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ELRCDismissedCause Number 972 of 2013· [2019] KEELRC 2450 (KLR)

Joseph Mwangi Gioche v Gatamaiyu Dairy Farmer’s Cooperative Society Limited [2019] KEELRC 2450 (KLR)

Employment and Labour Relations Court of Kenya
25 January 2019
ANAbuodha Jorum Nelson
2,033 words in judgment
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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 by the respondent cooperative society as Manager from 14th September 2005 at a monthly salary of Kshs. 25,000, sued for unfair dismissal following his termination on 6th February 2013. Following an outcry over financial mismanagement, members at the October 2012 AGM dissolved the management board and appointed a caretaker committee, which commissioned Kigo Njenga Associates to conduct a forensic audit. The audit revealed double accounting of income, approximately Kshs. 43 million in uncollected debts, cheques issued without funds totalling about Kshs. 11 million, and an overdraft far exceeding the authorised limit. While on leave, the claimant was summoned to answer audit queries, which he attended and answered, and was handed a dismissal letter the same day. He alleged he was denied a show cause letter and a disciplinary hearing. The respondent contended the claimant bore responsibility for the mismanagement as Manager and Board Secretary. The court, applying section 43 of the Employment Act, found the employer proved valid and reasonable grounds for termination, holding that financial mismanagement of the magnitude disclosed was sufficient cause and that the claimant could not remain in office after the Board he served was dissolved. On procedure, the court held the process need not be mechanical: having had reasonable notice of the allegations and an opportunity to answer them, the claimant could not insist on a show cause letter and disciplinary hearing. The claim was dismissed except for an award of Kshs. 287,318.90 in outstanding leave days and leave allowance, with no orders as to costs.

Key legal issues

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01

Whether there were valid grounds for termination

Holding

Financial mismanagement of the magnitude disclosed by the forensic audit constituted reasonable cause to terminate the manager's services, and the dissolution of the Board he served made his removal inevitable

Reasoning

The court accepted that concern over the respondent's financial management was common ground. The claimant conceded he was responsible for day-to-day management and implementing Board decisions. The forensic audit disclosed serious mismanagement, including cheques issued without funds and uncollected debts. The claimant, as manager and Board secretary who briefed and implemented Board decisions, could not remain in office after the members removed the Board at the 2012 AGM. Valid grounds therefore existed under section 43 of the Employment Act.

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02

Whether the dismissal was procedurally fair

Holding

Yes - the claimant was summoned, answered audit queries in the presence of the auditor and committee members, and could not insist on a show cause letter and formal disciplinary hearing

Reasoning

The claimant admitted being summoned on 6th February 2013 to answer audit queries and attending. Although he was not issued a show cause letter or given a formal disciplinary hearing, the court held the procedural requirements under the Employment Act need not follow a pedantic and mechanical path. Where an employee has reasonable notice of the allegations and is called upon to answer them, a subsequent dismissal satisfies procedural fairness.

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Legal principles established

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  • Under section 43 of the Employment Act, the employer must prove the reasons for termination, failing which the termination is deemed unfair
  • The requirement of a show cause letter and disciplinary hearing is not mechanical; where an employee has reasonable notice of allegations and answers them, a subsequent dismissal is procedurally fair

Court orders

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  1. 1.Claim dismissed for lack of merit
  2. 2.Claimant to be paid Kshs. 287,318.90 being outstanding leave days (Kshs. 240,371.28) and leave allowance (Kshs. 46,947.60)
  3. 3.No orders as to costs

Authorities

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Legislation

  • Employment Actsection 43(1) and 43(2)
  • Co-operatives Act
Jurisdiction invoked
Employment and Labour Relations Court established under Article 162(2) of the Constitution; claim arising under the Employment Act

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (4)

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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, "Joseph Mwangi Gioche v Gatamaiyu Dairy Farmer’s Cooperative Society Limited [2019] KEELRC 2450 (KLR)", Case Analysis (2019). Cause Number 972 of 2013. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2019/2450/eng@2019-01-25

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