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ELRCPartially AllowedCause No 790 of 2014· [2020] KEELRC 1210 (KLR)

Richard Muema Peter v Added Performance Kenya Limited & 2 others [2020] KEELRC 1210 (KLR)

Employment and Labour Relations Court
23 April 2020
2,648 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~11 min to read original · ~4 min brief

The bottom line

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A Kenyan employer lost an unfair termination case because it could not prove the employee got a fair hearing, and was ordered to pay Kshs.145,222 plus costs.

What this practically means

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Executive summary

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The claimant, employed as a driver by the 1st respondent company from about February 2002 at a monthly salary of Kshs.13,202, was terminated on 31st March 2014 following the loss of batteries from a vehicle in his charge. He sued, alleging breach of Sections 40, 41 and 43 of the Employment Act, and sought salary for his remaining years to retirement, full and final dues, and costs. The respondents admitted the employment but maintained the termination was a lawful summary dismissal for gross misconduct under Section 44(4)(g), that a show-cause notice and hearing were accorded, and that all dues were paid; they also contended the 2nd and 3rd respondents, being directors, were wrongly joined. The claimant testified alone; the respondents closed their case without calling witnesses. The court framed three issues: validity of the termination (procedurally and substantively), wrongful joinder of the directors, and entitlement to reliefs. It held the termination unfair because the respondents produced no minutes or evidence of a disciplinary hearing, and the claimant's unrebutted evidence that he was not responsible for loading or custody of the batteries stood. Applying the separate corporate personality doctrine, the court discharged the claims against the 2nd and 3rd respondents, finding no basis to lift the corporate veil. On remedies, the claimant was awarded one month's salary in lieu of notice and ten months' salary (Kshs.132,020) as compensation for unfair termination. Claims for accrued leave, overtime, service pay (being an NSSF member) and salary to retirement age were dismissed for want of proof or legal basis. Judgment was entered against the 1st respondent for Kshs.145,222, with costs to the claimant and interest from the date of judgment.

Key legal issues

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01

Whether the termination of the claimant's employment was procedurally and substantively fair

Holding

The termination was unlawful and unfair as the respondents failed to prove procedural fairness under Section 41, having adduced no minutes of a disciplinary hearing or other evidence of one

Reasoning

The respondents relied on a notice to show cause but, despite asserting the claimant was accorded a hearing, produced no minutes or other evidence of a disciplinary hearing. The claimant testified he was not responsible for loading the lost batteries. Under Section 45(2), where the employer fails to prove either procedural fairness or validity of reason, the termination is unfair. The respondents having closed their case without calling witnesses, the claimant's evidence stood unrebutted.

p. 3
02

Whether the 2nd and 3rd Respondents (directors) were wrongly joined

Holding

They were wrongly enjoined; the claims against them were discharged as no evidence warranted lifting the corporate veil and no claim was made against them personally

Reasoning

It was common ground that the 2nd and 3rd respondents were directors of the 1st respondent company. Relying on Salomon v Salomon as cited in Joseph Kobia Nguthari and on Victor Mabachi, the court held a company is a distinct legal person separate from its directors and agents unless factors warranting lifting of the veil exist. No such factors were shown and no personal claim was pleaded.

p. 4
03

What reliefs the claimant is entitled to

Holding

One month's salary in lieu of notice and 10 months' salary as compensation for unfair termination (Kshs.132,020/-); claims for leave, overtime, service pay and salary to retirement dismissed

Reasoning

Notice pay was awarded under Sections 36 and 49(1) of the Employment Act despite summary dismissal because termination was unfair. Leave, overtime and service pay failed for want of proof and the NSSF exemption under Section 35. Compensation of 10 months' salary reflected length of service and the absence of a disciplinary hearing. Salary to retirement age was rejected as not provided in law or contract, remedies being proportionate to economic injury.

p. 4

Legal principles established

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  • For a termination to pass the fairness test there must be both substantive justification and procedural fairness
  • The burden of proving unfair termination rests on the employee, while the burden of justifying the grounds for termination rests on the employer
  • A company is a separate legal entity distinct from its directors and agents, and no claim lies against directors personally absent factors warranting lifting of the veil

Court orders

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  1. 1.Judgment entered for the claimant against the 1st respondent in the sum of Kshs.145,222/-
  2. 2.The 1st respondent to pay the claimant's costs of the claim
  3. 3.Interest to accrue from the date of judgment
  4. 4.Claims against the 2nd and 3rd Respondents discharged

Authorities

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Legislation

  • Employment Act, 2007Sections 35, 35(6)(d), 36, 40, 41, 43, 44(4)(g), 45(2), 47(5), 49(1)
  • Civil Procedure RulesOrder 21 Rule 1
  • Civil Procedure ActSection 1B
  • Constitution of Kenya, 2010Articles 159(2)(d) and 48

Cases cited (10)

  • Mwende Mbiti v Citrus Inn Limited
    (2018) eKLR
  • Paul Mumo Kitavi v ACM Containers Limited
    (2019) eKLR
  • Josephine Ayemba Musonye v Jitendra Rishi
    (2019) eKLR
  • Kennedy Maina Mirera v Barclays Bank of Kenya Limited
    (2018) eKLR
  • Kennedy Ochieng Ochuka v Wilham Kenya Limited
    (2019) eKLR
  • Walter Ogal Anuro v Teachers Service Commission
    (2013) eKLR
  • Joseph Kobia Nguthari v Kiegoi Tea Factory Company Limited and 2 Others
    (2016) eKLR
  • SALOMON vs. SALOMON
    [1897] AC 78
  • Victor Mabachi & Another vs. Nurturn Bates Limited
    (2013) eKLR
  • D. K. Njagi Marete v Teachers Service Commission – Industrial Cause No 379 of 2009
Jurisdiction invoked
Original jurisdiction under the Employment Act, 2007 (unfair termination complaint under Sections 40, 41, 43, 45 and 47(5))

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, "Richard Muema Peter v Added Performance Kenya Limited & 2 others [2020] KEELRC 1210 (KLR)", Case Analysis (2020). Cause No 790 of 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2020/1210/eng@2020-04-23

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