Gatoto v Muki Sacco Limited (Cause 45 of 2021) [2023] KEELRC 66 (KLR)
The bottom line
#A Kenyan Sacco was ordered to pay over Kshs 1.5 million for sacking its IT manager after a cyber-attack, because it had no proof he caused the breach.
What this practically means
#Executive summary
#Key legal issues
#Valid reason for termination
No valid reason existed; alleged negligence not established
The letter of dismissal alleged gross misconduct through negligence in sharing the administrator password and failing to secure the system. RW1 admitted the service agreement permitted giving the password to the provider and that the malicious software was installed by a Surestep official. CW2 testified the breach originated at the provider's end and was undetectable from the Respondent's side. The Claimant had also flagged system weaknesses with nothing done.
Procedural fairness
Due process under section 41 was followed
The Claimant admitted being given adequate time to prepare, was heard by the Board which explained areas of fault and exoneration, was advised of his right to a witness, and had his appeal considered. The court therefore found procedural compliance notwithstanding the unfair substantive reason.
Counterclaim for loss and loan
Loss claim fails; loan claim succeeds
The court found the Claimant not wholly responsible for the fraud, the culprits were arrested and charged, and the insurance refunded the loss, so the loss claim was not payable. On the loan, although the Claimant denied it and no evidence in chief was led, his pay slip (Exb. 24) showed an outstanding loan, justifying judgment for the Respondent on that head.
Remedies
Withheld half salary during suspension and 8 months' compensation awarded
Having found the dismissal unfair, the court awarded the withheld half salary for the suspension period (28th November 2020 to 11th February 2021) and compensation equivalent to eight months' salary, reflecting the unfairness of a dismissal without valid reason, offset by the loan counterclaim.
Legal principles established
#- An employer must establish valid reasons existing at the time of termination for a dismissal to be upheld under section 43 of the Employment Act
- A termination is unfair where the employer fails to prove a valid and fair reason and a fair procedure under section 45(2) of the Employment Act
- Where an employee is summarily dismissed without valid reason, compensation under section 49 may be awarded even where procedure was fair
Court orders
#- 1.Declaration that the Claimant was dismissed unfairly and unjustifiably for lack of valid reason
- 2.Award of withheld half salary during suspension: ½ x 162,200 x 3 = 243,200
- 3.Compensation equivalent to 8 months' salary for unfair termination = 1,297,600
- 4.Total award 1,540,800 less counterclaim of 565,189.02 and less statutory deductions
- 5.Respondent to pay for Respondent in terms of counterclaim Kshs.975,610.98 for outstanding loan (set off against award)
- 6.Respondent to pay costs of the suit plus interest at court rates from date of judgment
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction under the Employment Act and section 12(3)(viii) of the ELRC Act (invoked by the Respondent on the counterclaim)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Gatoto v Muki Sacco Limited (Cause 45 of 2021) [2023] KEELRC 66 (KLR)", Case Analysis (2023). ELRC Cause (Nairobi), memorandum of claim dated 30th July 2021. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/66/eng@2023-01-24
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.