Godfrey Odipo Tom v Tabasamu Sacco Limited [2022] KEELRC 768 (KLR)
The bottom line
#A Kenyan court ruled that punishing an employee for the company's own system failures amounts to constructive dismissal, awarding him nearly Kshs. 900,000.
What this practically means
#Executive summary
#Key legal issues
#Whether the claimant's resignation amounted to constructive dismissal
Yes - the unilateral unfair surcharge followed by demotion amounted to fundamental breach destroying trust and confidence
The internal audit attributed the fraud loss to deficiencies in the respondent's systems (no vendor communication policy, no vendor register, no FRC registration, untrained cash-handling staff), not to the claimant. Despite objections, the respondent surcharged the claimant Kshs. 139,802 by overdrawing his FOSA account (breaching section 19(3)) and demoted him to Senior Credit Officer with reduced allowance and authority. These double punishments were a fundamental breach and the claimant promptly resigned without condoning it.
Whether the surcharge under section 19(1)(c) of the Employment Act was lawful
No - the loss was not attributable to the claimant's negligence or dishonesty, so section 19(1)(c) did not apply
Section 19(1)(c) permits deduction for money shortages arising from an employee's negligence or dishonesty where the contract provides for entrustment with money. The court found the claimant took appropriate steps within his authority during the incident, had a clean record, and that the fraud succeeded due to the respondent's deficient operational systems as its own audit report disclosed, not any failure of due care by the claimant.
Remedies and the counterclaim
Claimant awarded 12 months' compensation, one month's notice pay, deducted salaries for June-August 2019, and 15 months' gratuity at 31%, less admitted loans as set-off; certificate of service to be issued
Under section 49 the court considered the clean record of service, 4.5 years served on the second fixed-term contract, the unexpired term, and aggravating factors including the unilateral surcharge, denial of pay and demotion. Leave claim was abandoned; loans of Kshs. 764,893.59 were admitted and set off, yielding a net award of Kshs. 894,639.28. The counterclaim for notice pay failed.
Legal principles established
#- To establish constructive dismissal, the employee must show a fundamental breach of the contract of service by the employer making it difficult or impossible to continue in service, without condoning or consenting to the breach; at its heart is breach of the duty of trust and confidence
- It is unfair labour practice for an employer to visit upon the employee adverse consequences for losses attributable to deficiencies in the employer's own operational policies and systems
- A demotion may entail placement in a position with diminished remuneration and/or diminished scope of control, authority or lower reporting level; double punishment by unfair surcharge and unfair demotion amounts to fundamental breach justifying constructive dismissal
- An employer may only deduct from wages an amount equal to a shortage arising through the employee's negligence or dishonesty where the contract specifically provides for entrustment with money, per section 19(1)(c) of the Employment Act
Court orders
#- 1.Declaration that the resignation amounted to unfair constructive dismissal
- 2.Respondent to pay the claimant Kshs. 894,639.28 by 01.04.2022, failing which interest to run from the date of judgment until full payment
- 3.Respondent to deliver the certificate of service by 01.03.2022
- 4.Respondent to pay 50% of the claimant's costs of the suit
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 and Article 41(1) of the Constitution (fair labour practices)
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (1)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Kiogora v Ndarawetta Tea Factory Ltd (Cause E006 of 2025) [2026] KEELRC 2446 (KLR)[2026] KEELRC 2446 (KLR)23 Jul 2026
Cite this brief
#Cite this brief
Caselaw, "Godfrey Odipo Tom v Tabasamu Sacco Limited [2022] KEELRC 768 (KLR)", Case Analysis (2022). Not stated in judgment (ELRC claim filed 14.10.2019). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2022/768/eng@2022-02-18
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.