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ELRCPartially AllowedMemorandum of Appeal dated May 18, 2022 (Gatundu Principal Magistrate's appeal)· [2023] KEELRC 457 (KLR)

Ndarugu Tea Factory Company Limited v Olouch (Appeal E058 of 2022) [2023] KEELRC 457 (KLR)

Employment and Labour Relations Court
23 February 2023
2,302 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 an unfair dismissal ruling against KTDA's Ndarugu Factory but cut the compensation from 12 months' salary to 9.

What this practically means

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Executive summary

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This is a first appeal to the Employment and Labour Relations Court against the judgment of H M Ng'ang'a, Principal Magistrate at Gatundu Law Courts, delivered on April 20, 2022, which found that a Boiler Technician employed since September 21, 2009 had been unlawfully and unfairly dismissed on July 2, 2019 over a missing boiler transmitter float ball, and awarded him 12 months' salary (Kshs 695,820). The appellant advanced seven grounds, contending that the trial court misapprehended the facts, ignored the claimant's attendance at the disciplinary meeting with a union representative, overlooked a union appeal outcome upholding the procedure, failed to value a boiler inspection report produced as an exhibit, and awarded maximum compensation without applying sections 49 and 50 of the Employment Act. Applying the first-appeal duty in Selles vs Motor Boat Company Limited, the court re-evaluated the evidence and found the dismissal was grounded on an unproved allegation of theft - no witness to the alleged theft testified - and that the inspection report giving the boiler a clean bill of health was never produced in court or at the disciplinary hearing. The claimant's check list showed the boiler was faulty as far back as 2017. The court held the respondent failed to satisfy sections 41, 43 and 45 of the Employment Act and dismissed the appeal on liability. However, it found the trial court misdirected itself in awarding maximum compensation without considering section 49(1) and (4); considering the claimant's 9 years of diligent service, payment of terminal benefits and lack of contribution, it substituted an award of 9 months' salary (Kshs 521,055) with interest at court rates from the date of the lower court's judgment, and ordered the appellant to pay costs of both courts.

Key legal issues

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01

Whether the claimant's dismissal was for a valid reason

Holding

The respondent failed to prove a valid reason for dismissal; the counter-claim alleging theft of the transmitter float ball was not proved as no witnesses to the alleged theft were called

Reasoning

The termination letter attributed the dismissal to a missing transmitter float ball which the respondent alleged the claimant stole. No witness who allegedly saw the claimant take the float ball testified. The claimant rebutted the allegation with a check list showing the JTA boiler was faulty as far back as September 20, 2017. The inspection report said to give the boiler a clean bill of health was never produced in court or at the disciplinary hearing.

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02

Whether the termination procedure was fair

Holding

The procedure was unfair because the claimant was denied the opportunity to produce relevant documents at the disciplinary hearing and his defence was not considered

Reasoning

The learned magistrate faulted the respondent for denying the claimant the opportunity to produce relevant documentation before the disciplinary committee to prove his innocence. This court agreed that the decision to terminate was rushed and ignored the claimant's defence, failing the requirements of section 41 of the Employment Act.

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03

Whether the award of 12 months' salary as compensation was justified

Holding

The trial court misdirected itself by not considering section 49(1) and (4) of the Employment Act before awarding maximum compensation; the award was reduced to 9 months' salary

Reasoning

The trial court awarded the maximum 12 months' compensation without laying any legal basis or applying the principles in sections 49 and 50 of the Employment Act. This court considered that the claimant had served diligently for 9 years, was paid terminal benefits, received a certificate of service, did not contribute to the dismissal, and desired to serve until retirement, and substituted an award of 9 months' salary.

p. 4

Legal principles established

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  • On a first appeal, the court is obliged to evaluate the evidence afresh and reach its own conclusion, while according due deference to the trial court's advantage of seeing and hearing the witnesses, and interferes only where the trial court misdirected itself on facts or law leading to injustice
  • An employer must both have a valid reason for termination and follow a fair procedure under sections 41, 43 and 45 of the Employment Act; failure on either renders dismissal unlawful and unfair
  • In awarding compensation under section 49 of the Employment Act, the court must consider the statutorily prescribed factors, including the employee's length of service and contribution to the termination

Court orders

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  1. 1.The appeal on the issue of liability is dismissed
  2. 2.The appeal partly succeeds on the issue of quantum
  3. 3.Judgment entered in favour of the claimant/respondent for a sum of Kshs 521,055 (equivalent of 9 months' salary, substituting the 12 months' award of Kshs 695,820)
  4. 4.The award is payable with interest at court rates from the date of the judgment of the lower court till payment in full
  5. 5.The appellant to meet the costs of the suit before the trial court and this court

Authorities

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Legislation

  • Employment Actsections 41, 43, 45, 49(1)(4), 50

Cases cited (2)

  • Selles vs Motor Boat Company Limited
  • National Bank of Kenya vs Samuel Nguru Mutonya
    [2019] eKLR
On appeal from
Principal Magistrate's Court, Gatundu Law Courts
Jurisdiction invoked
First appeal from the Principal Magistrate's Court (employment and labour relations matter)

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, "Ndarugu Tea Factory Company Limited v Olouch (Appeal E058 of 2022) [2023] KEELRC 457 (KLR)", Case Analysis (2023). Memorandum of Appeal dated May 18, 2022 (Gatundu Principal Magistrate's appeal). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/457/eng@2023-02-23

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