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ELRCPartially AllowedPetition (consolidated with Cause Number 722 of 2015)· [2021] KEELRC 1166 (KLR)

Jane Wanja Muthaura v Ethics and Anti-Corruption Commission [2021] KEELRC 1166 (KLR)

Employment and Labour Relations Court
28 July 2021
7,839 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~31 min to read original · ~4 min brief

The bottom line

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The Employment Court ordered the EACC to pay a former finance officer over Kshs. 10.2 million after finding her firing had no valid reason and no fair process.

What this practically means

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Executive summary

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Jane Muthaura, formerly Principal Officer Finance and Accounts of the defunct Kenya Anti-Corruption Commission, petitioned the Ethics and Anti-Corruption Commission, challenging the termination of her contract on 28th March 2013 and seeking declarations of constitutional violations, together with allowances, notice pay, gratuity and compensation totalling some Kshs. 21.9 million. The Commission's Claim in Cause No. 722 of 2015, consolidated with the Petition, sought a refund of Kshs. 3,012,976 allegedly paid as irregular acting and special duty allowances. The Court found that during the constitutional transition, in the absence of the Director and Assistant Directors, the Governance Manual continued to apply, and the acting and special duty allowances were lawfully payable and regularly paid. Ministry circulars could not override the Manual of an Independent Commission, and the Auditor-General's Report was not conclusive evidence of irregularity. The Respondent's refund claim was accordingly declined. On termination, the Court held there was no valid reason and no procedural fairness - no charges, show-cause letter or disciplinary hearing - and that the partially constituted Commission's actions, including vetting, were nullities. However, the grievances were contractual rather than constitutional, so no constitutional violations were declared. The Court awarded 12 months' gross salary as compensation (Kshs. 5,652,000), notice pay (Kshs. 1,413,000), annual leave pay (Kshs. 326,076), service gratuity (Kshs. 2,810,880) and salary for two days worked (Kshs. 39,336), totalling Kshs. 10,241,292, with costs to the Petitioner and interest at court rates from judgment. Claims for lost acting allowances, responsibility allowance and a separate contract-remainder award were refused as unsubstantiated or double compensation.

Key legal issues

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01

Whether acting and special duty allowances were lawfully paid

Holding

The allowances were payable and paid regularly under clauses 7.5 and 7.6 of the Governance Manual, which continued to apply during transition

Reasoning

In the absence of a definitive transitional law on allowances, the Governance Manual continued to apply, as the Government Financial Management Act was deemed to apply in ACIYE. The requirement of Director/Assistant Director approval could not be fulfilled because those offices stood abolished, and appointment was made in writing by the Advisory Board, Permanent Secretary Treasury and Head of Public Service. The Auditor-General's Report was not conclusive evidence of irregularity, and Ministry circulars could not override the Manual of an Independent Commission.

p. 8
02

Whether the Respondent's claim for refund of Kshs. 3,012,976 succeeds

Holding

The Claim is declined in its entirety

Reasoning

Since the allowances were lawfully paid, there is no basis for a refund. The Auditor-General's Report did not mention the Governance Manual, the Petitioner was not called to answer audit queries, and Ministry circulars cannot override the Manual of an Independent Commission.

p. 8
03

Whether termination was fair and lawful

Holding

Termination was unfair and unlawful - no valid reason was shown and procedure was disregarded

Reasoning

There were no allegations put to the Petitioner, no show-cause letter, no charges, no disciplinary hearing and no findings of any employment offence. The termination followed a pattern of demotion and humiliation by a Commission not fully constituted, and vetting leading to termination was a nullity per ACIYE and Mtwarachiu. Termination at the employer's will is misconceived in Kenyan law.

p. 9
04

Whether constitutional rights were violated

Holding

No constitutional violations established; remedies lie under the Employment Act

Reasoning

The violations complained of stemmed from inconsistent advice and misunderstanding of transitional provisions, affecting the contract of employment rather than constitutional rights. The Employment Act offers adequate remedies without recourse to the Constitution.

p. 9
05

Remedies payable

Holding

12 months' compensation, 3 months' notice pay, 18 days leave pay, service gratuity and 2 days' salary totalling Kshs. 10,241,292

