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ELRCPartially AllowedCause No. 633 of 2014· [2016] KEELRC 1387 (KLR)

Cleophas Odoyo v Toyota Kenya Limited (Cause 633 of 2014) (Employment and Labour) [2016] KEELRC 1387 (KLR)

Employment and Labour Relations Court of Kenya
31 March 2016
HWHellen S. Wasilwa
2,895 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 ruled Toyota Kenya fairly had grounds to fire an accountant, but firing him the same day without a proper hearing made the dismissal unlawful.

What this practically means

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Executive summary

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The Claimant, employed by Toyota Kenya Limited from 2.9.2011 and promoted to Assistant Accountant, was summarily dismissed on 10.2.2014 following discovery of fraudulent electronic payments totalling about Kshs.3.52 million transferred from the company's Citibank platform to wrong accounts. He claimed the payments were traced to his electronic card code but that he only admitted one wrongful payment of Kshs.417,600/= made in genuine error. He alleged he was denied documents, hurried through a same-day disciplinary process, and discriminated against among four persons who handled the transactions. He sought reinstatement, terminal benefits, Certificate of Service, pension refund, NSSF remittance, compensation and costs. The Respondent justified dismissal under Section 44 of the Employment Act 2007 as summary dismissal for fraud by an employee in a position of trust. The court framed three issues: valid reasons, due process, and remedies. It found valid reasons existed since the admitted wrongful posting of Kshs.417,600/= was conduct incompatible with the Claimant's role. However, the disciplinary hearing was convened in a hurried manner, with no summons letter and dismissal on the same day, breaching Section 41 of the Employment Act and Article 50 of the Constitution. The dismissal was therefore procedurally unfair. The court awarded three months' salary as compensation, eight days' salary, one month's notice pay, uncontroverted leave balance, the Certificate of Service and costs. Reinstatement and declarations of discrimination were not granted, and pension/NSSF claims were not separately ordered.

Key legal issues

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01

Whether there were valid reasons to warrant termination of the Claimant

Holding

Valid reasons existed: the admitted wrongful posting of Kshs.417,600/= was a fair reason related to the Claimant's conduct incompatible with his role as Assistant Accountant

Reasoning

The Respondents pleaded summary dismissal under Section 44 of the Employment Act on grounds of fraud involving about Kshs.3.5 million. The Claimant admitted one wrongful payment of Kshs.417,600/= made in error but denied the others. Under Section 45(2) the employer had to prove a valid, fair reason. The court found the admitted conduct incompatible with the duties of an Assistant Accountant and therefore a valid and fair reason for termination.

p. 4
02

Whether due process was followed in the termination

Holding

Procedural fairness was breached; the dismissal was unfair despite valid grounds

Reasoning

Section 41 requires an employer to explain the reasons for termination and hear the employee's representations before dismissal. The Claimant was summoned and dismissed on the same day, 10.2.2014, without being supplied with documents or adequate notice of the disciplinary hearing. The court found this hurried process offended Article 50 of the Constitution and Section 45(2)(c), rendering the dismissal procedurally unfair.

p. 6
03

Whether the Claimant is entitled to the remedies sought

Holding

Partially; compensation of 3 months' salary, 8 days' salary, one month's notice pay, leave balance, Certificate of Service and costs were awarded; reinstatement and declarations were not granted

Reasoning

Having found the dismissal unfair on procedure but justified on substance, the court awarded compensation under the Employment Act rather than reinstatement. It also awarded salary for the period between dismissal and receipt of the dismissal letter, notice pay and uncontroverted leave balance, and ordered issuance of the Certificate of Service.

p. 6

Legal principles established

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  • The burden of justifying the grounds for termination of employment rests on the employer under Section 47(5) of the Employment Act
  • A fair hearing requires the employee to understand the charge and be accorded resources and time to answer the charges
  • A hurried disciplinary process convened the same day the employee is summoned offends the purpose of a disciplinary hearing and is procedurally unfair under Section 45(2)(c)

Court orders

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  1. 1.3 months salary as compensation for unfair termination (Kshs. 247,950/=)
  2. 2.Salary for 8 days from 10.2.2014 to 18.2.2014 (Kshs. 22,040/=)
  3. 3.1 month salary in lieu of notice (Kshs. 82,650/=)
  4. 4.Leave balance as pleaded and not contested (Kshs. 36,525.97/=)
  5. 5.Issuance of Certificate of Service in terms of the Employment Act 2007
  6. 6.Costs of the case

Authorities

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Legislation

  • Employment Act 2007Section 44(3) and 44(4)(c) and (g)
  • Employment Act 2007Section 47(5)
  • Employment Act 2007Section 45(2)
  • Employment Act 2007Section 41
  • Constitution of Kenya 2010Article 50
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over unfair termination and wrongful dismissal claims 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, "Cleophas Odoyo v Toyota Kenya Limited (Cause 633 of 2014)  (Employment and Labour) [2016] KEELRC 1387 (KLR)", Case Analysis (2016). Cause No. 633 of 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2016/1387/eng@2016-03-31

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