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ELRCDismissedNot stated in judgment· [2022] KEELRC 330 (KLR)

James Obare Ong’ondo v Olkurruk Lodge Ltd t/a Angama Mara [2022] KEELRC 330 (KLR)

Employment and Labour Relations Court
30 March 2022
OMONESMUS N. MAKAU
3,486 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Employment Court upheld a clinic's dismissal of an employee who secretly supplied it overpriced medicine through his own company, ruling fraud justified summary dismissal.

What this practically means

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Executive summary

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The claimant, a clinical officer employed by the respondent from 15 October 2016, was summarily dismissed on 5 April 2019 after the respondent intercepted a delivery of medicine from JIMDOM E.A Pharmaceuticals, a company the claimant had recommended as a supplier. Investigations revealed the claimant was the sole director and shareholder of JIMDOM, that the invoices bore the KRA PIN and registration number of a former supplier, Spillway Pharmaceutical, and that payment was made to the claimant's personal Cooperative Bank account. The respondent paid Kshs 1,050,635 for medicine whose Transchem invoice was Kshs 245,739.08. The claimant sued for a declaration that the dismissal was unfair, damages of Kshs 1,558,700, interest and costs, contending he was dismissed without valid reason or fair process. The respondent defended the dismissal as justified fraud and breach of trust, and relied on authority including Bamburi Cement Ltd v William Kilonzo and the Canadian decision McKinley v B.C. Tel. The court framed three issues: validity of the reason, fairness of procedure, and relief. It held the claimant's undisclosed conflict of interest and fraudulent invoicing breached the trust inherent in the employment relationship, justifying summary dismissal under section 44(4)(g) of the Employment Act. It further found the claimant was accorded an oral disciplinary hearing as required by section 41. The claim was dismissed with costs.

Key legal issues

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01

Validity of the reason for summary dismissal

Holding

The respondent proved a valid and fair reason - fraud, conflict of interest and breach of trust - justifying summary dismissal under section 44(4)(g)

Reasoning

The claimant admitted being sole shareholder and director of JIMDOM E.A Limited, the supplier he recommended, without disclosing his interest. Invoices used another company's KRA PIN and registration number, and payment went to his personal bank account. The company bought medicine cheaply from Transchem and resold it to the employer at greatly inflated prices. This dishonesty breached the trust inherent in the employment relationship, satisfying the McKinley test adopted in Bamburi Cement.

p. 5
02

Fairness of the procedure followed

Holding

The claimant was accorded a fair hearing under section 41 of the Employment Act

Reasoning

The claimant admitted he was invited to a disciplinary hearing, attended on 5/4/2019, was questioned by the panel and answered, then stepped outside and was called back after 30 minutes and given a dismissal letter. The court found he was afforded a chance to defend himself in an oral hearing and the panel considered his defence.

p. 5

Legal principles established

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  • Just cause for dismissal exists where an employee's dishonesty violates an essential condition of the employment contract, breaches the trust inherent in the work relationship, or is fundamentally inconsistent with the employee's obligations to the employer

Court orders

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  1. 1.Declined to declare that the dismissal was unfair and irregular
  2. 2.Declined to award any compensatory damages under section 49 of the Employment Act
  3. 3.Dismissed the suit with costs

Authorities

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Legislation

  • Employment Act No. 11 of 2007section 41
  • Employment Act No. 11 of 2007section 45(1) & (2)
  • Employment Act No. 11 of 2007section 44(4)(g)
  • Employment Act No. 11 of 2007section 42(1)
  • Employment Act No. 11 of 2007section 49
  • ELRC Procedure RulesRule 28(3)

Cases cited (5)

  • Abraham Gumba v Kenya Medical Supplies Authority
    [2014] eKLR
  • Bamburi Cement Limited v William Kilonzo
    [2016] eKLR
  • Kenya Revenue Authority v Reuwel Waithaka Gitahi and 2 others
    [2019] eKLR
  • Kenya Power & Lighting Co. Ltd v Aggrey Lukerito Wasike
    [2017] eKLR
  • Pius Machafu Isindu v Lovington Security Guards Ltd
    [2017] eKLR
Jurisdiction invoked
Original jurisdiction of the Employment and Labour Relations Court under the Employment Act No. 11 of 2007

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, "James Obare Ong’ondo v Olkurruk Lodge Ltd t/a Angama Mara [2022] KEELRC 330 (KLR)", Case Analysis (2022). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2022/330/eng@2022-03-30

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