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ELRCPartially AllowedNot stated in the judgment· [2019] KEELRC 1813 (KLR)

Susan Njoki Kibe aka Susan Mungai v Institute of Certified Public Accountants of Kenya (ICPAK) [2019] KEELRC 1813 (KLR)

Employment and Labour Relations Court
4 April 2019
HWHellen Wasilwa
6,836 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~27 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court ruled ICPAK unfairly sacked its finance manager, awarding her Kshs 2.3 million because the dismissal lacked valid reasons and a fair process.

What this practically means

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Executive summary

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The Claimant, a former Senior Manager-Finance & Support Services of ICPAK, sued for unlawful and unfair termination of her employment on 5 March 2014 following a disciplinary process arising from audit findings. She challenged both the substantive and procedural fairness of the dismissal, complaining that the audit process was incomplete, the hearing notice was issued a day before the hearing, the termination letter gave no reasons, and the disciplinary minutes were unreliable. The Respondent maintained that the dismissal was summary and lawful under Section 44(4)(c) of the Employment Act, citing the approved payment to Tritek Consulting without supporting documents, the unauthorised advance payment of Kshs. 45,086,800.90 to China Jiangxi, and non-disclosure of a Kshs. 4,513,120.67 telephone bill accrual. The court framed three issues: validity of reasons for summary dismissal, procedural fairness, and remedies. It found the lapses did not amount to wilful negligence since the Respondent suffered no loss on the advance payment or the telephone bill. It also found the process unfair: the audit report was incomplete at the time of the hearing, the hearing letter did not specify the allegations, minutes of the Council's review were not supplied, and the minutes did not evidence a fair process under Section 41. The court awarded 35 leave days, 4 days' salary for March 2014, one month's salary in lieu of notice, six months' salary as compensation for unfair termination, plus costs and interest. Claims for the full month's salary and twelve months' compensation were refused.

Key legal issues

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01

Whether there were valid reasons for summary dismissal under Section 44(4)(c)

Holding

No valid reasons for gross misconduct were proved. The advance payment of Kshs. 45 million was authorised by the Director Finance and Strategy and cost the Respondent nothing as the bonds were fully paid; the telephone bill was written off by Telkom Kenya. The lapses did not amount to wilful negligence.

Reasoning

The court analysed the three charges: the iPad payment went through procurement; the 45 million advance payment was authorised by the Director Finance and Strategy, though the Claimant queried it being outside the contract, and the audit report indicated no loss to the Respondent; the telephone bill was waived by Telkom Kenya and cost the Respondent nothing. The Claimant as Finance Manager had some lapses in oversight but these did not constitute wilful negligence justifying summary dismissal.

p. 7
02

Whether the Claimant was accorded due process before dismissal

Holding

No. The disciplinary process was hurried, the audit report relied on was not complete, the hearing letter did not specify the offences to be defended, the minutes of the Council review were not supplied, and the minutes of the hearing did not evidence a fair process under Section 41 of the Employment Act.

Reasoning

The show cause letter was issued while the audit was ongoing; the hearing was a day after notice; the committee reported the same day at 6.35 pm and the termination followed the next day. The hearing letter did not inform the Claimant of the areas to be covered, and no minutes of the Council meeting that reviewed her response were attached. The minutes did not clearly set out accusations and responses, so the process fell short of Section 41 and Section 45(2) requirements.

p. 8
03

What remedies the Claimant is entitled to

Holding

The Claimant was awarded 35 leave days, 4 days' salary for March 2014, one month's salary in lieu of notice and six months' salary as compensation, plus costs and interest.

Reasoning

The Respondent had admitted willingness to pay accrued leave days and salary for days worked in March 2014. The court awarded those amounts, plus one month's notice pay given the unfair termination, and exercised discretion to award six months' salary as compensation for the unlawful termination, taking into account the Claimant's performance of work.

p. 9

Legal principles established

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  • Summary dismissal under Section 44(4)(c) of the Employment Act requires proof of wilful neglect or careless/improper performance of duties; mere misgivings or errors of judgment that cause the employer no loss do not amount to gross misconduct
  • A termination letter must state the reasons for termination as required by Section 43 of the Employment Act; a letter merely citing Section 44(4)(c) without details is insufficient
  • Minutes of a disciplinary hearing that do not clearly show the accusations and the employee's responses do not evidence a fair process under Section 41 of the Employment Act

Court orders

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  1. 1.Payment of Kshs. 327,815.80 for 35 leave days owing
  2. 2.Payment of Kshs. 37,465 as 4 days' salary for March 2014 (4/30 x 280,985)
  3. 3.Payment of one month's salary in lieu of notice of Kshs. 280,985
  4. 4.Payment of six months' salary as compensation for unlawful termination, Kshs. 1,685,910 (6 x 280,985)
  5. 5.Total award of Kshs. 2,332,175.80
  6. 6.Respondent to pay costs of the suit plus interest at court rates with effect from the date of the judgment

Authorities

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Legislation

  • Accountants ActSection 9
  • Accountants ActSection 10
  • Employment ActSection 10(2)(c)
  • Employment ActSection 18(4)
  • Employment ActSection 41
  • Employment ActSection 43
  • Employment ActSection 43(1)
  • Employment ActSection 43(2)
  • Employment ActSection 44(4)(c)
  • Employment ActSection 45(2)
  • Constitution of KenyaArticle 47
  • International Accounting Standards No. 10 (Events after the Reporting Period)

Cases cited (14)

  • Nicholas Muasya Kyula –v- Farmchem Limited
    [2012] eKLR
  • Bernard Damunga Ndunda –v- Kerio Valley Development Authority
    [2013] eKLR
  • Grace Gacheru Muriithi –v- Kenya Literature Bureau
    [2012] eKLR
  • Queenvelle Atieno Owala –v- Centre for Corporate Governance
    [2013] eKLR
  • Zephania O. Nyambane & Another –v- Nakuru Water & Sanitation Services Company Limited
    [2013] eKLR
  • Raphael Wellington Okonji –v- Sunthesis Limited
    [2012] eKLR
  • Patrick Abuya vs. Institute of Certified Public Accountants of Kenya (ICPAK) & Another
    [2015] eKLR
  • Nerbert Mandala Ombajo vs. Institute of Certified Public Accountants of Kenya (ICPAK)
    [2017] eKLR
  • Attorney General and Another –v- Crispinus Ngayoo Musundi
    [2017] eKLR
  • Michael Dowling v Workplace Safety & Insurance Board
    [2004] CAN LII 436 92
  • John Ngoko Isoe –v- Nyasionga Tea Factory Co. Ltd
    [2017] eKLR
  • George Kariuki Ngugi –v- Brolaz East Africa Limited
    [2014] eKLR
  • Kenya Plantation & Agricultural Workers’ Union –v- Keen Kleeners Limited
    [2014] eKLR
  • Saleh Kiplagat Chebii –v- Centre for African Family Studies [Cafs]
    [2014] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007

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, "Susan Njoki Kibe aka Susan Mungai v Institute of Certified Public Accountants of Kenya (ICPAK) [2019] KEELRC 1813 (KLR)", Case Analysis (2019). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2019/1813/eng@2019-04-04

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