Skip to content
AI-generated case briefs sourced from Kenya Law · Not legal advice
Caselaw
AI-generated case brief
Case Brief · caselaw.co.ke
ELRCPartially Allowed· [2021] KEELRC 323 (KLR)

Galgalo Jarso Jillo v Agricultural Finance Corporation [2021] KEELRC 323 (KLR)

Employment and Labour Relations Court
25 November 2021
BMB O M Manani
7,532 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~30 min to read original · ~4 min brief

The bottom line

#

A Kenyan court confirmed an employer can fire for financial misconduct, but must keep disciplinary records to prove a fair hearing.

What this practically means

#

Executive summary

#
The Claimant, employed on 18th June 2015 as branch manager of the Respondent's Hola branch, was suspended on 30th May 2016 following alleged financial irregularities, including an unexplained loss of Ksh. 664,700/= withdrawn from the Respondent's KCB loan account, irregular imprest claims and fraudulent fuel LPOs. After a show cause letter, his response and a disciplinary session, his employment was terminated by letter dated 31st October 2016. He claimed unfair suspension and termination, alleging denial of documents, cross-examination and the right to be accompanied by a co-employee, and sought various monetary reliefs and a Certificate of Service. The court held that the Respondent proved valid substantive grounds for termination: as branch manager and principal bank signatory, the Claimant had supervisory responsibility for the losses, and his admission of inserting wrong vehicle registration details in fuel LPOs amounted to gross misconduct under sections 43(2) and 44(4)(g) of the Employment Act. However, the Respondent failed to prove procedural fairness because it withheld the minutes of the disciplinary committee from the court, leaving the procedural complaints unanswered. The suspension was held lawful as a non-punitive investigative measure. The termination was declared unfair only on the procedural limb. Applying section 49 and considering the Claimant's contributory conduct, the court awarded nominal damages of one month's gross salary (Ksh. 150,750/=), a notice pay deficit of Ksh. 116,500/= under clause 7 of the contract, leave pay of Ksh. 150,750/=, interest, statutory deductions, and a Certificate of Service. Other reliefs were declined and each party was ordered to bear its own costs. Judgment was delivered online pursuant to Covid-19 directives.

Key legal issues

#
01

Whether the Respondent proved valid substantive reasons for termination

Holding

Yes. The special audit, the unexplained loss of Ksh. 664,700/= under the Claimant's watch as branch manager and principal signatory, the irregular imprest claims and the fuel LPO misrepresentations gave the Respondent a credible basis to genuinely believe the Claimant engaged in financial impropriety under sections 43(2) and 44(4)(g).

Reasoning

The court found the Claimant's attempt to distance himself from branch mismanagement an abdication of his supervisory role as branch head and principal bank signatory. His admission of entering wrong vehicle registration details in LPOs, causing loss of over Ksh. 13,000/=, constituted gross misconduct. The audit report provided a sound basis for the Respondent's genuine belief.

p. 5
02

Whether the Respondent proved procedural fairness

Holding

No. The Respondent failed to produce the minutes of the disciplinary committee, leaving the court without evidence that the Claimant was allowed a co-employee of his choice, cross-examination of witnesses and access to documents.

Reasoning

The burden of proving compliance with section 41 lay with the Respondent, which was on notice of the procedural complaint. Its witnesses confirmed the disciplinary minutes were not produced as exhibits. Without that record the court could not verify the contested claims of denial of documents, cross-examination and accompaniment, so the procedural limb failed.

p. 6
03

Validity of the suspension

Holding

The suspension was lawful as a non-punitive, temporary measure to facilitate investigations into the financial irregularities.

Reasoning

The suspension was a precursor to the disciplinary process, and an employer may suspend to facilitate investigations so long as the employee is eventually given a chance to respond. The court obiter observed that withholding an employee's entire pay during suspension would breach the contract unless consented to or permitted by law, but here part salary was in fact released.

p. 6
04

Appropriate remedies

Holding

Nominal damages of one month's gross salary for the procedural failure, deficit in notice pay of Ksh. 116,500/= under clause 7 of the contract, leave pay of Ksh. 150,750/=, and a Certificate of Service; full compensation declined in light of the Claimant's contributory conduct.

Reasoning

Section 49 of the Employment Act obligates courts to consider the employee's contribution to the termination. Having regard to the Claimant's impugned conduct, the court awarded only nominal damages despite the procedural failure. The Respondent's election to treat the dismissal as normal termination entitled the Claimant to three months' notice pay per the contract and accrued leave under section 28.

p. 8

Legal principles established

#
  • The burden of proving unfair termination is discharged by the employee once a prima facie case is established, shifting the burden to the employer
  • An employer need only prove reasons it genuinely believed to exist, on a balance of probability, applying the range of reasonable responses test
  • An employer need not have conclusive proof of an employee's criminal conduct to rely on section 44(4)(g) of the Employment Act; reasonable and sufficient grounds of suspicion suffice
  • An employer is entitled to suspend an employee administratively to facilitate investigations so long as the employee is afforded a chance to respond within reasonable time
  • Unilateral withholding of an employee's entire salary during suspension would breach the contract of service unless sanctioned by law or consented to
  • Failure to produce minutes of disciplinary proceedings deprives the employer of proof of procedural fairness

Court orders

#
  1. 1.Declaration that the termination was unfair only to the extent of the Respondent's failure to prove procedural fairness
  2. 2.Respondent to pay Ksh. 116,500/= being one month's basic salary deficit in notice pay under clause 7 of the contract
  3. 3.Respondent to pay Ksh. 150,750/= being one month's salary in lieu of leave
  4. 4.Respondent to pay Ksh. 150,750/= as nominal damages for failure to accord procedural fairness
  5. 5.Interest on the sums awarded at court rates from the date of judgment till payment in full
  6. 6.Award subject to applicable statutory deductions under section 49 of the Employment Act
  7. 7.Respondent to issue the Claimant with a Certificate of Service
  8. 8.Each party to bear their own costs
  9. 9.All other reliefs sought by the Claimant declined

Authorities

#

Legislation

  • Constitution of Kenya, 2010Articles 41 and 47
  • Employment Act, 2007Sections 28, 40, 41(1), 43(1) and (2), 44(3), 44(4)(g), 45(1) and (2), 47(5), 49, 51; Part IV
  • Anti Corruption and Economic Crimes Act, 2003Section 63
  • Employment and Labour Relations Court (Procedure) RulesRule 28(3)

Cases cited (8)

  • Josephine M. Ndungu & others v Plan International Inc
    [2019] eKLR
  • Muthaiga Country Club v Kudheiha Workers
    [2017] eKLR
  • Kenya Revenue Authority v Reuwel Waithaka Gitahi & 2 others
    [2019] eKLR
  • Thomas Sila Nzivo v Bamburi Cement Limited
    [2014] eKLR
  • National Bank of Kenya v Samuel Nguru Mutonya
    [2019] eKLR
  • Kenya Power & Lighting Company Limited vs. Aggrey Lukorito Wasike
    [2017] eKLR
  • Transport Workers Union v African Safari Diani Adventure
    [2013] eKLR
  • National Bank of Kenya v Anthony Njue John
    [2019] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (unfair termination claim)

Key timeline

#

Practical implications

#

Frequently asked questions

#

Later judgments citing this (21)

#

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

Cite this brief

#

Cite this brief

Caselaw, "Galgalo Jarso Jillo v Agricultural Finance Corporation [2021] KEELRC 323 (KLR)", Case Analysis (2021). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2021/323/eng@2021-11-25

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