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ELRCPartially AllowedCause No. 159 of 2014· [2017] KEELRC 1977 (KLR)

Levy Muzuni Chadiki v Wells Fargo Limited [2017] KEELRC 1977 (KLR)

Industrial Court of Kenya
22 September 2017
MOMaureen Onyango
3,063 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 a security guard's dismissal for criminal charges was unfair, awarding him over Kshs.317,000 because his employer failed both fair process and valid reasons.

What this practically means

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Executive summary

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The Claimant, a guard employed by the Respondent security firm since 1993, was summarily dismissed after a disciplinary hearing into allegations that stolen property taken from Crown Bus Company's Bungoma office was found in his house and that he had handled stolen property. He was charged in Bungoma Criminal Case No. 1826 of 2013 and acquitted. He claimed his dismissal and withholding of dues were unlawful, and sought terminal dues of Kshs.174,510, reinstatement or damages, and costs. The Respondent maintained the dismissal was for gross misconduct following due process. The court found that for termination to be fair, the employer must prove both procedural and substantive fairness under sections 41 and 43 of the Employment Act. On substance, the charges did not fall within section 44(4)(f) or (g) as they did not relate to the Respondent's property or cause it substantial detriment, and unproved criminal charges cannot ground dismissal given the constitutional presumption of innocence, later confirmed by the acquittal. On procedure, the Claimant and his co-accused were interrogated separately and thus could not hear and controvert each other's evidence; an interrogation is not a hearing; and the shop steward, unknown to the Claimant, made no representations for him. The dismissal was therefore unfair both procedurally and substantively. The court awarded notice pay of Shs.11,634, salary arrears of Shs.20,941.20, 14 days' leave pay of Shs.5,429, gratuity of Shs.139,608 for 20 years' service under the Regulation of Wages (Protective Security Services) Order, and maximum compensation of 12 months' salary of Shs.139,608, totalling Kshs.317,220.20, plus costs. Reinstatement was not pursued as the Claimant did not wish to return to employment. Dated and delivered at Kisumu on 22nd September 2017 by Hon. Lady Justice Maureen Onyango.

Key legal issues

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01

Whether the criminal charge against the Claimant constituted a valid reason for summary dismissal

Holding

No valid reason existed: the charges did not involve the Respondent's property or cause it any detriment, and the Claimant's subsequent acquittal confirmed his innocence.

Reasoning

Section 44(4)(f) and (g) permit summary dismissal only where an employee is held in custody beyond 14 days or commits/is reasonably suspected of committing a criminal offence against or to the substantial detriment of the employer. The alleged handling of stolen property occurred at the Claimant's home, involved third-party property (Crown Bus), and the Respondent suffered no loss. The presumption of innocence also forecloses dismissal on unproved charges, and the Claimant was in fact acquitted.

p. 5
02

Whether the disciplinary hearing complied with section 41 of the Employment Act

Holding

The hearing was procedurally unfair: the Claimant was interrogated rather than heard, was not confronted with or allowed to controvert his co-accused's evidence, and the shop steward could not represent him as he did not know him.

Reasoning

Section 41 requires the employer to explain the reasons for termination and to hear and consider the employee's representations with a representative of his choice. The Claimant and Kapchanga were interrogated separately, so neither could respond to the other's evidence, which was then used to condemn them. The unknown shop steward made no representations on the Claimant's behalf, confirming the failure of fair procedure.

p. 5
03

What remedies flow from the unfair and unlawful dismissal

Holding

The Claimant was awarded notice pay, accrued salary, unpaid leave, gratuity under the Regulation of Wages (Protective Security Services) Order, and the maximum 12 months' compensation for unfair termination.

Reasoning

Notice pay, salary arrears and untaken leave were earned entitlements with no evidence of payment. Gratuity accrues under the Protective Security Services Order notwithstanding NSSF membership. Compensation was set at the statutory maximum of 12 months' gross salary given 20 years of service, a clean disciplinary record, and the unfairness of the termination.

p. 5

Legal principles established

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  • For termination of employment to be fair, the employer must prove both procedural fairness under section 41 and substantive fairness under section 43 of the Employment Act.
  • Unproved criminal charges cannot found a dismissal; an employee is constitutionally presumed innocent until proved guilty.
  • Summary dismissal under section 44(4)(f) and (g) requires the offence to relate to the employer or the employer's property or substantial detriment to the employer.
  • An interrogation is not a hearing; an employee must be allowed to hear and controvert evidence used against him, including evidence from a co-accused.
  • Gratuity for a protective security services employee is payable under the Regulation of Wages (Protective Security Services) Order regardless of NSSF membership.

Court orders

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  1. 1.A declaration that the summary dismissal of the Claimant was unfair both procedurally and substantively
  2. 2.An award to the Claimant of Kshs.317,220.20 comprising one month's salary in lieu of notice (Shs.11,634), salary up to the date of dismissal less Shs.2,752 paid (Shs.20,941.20), 14 days leave for 2013 (Shs.5,429), gratuity at 18 days pay per year for 20 years (Shs.139,608) and maximum compensation of 12 months' salary (Shs.139,608)
  3. 3.The Respondent to pay the Claimant's costs

Authorities

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Legislation

  • Employment Actsection 41(1) and (2)
  • Employment Actsection 43(1) and (2)
  • Employment Actsection 44
  • Employment Actsection 44(4)(f) and (g)
  • Employment Actsection 45
  • Penal Codesection 268(1)
  • Regulation of Wages (Protective Security Services) Ordergratuity at 18 days per year worked with a qualifying period of 5 years service
  • Constitution of Kenyapresumption of innocence
  • Employment Act 2007 (as referenced in disciplinary minutes)f & g

Cases cited (7)

  • Nicholas Otingu Muruka v Equity Bank Limited
    [2013] eKLR
  • Banking Insurance Finance Union (Kenya) v Consolidated Bank of Kenya Limited
    [2014] eKLR
  • Onesmus Omwenga Maroko v Co-operative Bank of Kenya
    [2013] eKLR
  • Ismail Hassan Abdullahi v Kenya Ports Authority
    [2013] eKLR
  • Metah Mzee v SDV Transami t/s Bollore Logistics Kenya Ltd
    [2013] eKLR
  • Sophia Wanjiku Ngugi v Saida Ali & 2 Others
    [2013] eKLR
  • Fulgence Sunza Masai v Kenya Revenue Authority
    [2014] eKLR
Jurisdiction invoked
Employment and labour relations jurisdiction under the Industrial Court Act (unfair and wrongful termination claim under the Employment Act)

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, "Levy Muzuni Chadiki v Wells Fargo Limited [2017] KEELRC 1977 (KLR)", Case Analysis (2017). Cause No. 159 of 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2017/1977/eng@2017-09-22

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