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ELRCPartially AllowedCause 1339 of 2015· [2019] KEELRC 1221 (KLR)

Julius Githaiga Mwangi v Ultra Limited [2019] KEELRC 1221 (KLR)

Employment and Labour Relations Court
3 July 2019
HWHellen S. Wasilwa
2,936 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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What this practically means

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Executive summary

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The Claimant, employed as an Accounts Assistant from 28/4/2014 at a monthly salary of Kshs. 15,000/=, was terminated by letter dated 15/4/2015 effective 15/5/2015 on grounds of the Respondent's financial constraints. He sued for wrongful and unfair termination, claiming one month's salary in lieu of notice, unpaid leave, salary arrears of Kshs. 71,478/=, bank charges of Kshs. 2,200/= for a dishonoured cheque of Kshs. 67,000/=, and 12 months' salary as damages, total Kshs. 283,678/=. The Respondent asserted a mutual agreement that the Claimant leave early for another job, that the cheque of Kshs. 67,000/= had gone missing and was cancelled, and that its financial constraints justified the termination. The court found the termination, based on financial constraints, connoted a redundancy situation. The Respondent issued the requisite one month notice and the Claimant, being an accountant, understood the reason for termination, so the court held the redundancy justifiable and procedural. On the disputed cheque, the court found the dues computation authentic (signed by the Respondent's employee and stamped with the Respondent's stamp), that no forgery or police report of loss was shown, and that the bounced cheque demonstrated the Respondent intended to pay and did not pay the Kshs. 67,000/=. Judgment was entered for the Claimant for Kshs. 84,200/= (cheque amount, bank charges and one year's leave pay) plus costs and interest at court rates from the date of judgment. Claims for 12 months' damages and notice pay were not awarded.

Key legal issues

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01

Nature of the termination

Holding

The termination on grounds of financial constraints was a redundancy situation

Reasoning

The court examined the termination letter dated 15/4/2015 effective 15/5/2015 and the reasons assigned. Financial constraints on the employer's part connote redundancy, bringing Section 40 of the Employment Act into play rather than a summary or unfair dismissal analysis.

p. 4
02

Procedural fairness of the redundancy

Holding

The redundancy was justifiable and procedural because the one month notice was issued and the employee, being an accountant, understood the reason

Reasoning

The court found the Respondent issued the requisite one month notice and paid part of the dues by cheque. The Claimant knew of the financial difficulties as accountant and was owed salary arrears, so the substantive and procedural requirements were met despite no claim of the two Section 40(1) notices being expressly found.

p. 4
03

Authenticity of the dues computation and the dishonoured cheque

Holding

The computation document was authentic and the Respondent intended to and did not pay the Kshs. 67,000/=

Reasoning

The computation was signed by the Respondent's employee and stamped with the Respondent's rubber stamp, which the Respondent never disputed. No forgery was indicated and no police report of the cheque's loss was made. The bounced cheque demonstrated an intention to pay terminal dues.

p. 4
04

Entitlement to remedies

Holding

The Claimant was entitled only to the bounced cheque amount, bank charges and leave pay, not 12 months' damages or notice pay

Reasoning

Because the redundancy was found justifiable and procedural, the damages for wrongful dismissal and one month's notice pay fell away. The court limited remedies to the unpaid cheque sum of Kshs. 67,000/=, bank charges of Kshs. 2,200/= and leave pay of Kshs. 15,000/=, with costs and interest.

p. 4

Legal principles established

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  • A cheque issued by an employer to an employee as part of terminal dues, which is later dishonoured and whose alleged loss is not reported to the police, evidences an intention to pay and non-payment of those dues
  • A termination for financial constraints connotes a redundancy situation and must comply with Section 40 of the Employment Act; where the requisite notice is given and the employee knows the reason, the redundancy may be held justifiable and procedural

Court orders

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  1. 1.Payment of Kshs. 67,000/= being the amount of the bounced cheque
  2. 2.Payment of Kshs. 2,200/= being bank charges over the rejected cheque
  3. 3.Payment of leave pay for 1 year of Kshs. 15,000/=
  4. 4.Total award of Kshs. 84,200/= plus costs of the suit and interest at court rates from the date of judgment

Authorities

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Legislation

  • Employment ActSection 40
  • Employment ActSection 40(1)
  • Employment ActSection 40(1)(b)
  • Employment ActSection 43(2)
  • Employment ActSection 45(2)

Cases cited (10)

  • Mwangi Ngumo –v- Kenya Institute of Management
    [2012] eKLR
  • Horne Coupar v Velletta & Co.
    2010 BCSC 483
  • Kenafric Industries Limited –v- John Gitonga Njeru
    [2016] eKLR
  • Charles Nyangi Nyamohanga –v- Action Aid International
    [2015] eKLR
  • Tailors and Textiles Workers Union –v- Summit Fibres Ltd
    [2018] eKLR
  • Eunice Kamau –v- AAR Insurance (K) Limited
    [2017] eKLR
  • Mwangi v Kenya Institute of Management
    [2012] eKLR
  • The National Bank of Commerce Ltd v Nabro Ltd & Anor
    [2008] eKLR 1 EA 432
  • Mamta Peeush Mahajan [suing on behalf of the estate of the late Peeush Premlal Mahajan] –v- Yashwant Kumari Mahajan [sued personally and as Executrix of the estate and beneficiary of the estate of the late Kriishan Lal Mahajan
    [2017]
  • Peter Masila Ngengya –v- Meya Agri Traders Limited
    [2018] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act (employment and labour relations dispute)

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, "Julius Githaiga Mwangi v Ultra Limited [2019] KEELRC 1221 (KLR)", Case Analysis (2019). Cause 1339 of 2015. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2019/1221/eng@2019-07-03

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