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ELRCDismissedCause (ELRC, Kisumu) – unfair termination and breach of contract cause (statement filed 10 February 2016)· [2021] KEELRC 203 (KLR)

Moses Agumba Orot v Chairman, Board of Directors, Lake Victoria South Water Services Board & another [2021] KEELRC 203 (KLR)

Employment and Labour Relations Court
15 December 2021
2,083 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~8 min to read original · ~4 min brief

The bottom line

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A Kenyan court upheld a water board CEO's dismissal, ruling his self-help conduct justified firing despite a procedural error by the employer.

What this practically means

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Executive summary

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The Claimant, formerly Chief Manager and later Chief Executive Officer of the Lake Victoria South Water Services Board, sued the Board and the Cabinet Secretary, Water, alleging unfair termination and breach of contract after his summary dismissal on 19 October 2015. He sought reinstatement, a declaration that only the Cabinet Secretary could dismiss the CEO, damages, costs and interest. The Court adopted the issues identified in submissions and found the facts largely undisputed. It held that the challenge to the Board's power to dismiss the CEO lacked legal foundation, since section 5(3) of the State Corporations Act vests the recruitment and terms-of-service mandate in the Board. The High Court stay orders of 2 September 2015 related only to the earlier decision directing the Claimant to step aside, not to the fresh 3 September 2015 allegations of breaking into and changing locks to his office. On the 2014 payroll allegations, the Court found it procedurally and substantively unfair for the Board to reopen a matter already sanctioned with a warning. However, the Board substantially complied with sections 35(1)(c) and 41 of the Employment Act by issuing a show-cause and inviting the Claimant to a hearing, which he snubbed on a mistaken belief of contempt. On substantive fairness, the Board proved valid and fair reasons for dismissal: the Claimant admitted breaking and replacing office locks while on suspension, conduct unbefitting his position. Consequently, compensation, notice pay, gratuity and post-October 2015 salaries were all unavailable. The Cause was dismissed with costs to the Respondents on 15 December 2021.

Key legal issues

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01

Power to dismiss the CEO of a state corporation

Holding

The challenge to the Board's power failed; the Board had the mandate under section 5(3) of the State Corporations Act

Reasoning

The Claimant asserted that only the Cabinet Secretary could hire or fire the CEO but did not pursue the point in testimony or submissions and did not identify any legal source for the claimed Cabinet Secretary power. The Court examined section 5(3) of the State Corporations Act and found the recruitment and terms-of-service mandate vest in the Board, rendering the challenge legally baseless.

p. 2
02

Effect of the High Court stay orders of 2 September 2015

Holding

The stay covered only the 27 August 2015 decision to step aside, not the fresh allegations of 3 September 2015; the dismissal was not barred

Reasoning

The Court inspected the High Court proceedings and orders and found that they related to the Board's decision of 27 August 2015 concerning the payroll variance and a private prosecution. The suspension on 17 September 2015 rested on fresh allegations (breaking and changing office locks on 3 September 2015) which the stay order did not anticipate, so the disciplinary process and dismissal were not caught by the stay.

p. 3
03

Double punishment – reliance on the 2014 payroll allegations

Holding

It was unfair for the Board to reopen the 2014 payroll fraud case after having sanctioned the Claimant with a warning in 2014

Reasoning

The Board had issued a show-cause notice on 2 May 2014 over the payroll allegations, considered his response, and imposed a warning; in January 2015 it promoted him to CEO. The Court held that procedural and substantive fairness precluded reopening the same matter afresh in 2015, though the dismissal otherwise survived on the 2015 misconduct.

p. 3
04

Procedural fairness

Holding

The Board substantially complied with sections 35(1)(c) and 41 of the Employment Act; the Claimant snubbed a valid hearing

Reasoning

The Claimant was suspended, issued a show-cause notice and invited to appear before the Board on 2 October 2015. He refused, claiming contempt of the stay orders, but the Court found the stay did not cover the fresh allegations. His claim that a Ministry meeting clashed was rejected because the Ministry letter of 14 October 2015 scheduled a meeting for 21 October 2015, not 2 October.

p. 3
05

Substantive fairness – validity of reasons for dismissal

Holding

The Board proved valid and fair reasons: the Claimant broke into and changed locks to his office while on suspension

Reasoning

Sections 43 and 45 placed the burden on the Board. The Claimant admitted breaking and changing the locks while enforcing stay orders. As executive head, he was expected to act with grace and courtesy, give the Board time to study the order, or seek enforcement or security assistance from the High Court. Taking the law into his own hands constituted misconduct justifying dismissal.

p. 4
06

Gratuity and post-dismissal salaries

Holding

No gratuity was payable (contract excluded it on gross misconduct) and only earned remuneration up to 19 October 2015 was due

Reasoning

The contract provided gratuity at 31% of basic annual salary upon successful completion but excluded payment where separation was due to gross misconduct, which the Court had found. The dismissal took effect on 19 October 2015, so claims for salaries thereafter were contractually and legally untenable.

p. 4

Legal principles established

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  • An employer who has sanctioned an employee for given misconduct with a warning may not, as a matter of procedural and substantive fairness, reopen the same misconduct afresh to dismiss the employee
  • Under section 5(3) of the State Corporations Act, the power to recruit and set terms and conditions of service of a state corporation's CEO rests with the Board, not the Cabinet Secretary
  • An employer who issues a show-cause notice and invites the employee to a hearing substantially satisfies the procedural fairness requirements of sections 35(1)(c) and 41 of the Employment Act even if the employee snubs the hearing

Court orders

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  1. 1.The Cause is dismissed
  2. 2.Costs of the suit are awarded to the Respondents

Authorities

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Legislation

  • State Corporations Actsection 5(3)
  • Employment Act, 2007section 35(1)(c)
  • Employment Act, 2007section 41
  • Employment Act, 2007sections 43 and 45

Cases cited (1)

  • R v Board of Directors, the Lake Victoria South Water Services Board ex-parte Eng Moses Agumba Orot (Kisumu Misc Civil Suit No. 8 of 2015)
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over unfair termination and breach of employment contract (Employment Act, 2007); original first-instance cause

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, "Moses Agumba Orot v Chairman, Board of Directors, Lake Victoria South Water Services Board & another [2021] KEELRC 203 (KLR)", Case Analysis (2021). Cause (ELRC, Kisumu) – unfair termination and breach of contract cause (statement filed 10 February 2016). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2021/203/eng@2021-12-15

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