Reasoning

Compensation assessed on length of service (7 years), clean record, premature termination 12 months before contract expiry, and unlawful procedure, with Section 49(4)(e) and (f) factors. Gross monthly salary of Kshs. 471,000 adopted; allowances excluded from gross pay. Gratuity awarded as computed by the Respondent at Kshs. 2,810,880.

p. 10

Legal principles established

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  • All termination of contracts of employment must meet the tests of substantive justification and procedural fairness
  • Termination at the will of the employer is not a valid principle of employment law in Kenya
  • During the transition under the Sixth Schedule, existing laws and instruments applicable to transitioning institutions continue to apply in the interim; there are no gaps contemplated
  • Circulars from the Public Service Ministry cannot override the Governance Manual of an Independent Commission
  • Where compensation for unfair termination is awarded, the remainder of a fixed-term contract cannot form the basis for a separate award

Court orders

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  1. 1.The Claim by the Respondent under Cause Number 722 of 2015 for Kshs. 3,012,976, costs and interest is declined
  2. 2.Declaration that termination of the Petitioner's contract was unfair and unlawful
  3. 3.Respondent to pay the Petitioner Kshs. 39,336 as salary for 2 days worked
  4. 4.Respondent to pay compensation for unfair termination equivalent of 12 months' gross salary at Kshs. 5,652,000
  5. 5.Respondent to pay 3 months' salary in notice pay at Kshs. 1,413,000
  6. 6.Respondent to pay annual leave of 18 days at Kshs. 326,076
  7. 7.Respondent to pay service gratuity at Kshs. 2,810,880
  8. 8.Total award of Kshs. 10,241,292
  9. 9.Costs to the Petitioner
  10. 10.Interest at court rates from the date of Judgment till payment is made in full

Authorities

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Legislation

  • Constitution of Kenya, 2010Articles 10, 25, 27, 41, 47, 50, 79, 259(3)(b), Fifth/Sixth Schedule (Transitional and Consequential Provisions)
  • Employment ActSections 5, 35, 36, 41, 45, 49 (including 49(4)(e) and (f))
  • Ethics and Anti-Corruption Commission Act No. 22 of 2011
  • Anti-Corruption and Economic Crimes Act, 2003
  • Government Financial Management Act, 2004Section 17
  • Retirement Benefits Authority (RBA) Act
  • EACC Governance ManualClauses/Regulations 7.5 and 7.6

Cases cited (10)

  • African Centre for International Youth Exchange [ACIYE] & 2 others v. Ethics & Anti-Corruption Commission & another
    [2012] e-KLR; Petition Number 334 of 2012
  • Pravin Bowry v. Ethics and Anti-Corruption Commission
    [2013] e-KLR
  • Communication Commission of Kenya and 5 Others v. Royal Media Services and 5 Others
    SC Petition Nos. 14, 14A, 14B, 14C of 2014
  • Ethics and Anti-Corruption Commission v. Nicholas Mwenda Mtwaruchiu and 8 Others
    [2018] e-KLR
  • Nicholas Mwenda Mtwarachiu and 7 Others v. Ethics and Anti-Corruption Commission and 5 Others
    [2014] e-KLR
  • Joseph Muthama Ndambuki and 4 others v. Delmonte [K] Limited
  • Kenfreight [E.A.] Limited v. Benson K. Nguti
    [2019] e-KLR
  • Jane Jerotich Sirma v. Postal Corporation of Kenya
    [2020] e-KLR
  • Herman Musabi v Teachers Service Commission and the Attorney-General
    [2018] e-KLR
  • Ruth Muganda v. Kenya Anti-Corruption Commission
    H.C. Misc. Application No. 288 of 2012
Jurisdiction invoked
Employment and labour relations jurisdiction; petition alleging violation of Articles 10, 27, 41, 47 and 50 of the Constitution and 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 (2)

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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, "Jane Wanja Muthaura v Ethics and Anti-Corruption Commission [2021] KEELRC 1166 (KLR)", Case Analysis (2021). Petition (consolidated with Cause Number 722 of 2015). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2021/1166/eng@2021-07-28

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