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ELRCPartially AllowedNot stated in the judgment text provided· [2021] KEELRC 178 (KLR)

Nancy Chao Mbele v First Assurance Company Limited [2021] KEELRC 178 (KLR)

Employment and Labour Relations Court
3 December 2021
BOByram Ongaya
2,761 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 court ruled an insurance company unfairly sacked a receptionist over missing cash procedures it could not prove existed.

What this practically means

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Executive summary

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The claimant, employed by the respondent since 2002 and promoted to Front Office Assistant on a monthly salary of Kshs. 84,548.00, received cash of Kshs. 20,000.00 from a client on 16.04.2016 at the Mombasa Branch. With no cashier present, she kept the money in a sealed envelope in her handbag, forgot about it during a stressful period, and went on a month's leave; the receipt was issued on 26.05.2016. After a show-cause letter, a disciplinary hearing on 03.03.2017, and termination by letter dated 15.03.2017 with one month's pay in lieu of notice, her appeal failed after she declined to attend the rescheduled appeal hearing. She sued, contending the termination was unfair because no cash handling policy existed, the reason was invalid, and she was not heard on appeal, and claiming a declaration and 12 months' compensation. The respondent asserted a 2014 memo required daily receipting and that termination was fair. The court found a contract of service existed and that procedure (notice, hearing, appeal) was accorded. However, it held the reason for termination invalid: the respondent failed to discharge the section 10(7) Employment Act burden of proving the cash handling policy existed and was communicated; the 2014 memo was unsigned and not addressed to the claimant, and a disciplinary panellist confirmed procedures were lacking. Applying its earlier decision in Grace Gacheri Muriithi v Kenya Literature Bureau, the court found it an unfair labour practice to penalise an employee for deficiencies in the employer's operational systems. Judgment was entered for the claimant for six months' salary (Kshs. 507,288.00) payable by 15.01.2022, with interest if unpaid, plus costs. The 12-month compensation claim was refused as excessive given the claimant's contribution.

Key legal issues

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01

Validity of the reason for termination where the invoked policy did not exist

Holding

The reason was not valid and fair because the cash handling policy was not shown to exist or to have been communicated to the claimant

Reasoning

The court found the respondent failed to discharge the section 10(7) burden of proving the existence of a cash handling policy. The 2014 internal memo relied on was unsigned and not addressed to the claimant. A panellist at the disciplinary hearing remarked that clear procedures were needed, confirming the procedures did not exist. The claimant's oversight was excusable, prompted by stress, and corrective action was promptly taken.

p. 3
02

Procedural fairness of the termination and appeal process

Holding

The respondent afforded due procedure — notice, hearing and appeal — and the claimant's failure to attend the appeal was by her own design

Reasoning

The claimant received a show cause letter, replied, attended a disciplinary hearing, and was offered an appeal with accommodation of some of her conditions. She nonetheless declined to attend the rescheduled appeal; the respondent upheld the termination. The court held this satisfied the procedural fairness requirements.

p. 2
03

Entitlement to and quantum of compensation under section 49

Holding

Six months' salary (Kshs. 507,288.00) awarded as just and equitable compensation

Reasoning

The court considered section 49 factors: over 14 years' clean service, desire to continue in employment, joint contribution by both parties (claimant's stress and respondent's deficient procedures), failure to train her, but also her contribution in failing to attend the appeal hearing. Six months' salaries was found to balance justice.

p. 3

Legal principles established

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  • Under section 10(7) of the Employment Act, the employer bears the burden of proving an alleged term of employment, including operational policies; where the employer cannot show a policy existed and was communicated, termination premised on breach of it lacks a valid reason
  • It is an unfair labour practice for an employer to penalise an employee for losses attributable to deficiencies in the employer's operational policies and systems, and such a termination is unfair under section 45 and Article 41(1) of the Constitution

Court orders

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  1. 1.Payment of Kshs. 507,288.00 (six months' salary) by 15.01.2022, failing which interest at Court rates from the date of judgment until full payment
  2. 2.Respondent to pay the claimant's costs of the suit

Authorities

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Legislation

  • Employment Actsection 10 (and 10(7))
  • Employment Actsection 45(2)
  • Employment Actsections 43 and 45
  • Employment Actsection 49
  • Constitution of KenyaArticle 41(1)

Cases cited (1)

  • Grace Gacheri Muriithi – Versus – Kenya Literature Bureau
    (2012) eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act (sections 10, 43, 45, 49) and Article 41(1) of the Constitution (fair labour practices)

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, "Nancy Chao Mbele v First Assurance Company Limited [2021] KEELRC 178 (KLR)", Case Analysis (2021). Not stated in the judgment text provided. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2021/178/eng@2021-12-03

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