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ELRCPartially AllowedNot stated in judgment· [2017] KEELRC 1826 (KLR)

Justus A. M. Sigah v Jumbo Savings & Credit Co-Operative Society Limited [2017] KEELRC 1826 (KLR)

Employment and Labour Relations Court
1 February 2017
2,766 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 awarded a SACCO employee nearly Kshs. 1 million because his employer couldn't prove a consistent, lawful reason for firing him.

What this practically means

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Executive summary

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The Claimant, employed by the Respondent SACCO from 2008 as an office assistant and rising to Operations Officer, was suspended on 31 January 2014 for allegedly fraudulently withdrawing Kshs.50,000/= in excess of authorised amounts, and received a termination letter dated 31 March 2014 which he received on 9 June 2014. He sued for damages for unfair and unlawful termination, contending he was never given a fair hearing or paid terminal dues. The Respondent maintained that a valid reason existed (the fraudulent withdrawal and prior warnings), that due process was followed through a management committee meeting of 7 February 2014, and counterclaimed for a refund of Kshs.108,883/= allegedly overpaid as gratuity. The Court framed four issues: valid reason, due process, the counter-claim, and remedies. It found the termination letter omitted any reason for termination, and that the Respondent's own documents were contradictory - referring both to the failure to re-bank Kshs.50,000/= and to the Claimant's 'retrenchment' - while the minutes of the Joint Board Meeting of 14.2.2014 were never produced. No disciplinary hearing was demonstrated, and if the termination was by redundancy, none of the Section 40(1) conditions were met. Termination was therefore unfair under Section 45(2). The counter-claim failed because the promised service pay was never paid; on the Respondent's own Policy Manual the Claimant remained owed money. The Court awarded the equivalent of 12 months' salary (Kshs.660,660/=), 52 days' leave pay (Kshs.95,429/=) and salary from May to 9 June 2014 (Kshs.110,110/=), totalling Kshs.977,536/= less statutory deductions, plus costs and interest from the date of judgment. The counter-claim was dismissed.

Key legal issues

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01

Whether there was a valid reason for termination

Holding

No valid reason was established; the Respondent's documents gave contradictory reasons (misconduct for failing to re-bank Kshs.50,000/= versus retrenchment/redundancy) and the minutes of the meeting of 14.2.2014 were not produced

Reasoning

The termination letter omitted the reason for termination and referred only to the suspension letter alleging failure to re-bank Kshs.50,000/=. The Respondent's own minutes of 7.2.2014 referred to the Claimant's 'retrenchment', suggesting redundancy. The minutes of the Joint Board Meeting of 14.2.2014 relied on in the termination letter were not produced. The Court therefore found the reasons contradictory and no valid reason proved under Section 43.

p. 4
02

Whether due process was followed before termination

Holding

No due process was followed; there was no disciplinary hearing, no show cause or invitation letter, and no compliance with Section 40(1) if the termination was by redundancy

Reasoning

Section 41 requires an employer to explain the reasons for termination and hear representations before dismissing for misconduct. The only meeting referred to was a Joint Board Meeting of 14.2.2014 with no evidence the Claimant was subjected to a disciplinary process. If the termination was for redundancy, none of the conditions in Section 40(1) - notification of the labour officer, seniority-based selection, one month's notice and severance pay compliance - were met.

p. 5
03

Whether the Counter-Claim for refund of Kshs.108,883/= overpayment was proved

Holding

Counter-claim dismissed; no overpayment arose

Reasoning

The discharge voucher showed payment of gratuity of Kshs.108,883/= in lieu of the promised service pay. Even assuming gratuity was not payable, the Respondent's own Personnel Policy Manual entitled the Claimant to 20 days' salary per year worked, which when computed (20/30 x 55,055 x 6 = 220,220/= less 108,883/= paid) still left the Claimant owed Kshs.111,337/=. The alleged overpayment therefore did not arise.

p. 6

Legal principles established

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  • The employer bears the burden of proving the reason for termination; failure to do so renders the termination unfair
  • Where the employer's own documents give contradictory reasons for termination, no valid reason is established
  • Termination on grounds of redundancy requires strict compliance with Section 40(1) of the Employment Act

Court orders

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  1. 1.Declaration that the termination of the Claimant was unfair and unjustified under Section 45(2) of the Employment Act
  2. 2.Award of 12 months' salary as compensation for unfair termination (Kshs. 660,660/=)
  3. 3.Payment for 52 days leave (Kshs. 95,429/=)
  4. 4.Salary for May to 9th June 2014 (Kshs. 110,110/=)
  5. 5.Total award of Kshs. 977,536/= less statutory deductions
  6. 6.Costs and interest running from the date of judgment
  7. 7.Dismissal of the Respondent's Counter-Claim

Authorities

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Legislation

  • Employment Act, 2007Section 41
  • Employment Act, 2007Section 42
  • Employment Act, 2007Section 43
  • Employment Act, 2007Section 45(2)
  • Employment Act, 2007Section 40(1)

Cases cited (1)

  • Frederick Were Vs MK. Jeffery’s Hauliers
    (2013) eKLR
Jurisdiction invoked
Employment Act, 2007 (Sections 40, 41, 42, 43, 45) - unfair termination claim and counterclaim

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, "Justus A. M. Sigah v Jumbo Savings & Credit Co-Operative Society Limited [2017] KEELRC 1826 (KLR)", Case Analysis (2017). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2017/1826/eng@2017-02-10

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