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ELRCPartially AllowedCause No 1381 of 2010· [2019] KEELRC 1881 (KLR)

Ernest Morara Mokua v Kenya Railways Corporation [2019] KEELRC 1881 (KLR)

Employment and Labour Relations Court
29 March 2019
BOByram Ongaya
2,470 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
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The bottom line

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A Kenyan court ruled an employer cannot fire an employee for losses caused by its own missing policies, awarding the employee ten months' salary.

What this practically means

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Executive summary

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The claimant, employed by the respondent as Assistant Management Accountant from April 2007 until February 2009, sued for general and exemplary damages, costs and interest following his dismissal. The dispute arose from a Kshs. 10.7 Million cheque received on 09.10.2008 which, on the customer's request citing liquidity challenges, the claimant instructed be banked two weeks later; it was banked on 27.10.2008 but not credited owing to KCB system shortcomings, prompting the claimant's arrest on a charge of stealing by servant, later withdrawn under section 87 of the Criminal Procedure Code, and his dismissal by the respondent's Board. Procedural fairness was settled by consent, leaving the validity of the reason for termination under section 43 of the Employment Act, 2007. The Court found the respondent had exhibited no operational policy, job description or standing instructions barring the claimant's action, noted the customer's Kshs. 214 Million cash security, and held the respondent operated deficient operational systems, following its own decision in Grace Gacheri Muriithi v Kenya Literature Bureau on unfair labour practices under Article 41(1). The termination was held unfair for want of a valid reason, and the claimant was awarded 10 months' salary (Kshs. 1,364,000.00) under section 49, with the court factoring his erroneous prosecution as aggravating and his delayed reporting as a small mitigating contribution. The respondent's limitation objection under section 87(b) of the Railways Corporation Act was rejected in favour of section 90 of the Employment Act, distinguishing Joel Kiprono Langat. Exemplary damages were refused following Abdulhamid Ebrahim Ahmed. Judgment was entered for the claimant with costs.

Key legal issues

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01

Whether the termination was for a genuine and valid reason under section 43 of the Employment Act, 2007

Holding

The termination was unfair for want of a valid reason; the employer exhibited no operational policy, job description or standing instructions barring the claimant from withholding the cheque per the customer's instructions.

Reasoning

Procedural fairness was settled by consent, leaving only the substantive reason. The claimant withheld the Kshs. 10.7 Million cheque for two weeks at the customer's request on liquidity grounds, banked it on 27.10.2008, and the customer had deposited Kshs. 214 Million cash as security. The bank's system failures, not the claimant, caused the delay in crediting. The employer adduced no policy barring the withholding, and its ad hoc committee identified internal control weaknesses without identifying corrective policies, evidencing deficient operational systems.

p. 2
02

Whether the claimant was entitled to compensation for unfair termination

Holding

Yes - 10 months' salary at Kshs. 136,400.00 per month, totalling Kshs. 1,364,000.00 under section 49 of the Employment Act, 2007.

Reasoning

The Court weighed the claimant's clean record and desire to continue in employment, the aggravating factor of his erroneous prosecution for stealing by servant discharged under section 87 of the Criminal Procedure Code, and the mitigating factor of his small contribution through delayed reporting of the cheque to the General Manager Finance within the same week.

p. 3
03

Whether the suit was time barred under section 87(b) of the Railways Corporation Act

Holding

No - the 3-year limitation under section 90 of the Employment Act, 2007 prevails; the suit filed 09.11.2010 was within 3 years of the dismissal dated 20.05.2009.

Reasoning

The Court held the Railways Corporation Act provision could not derogate from the Employment Act limitation period, and that under section 3(1) of the Employment Act the parties were bound by it. It distinguished Joel Kiprono Langat because in that case the cause of action preceded the Employment Act, 2007, whereas here it arose after its enactment.

p. 3
04

Whether exemplary damages were payable

Holding

No - the claimant established none of the three recognised categories for exemplary damages.

Reasoning

Following Abdulhamid Ebrahim Ahmed v Municipal Council of Mombasa, exemplary damages are confined to oppressive, arbitrary or unconstitutional actions by servants of government; conduct calculated to earn the defendant profit; and cases expressly authorised by statute. None was established here.

p. 3

Legal principles established

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  • It is unfair labour practice for an employer to visit upon the employee adverse consequences for losses attributable to deficiencies in the employer's operational policies and systems; where such unfair labour practices ground a termination, the termination is unfair.
  • A termination of employment is unfair where the employer fails to prove that the reason for termination is related to the employee's conduct, capacity or compatibility or based on operational requirements.
  • Section 87(b) of the Railways Corporation Act (12-month limitation) does not derogate from section 90 of the Employment Act, 2007 (3-year limitation) in termination-of-employment causes of action.

Court orders

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  1. 1.The respondent to pay the claimant a sum of Kshs. 1,364,000.00 by 15.05.2019 failing interest to be payable thereon at Court rates from the date of judgment till full payment
  2. 2.The respondent to pay the claimant's costs of the suit

Authorities

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Legislation

  • Employment Act, 2007section 43
  • Employment Act, 2007section 45(2)
  • Employment Act, 2007section 47(5)
  • Employment Act, 2007section 49
  • Employment Act, 2007section 90
  • Employment Act, 2007section 3(1)
  • Railways Corporation Actsection 87(b)
  • Railways Corporation Actsection 92
  • Criminal Procedure Codesection 87
  • Constitution of Kenya, 2010Article 41(1)

Cases cited (3)

  • Grace Gacheri Muriithi –Versus- Kenya Literature Bureau
    (2012) eKLR
  • Joel Kiprono Langat –Versus- Kenya Postal & Telecommunication Corporation
    [2000] eKLR
  • Abdulhamid Ebrahim Ahmed –Versus- Municipal Council of Mombasa
    [2004] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over disputes arising from contracts of service, the claimant's cause of action arising under the Employment Act, 2007 (section 3(1))

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (2)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Ernest Morara Mokua v Kenya Railways Corporation [2019] KEELRC 1881 (KLR)", Case Analysis (2019). Cause No 1381 of 2010. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2019/1881/eng@2019-03-29

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