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ELRCPartially AllowedCause 1016 of 2011 (statement of claim dated 1st September 2011)· [2018] KEELRC 1311 (KLR)

Patrick Isinga Amugune & another v Mumias Sugar Company Limited [2018] KEELRC 1311 (KLR)

Industrial Court of Kenya (Employment and Labour Relations Court)
30 July 2018
MOMaureen OnyangoMNMathews Nderi Nduma
1,217 words in judgment
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The bottom line

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Mumias Sugar was ordered to pay two dismissed employees nearly a year's salary each because it fired them without a proper hearing or stated reasons.

What this practically means

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Executive summary

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Two long-serving employees of Mumias Sugar Company Limited - Patrick Isinga Amugune (employed 1993, rising to supervisor of the Nairobi godown) and Sophie Nechesa Wabuyabu (employed 1994, rising to warehouse supervisor) - sued claiming that their employment was unfairly terminated. Both were arrested in May 2009 and charged with stealing a banker's cheque of Kshs.7 million belonging to a customer; they were issued show cause letters, responded to them, and were then terminated by letters dated 1st July 2009, served on 17th July 2009. They were later acquitted in Butere Resident Magistrate's Criminal Case No. 433 of 2009 on 26th November 2010. They sought a declaration that the termination was unfair and unlawful, salary arrears for 84 months, reinstatement (later abandoned) and costs. The respondent filed written submissions but called no evidence, contending that due process under Sections 41 and 42 of the Employment Act was followed and the termination was justified under Section 44(4)(g). The court held the termination letters gave no reasons, breaching Section 43, and that the claimants were never called for a disciplinary hearing, breaching Section 41; the termination was therefore unfair under Section 45(2). Under Section 49, the court awarded each claimant maximum compensation of 12 months' gross salary - Kshs.922,793.40 to the 1st claimant and Kshs.915,728.40 to the 2nd claimant - declining the 84-month claim. The respondent was ordered to bear the claimants' costs, and interest was awarded on the decretal sum from the date of judgment.

Key legal issues

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01

Procedural fairness of termination

Holding

Termination was procedurally unfair because the claimants were not called for a disciplinary hearing despite responding to show cause letters.

Reasoning

Section 41 of the Employment Act requires an employee be given an opportunity to be heard before termination. Issuing show cause letters and receiving responses is not sufficient; the employer must convene a disciplinary hearing. The respondent called no evidence, so no proof of a hearing existed. The termination therefore fell short of the fair procedure required by Section 41.

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02

Substantive validity of reasons for termination

Holding

The termination letters gave no reasons, violating Section 43, rendering the termination substantively unfair under Section 45(2).

Reasoning

Section 43 obliges the employer to prove valid reasons for termination. The termination letters merely notified termination with effect from 17th July 2009 without stating any reason. The respondent called no witnesses to justify the termination. Combined with the procedural failure, the court found the termination unfair both procedurally and substantively and declared it so.

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03

Remedies for unfair termination

Holding

Each claimant awarded maximum compensation of 12 months' gross salary under Section 49, given 16 and 15 years of service.

Reasoning

The claimants sought 84 months' salary arrears but Section 49 caps compensation at 12 months' salary. Considering their long service of 16 and 15 years and the finding of both procedural and substantive unfairness, the court exercised discretion under Section 49 to award the maximum of 12 months' gross salary to each claimant. Reinstatement was treated as abandoned, and the 84-month claim was reduced accordingly.

p. 3

Legal principles established

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  • Termination without a disciplinary hearing, even where show cause letters were issued and answered, breaches Section 41 of the Employment Act and is unfair under Section 45(2).
  • A letter of termination that gives no reason fails the substantive justification requirement of Section 43 of the Employment Act.

Court orders

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  1. 1.Declaration that the termination of employment of the claimants by the respondent was unfair
  2. 2.Award to Patrick Isinga Amugune of KSHS.922,793.40/= being maximum compensation of 12 months gross salary
  3. 3.Award to Sophie Nechesa Wabuyabu of KSHS.915,728.40/= being maximum compensation of 12 months gross salary
  4. 4.Respondent to bear the claimants' costs
  5. 5.The decretal sum shall accrue interest from the date of judgment

Authorities

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Legislation

  • Penal CodeSection 275
  • Penal CodeSection 353
  • Employment Act, 2007Section 41
  • Employment Act, 2007Section 42
  • Employment Act, 2007Section 43(1)
  • Employment Act, 2007Section 44(4)(g)
  • Employment Act, 2007Section 45(2)
  • Employment Act, 2007Section 49

Cases cited (1)

  • ANNE ATIENO OMAM -V- WESTERN EDUCATION ADVOCACY AND EMPOWERMENT PROGRAM (WEAEP)
    Cause 261 of 2010
Jurisdiction invoked
Jurisdiction over unfair termination claims under the Employment Act, 2007 (Sections 41, 43, 45(2) and 49)

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, "Patrick Isinga Amugune & another v Mumias Sugar Company Limited [2018] KEELRC 1311 (KLR)", Case Analysis (2018). Cause 1016 of 2011 (statement of claim dated 1st September 2011). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2018/1311/eng@2018-07-30

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