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ELRCPartially AllowedCause No. 351 of 2015· [2018] KEELRC 1394 (KLR)

James Norman Maloba Wandera v Harambee Co-operative Savings & Credit Society Limited [2018] KEELRC 1394 (KLR)

Employment and Labour Relations Court of Kenya
19 July 2018
1,983 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 awarded a Sacco CEO Kshs. 7.9 million after ruling his dismissal unfair because the employer proved no valid reason and followed no fair procedure.

What this practically means

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Executive summary

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The claimant, former Chief Executive Officer/General Manager of Harambee Co-operative Savings & Credit Society Limited, sued for unpaid salary and compensation after he was forced out of his office on 23.11.2012 under police escort following allegations of fraud made by directors and managers, and suspension effected by SASRA, the Sacco regulator. He claimed notice pay, salary for the suspension period, 12 months' compensation for unfair termination, accrued leave, and reimbursement of shares deducted from him. The Respondent filed a defence and documents through Oraro and Company Advocates but called no witness and did not adopt its Statement of Response as evidence; the court held that pleadings and documents not admitted through witnesses are mere statements, leaving the claim uncontroverted. Framing three issues - valid reasons for dismissal, due process, and entitlement to prayers - the court held under Section 43 of the Employment Act that the employer failed to prove reasons for termination, since no dismissal letter issued and the removal was effected by SASRA, a third party with no employment contract with the claimant, contrary to the Court of Appeal's decision in Barclays Bank of Kenya v Gladys Muthoni. No Section 41 procedure was followed. The dismissal was therefore unfair and unjustified. The court awarded Kshs. 7,904,002.80 comprising two months' salary for the suspension period, one month's notice pay, 30 accrued leave days, reimbursement of Kshs. 1,951,021 in shares, and 12 months' compensation, with costs and interest at court rates, subject to statutory deductions except the share reimbursement. The claim succeeded partially, as prayers for the full suspension period and salary until determination were not granted in full.

Key legal issues

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01

Whether there were valid reasons to warrant dismissal of the Claimant

Holding

There was no valid reason; the Claimant was thrown out of office by SASRA, a third party and not his employer, and the employer issued no dismissal letter or reasons

Reasoning

Under Section 43 of the Employment Act the employer bears the burden of proving the reason for termination. The Claimant was removed by SASRA under police escort on 23.11.2012 with no dismissal letter, so no reasons could be discerned. Relying on the Barclays Bank decision, the court held that a third party cannot terminate employment; the Respondent should itself have issued a notice to show cause and taken disciplinary action. Its failure meant no valid reason existed.

p. 3
02

Whether the Claimant was subjected to due process before dismissal

Holding

No due process was followed; the dismissal was unfair and unjustified under Sections 41 and 45 of the Employment Act

Reasoning

Section 41 prescribes the procedure an employer must follow before dismissing an employee, including notification and an opportunity to be heard. The Claimant was never allowed back to the office, was never called to verify the allegations, and only saw the alleged termination letter in court. The court found the process under Section 41 was clearly not followed, rendering the dismissal unfair under Section 45(2).

p. 3
03

Effect of the Respondent's failure to call any witness or adduce evidence

Holding

The Respondent's filed pleadings and documents were mere statements, leaving the Claimant's case uncontroverted

Reasoning

Despite filing a defence and documents through Oraro and Company Advocates, the Respondent called no witness and did not have its Statement of Response adopted as evidence. Citing the Court of Appeal in Civil Appeal No. 140/2008 quoting Der Raj Sharma and Michael Hausa, the court noted that documents not admitted in evidence and only marked for identification cannot be used as evidence, so the claim stood uncontroverted.

p. 2
04

Whether the Claimant is entitled to the prayers sought

Holding

The Claimant was entitled to the award made, but not to the full extent of the prayers sought

Reasoning

Having found the dismissal unlawful and unprocedural, the court awarded two months' salary for the suspension period, notice pay, accrued leave, reimbursement of shares, and 12 months' compensation under Section 49, totalling Kshs. 7,904,002.80, subject to statutory deductions and with costs and interest. Prayers for the full suspension period salary and salary until determination were not granted in full.

p. 3

Legal principles established

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  • An employer must prove the reasons for termination; failure to do so renders the termination unfair
  • A third party cannot validly terminate an employee's employment where no employment contract exists with that third party
  • Pleadings and documents filed but not adopted through witnesses do not amount to evidence; an unchallenged claim remains uncontroverted

Court orders

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  1. 1.2 months' salary for the suspension period 23.11.2012 to 7.1.2013 (54 days) = Kshs. 678,198.60
  2. 2.1 month's salary in lieu of notice = Kshs. 376,771
  3. 3.Accrued leave for 30 days = Kshs. 376,771
  4. 4.Reimbursement of Kshs. 1,951,021.00 deducted from the Claimant's shares
  5. 5.12 months' salary as compensation for unlawful termination = Kshs. 4,521,252
  6. 6.Total award of Kshs. 7,904,002.80 plus costs of the suit and interest at court rates from the date of judgment
  7. 7.Total figure subject to statutory deductions except the share reimbursement

Authorities

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Legislation

  • Employment ActSection 43
  • Employment ActSection 41
  • Employment ActSection 45(2)

Cases cited (4)

  • Der Raj Sharma vs Reginam
    (1953) 19 EACA 310
  • Michael Hausa vs the State
    (1994) 7-8 SCANJ 144
  • Barclays Bank of Kenya and Another vs Gladys Muthoni & 20 Others
    (2018) eKLR
  • Civil Appeal No. 140/2008 (Nairobi) - Visram, Mwilu (as she then was) and Otieno Odek JJA
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act and Labour Relations Act (Cause No. 351 of 2015)

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, "James Norman Maloba Wandera v Harambee Co-operative Savings & Credit Society Limited [2018] KEELRC 1394 (KLR)", Case Analysis (2018). Cause No. 351 of 2015. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2018/1394/eng@2018-07-19

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