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ELRCPartially AllowedCause No 1994 of 2013· [2019] KEELRC 1456 (KLR)

Paul Methu Mbuchi & another v CIC General Insurance Limited [2019] KEELRC 1456 (KLR)

Employment and Labour Relations Court of Kenya
17 May 2019
2,037 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 ruled CIC Insurance unfairly dismissed two assessors, awarding them over Kshs 1.8 million combined for skipping proper disciplinary procedure.

What this practically means

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Executive summary

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The Employment and Labour Relations Court at Nairobi, per Abuodha Jorum Nelson J, dealt with a claim by two motor vehicle assessors, Paul Methu Mbuchi and George Ernest Mwangi Wanjohi, summarily dismissed by CIC General Insurance Limited on 8 October 2013 over allegations of negligence, collusion and attempted fraud arising from the authorisation of additional repairs to motor vehicle KBU 365L without the claims manager's approval. The court applied sections 43, 41(2) and 45(2) of the Employment Act. On substance, it found the disputed repairs were never paid for and the respondent produced no evidence contradicting the claimants' view that the axle was bent; the disciplinary committee itself was divided on whether to dismiss, and summary dismissal was therefore too harsh and reserved for plain and obvious misconduct. On procedure, the respondent's witnesses conceded the notice of hearing was verbal, charges were never reduced to writing, the investigation report and advance charges were not availed, and the claimants were not informed of their right to be accompanied - a breach of section 41(2). The court held the dismissals amounted to unfair termination both as to reason and procedure. The claim for house allowance was disallowed because salaries were consolidated and the issue was never raised during employment. The court awarded each claimant one month's salary in lieu of notice, salary for eight days worked in October, and eight months' salary as compensation for unfair termination (Kshs 1,100,314 for Wanjohi and Kshs 721,122 for Mbuchi), net of taxes and statutory deductions, together with costs of the suit.

Key legal issues

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01

Fairness of the reason for termination

Holding

The reason for dismissal - authorising additional repairs without manager approval - was insufficient to justify summary dismissal since the repairs were not paid for and the respondent produced no contrary evidence that the axle was not bent

Reasoning

The claimants were accused of negligence and possible fraud for authorising repairs to motor vehicle KBU 365L without the claims manager's approval. However, the respondent did not pay for the disputed repairs and produced no report showing the axle was not bent. Applying the reasonable employer test, and given the disciplinary committee's own division on the outcome, summary dismissal was too harsh and the reason was not a fair one.

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02

Fairness of the termination procedure

Holding

The procedure violated sections 41 and 45 of the Employment Act; the claimants were not formally invited to a disciplinary hearing, not given charges in writing, and not informed of their right to be accompanied

Reasoning

The respondent's own witnesses conceded that the notice of hearing was verbal, the charges were never reduced to writing, and the claimants were never informed of their right to be accompanied by an employee of their choice. Neither the investigation report nor advance copies of the charges were availed to them. Section 41(2) requires an employer to hear and consider representations before termination, and this was not complied with.

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03

Entitlement to house allowance

Holding

The claim for house allowance was disallowed because the salary was consolidated and the issue was never raised during employment

Reasoning

The respondent's evidence was that the claimants were paid consolidated salaries and the system only showed basic pay. The court found it inconceivable that employees at the claimants' senior level would not raise the issue of non-payment of house allowance during their employment, only doing so after their services were terminated. The claim was accordingly disallowed.

p. 3

Legal principles established

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  • Under section 43(2) of the Employment Act, the reason for termination is what the employer genuinely believed to exist at the time of termination
  • The test for the reason for termination is whether a reasonable employer placed in similar circumstances would consider dismissal the most appropriate action
  • Summary dismissal should be reserved for plain and obvious cases of misconduct, not cases where doubt exists
  • A termination is unfair under section 45(2) if the employer fails to prove both a fair reason and a fair procedure

Court orders

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  1. 1.Judgment entered against the respondent in favour of George Ernest Mwangi Wanjohi: one month's salary in lieu of notice Kshs 118,739; salary for 8 days worked in October Kshs 31,663; eight months' salary as compensation for unfair termination Kshs 949,912 (total Kshs 1,100,314), net of taxes and statutory deductions
  2. 2.Judgment entered against the respondent in favour of Paul Methu Mbuchi: one month's salary in lieu of notice Kshs 77,819; salary for 8 days worked in October Kshs 20,751; eight months' salary as compensation for unfair termination Kshs 622,552 (total Kshs 721,122), net of taxes and statutory deductions
  3. 3.Costs of the suit awarded to the claimants

Authorities

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Legislation

  • Employment ActSection 43(1)
  • Employment ActSection 43(2)
  • Employment ActSection 41(2)
  • Employment ActSection 45(2)
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over employment disputes (Employment Act; ELRC established under Article 162(2) of the Constitution)

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, "Paul Methu Mbuchi & another v CIC General Insurance Limited [2019] KEELRC 1456 (KLR)", Case Analysis (2019). Cause No 1994 of 2013. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2019/1456/eng@2019-05-17

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