notice which he served and did not challenge, and the moonlighting evidence was unrebutted.

Reasoning

Notice of 30 days was lawful under section 35 of the Employment Act and was not challenged, defeating claims premised on premature dismissal before retirement age. Further, the Claimant secured new employment and did not rebut the defence evidence that he worked for rival Leading Locks Ltd and shared business secrets contrary to his contract. The court treated this as grave and disqualifying of lost earnings claims.

p. 7

Legal principles established

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  • The procedural fairness requirements of section 41 of the Employment Act are mandatory and must be followed even where the employer issues a termination notice or alleges gross misconduct; failure to hear the employee renders the termination procedurally unfair contrary to section 45.
  • The burden lies on the employer to prove genuine reasons for termination at the time of termination under section 43 of the Employment Act.
  • Where an employer fails to hear the employee or set modalities (such as a human resource manual) to ensure a hearing before termination, the employer is exposed to unfair termination claims.

Court orders

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  1. 1.A declaration that the termination was procedurally unfair
  2. 2.Compensation for unfair termination awarded at Kshs.329,556.00 (6 months' pay at gross salary Kshs.65,426.00)
  3. 3.Unpaid leave awarded at Kshs.80,512.00
  4. 4.Salary due for October 2010 awarded at Kshs.47,960.00
  5. 5.Amounts due to be paid less Kshs.100,000.00 already paid and acknowledged as part-payment of terminal dues
  6. 6.Monies paid to the Claimant to be subject to the provisions of section 49(2) of the Employment Act
  7. 7.Costs awarded to the claimant

Authorities

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Legislation

  • Employment Actsection 41
  • Employment Actsection 43
  • Employment Actsection 45
  • Employment Actsection 35 (including 35(5) and 35(6))
  • Employment Actsection 28
  • Employment Actsection 49(2)

Cases cited (5)

  • Hivac limited versus Park Royal Scientific Instruments Limited
    (1994) 1 AER
  • Kenya Union of Commercial Food and Allied Workers versus Meru North Farmers Sacco Limited
    [2014] eKLR
  • Henry Njenga versus Shell Chemicals Co. of Eastern Africa
    HCCC No.1077 of 1991
  • Anthony Mulaki versus Addax Kenya limited
    Cause No.822 of 2012
  • Alphonse Maghanga versus Operations 680 Ltd
    Cause No.146 of 2012
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under Article 162(2) of the Constitution over employment and labour relations disputes (dispute over termination of employment under 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 (4)

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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, "Henry Ondari v Top Security Systems Ltd [2016] KEELRC 1243 (KLR)", Case Analysis (2016). Cause No. 572 of 2011. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2016/1243/eng@2016-03-24

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