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ELRCPartially AllowedAppeal against the decision in ELRC No 2466 of 2019, Chief Magistrate's Court at Milimani· [2023] KEELRC 865 (KLR)

Delta Point Distributors Ltd t/a Milele Lounge v Ndichu (Employment and Labour Relations Appeal E169 of 2021) [2023] KEELRC 865 (KLR)

Employment and Labour Relations Court
14 April 2023
SRStella Rutto
4,441 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan employer's dismissal was unfair because it had no valid proof or fair hearing, but some employee awards were reduced for lack of evidence.

What this practically means

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Executive summary

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The respondent was employed by the appellant as Operations Manager from March 17, 2017. In June 2019 he was sent on compulsory leave for 21 days pending an audit into alleged embezzlement. Upon resuming, he claimed he was verbally and summarily dismissed without a hearing, and he sued for various employment reliefs before the Chief Magistrate's Court at Milimani (ELRC No 2466 of 2019). The trial court allowed the claim with costs on November 26, 2021. The employer appealed on nine grounds, principally that the claim was unproven and the awards unsupported by pleadings and evidence. Justice Stella Rutto re-evaluated the evidence as a first appellate court and framed three issues: substantive justification, procedural fairness, and remedies. On substance, the court found the audit report unsigned, unattributed, generic and of low probative value, so the employer failed to prove valid and fair reasons for dismissal under Sections 43 and 45 of the Employment Act. On procedure, there was no evidence of a show cause letter, disclosure of the audit or any hearing as required by Section 41, whose minimum standards the court, following Postal Corporation of Kenya vs Andrew K Tanui, held to be mandatory; the dismissal was therefore procedurally unfair. On remedies, the court sustained compensatory damages of six months' salary (Kshs 360,000), one month's salary in lieu of notice, June 2019 salary, 4 days' July salary and annual leave limited to 18 months, but set aside the awards for unremitted NHIF, service pay, rest days and overtime for lack of proof or statutory exclusion. The decretal amount was reduced from Kshs 1,308,168 to Kshs 549,000, with interest at court rates. Costs of the appeal and trial court were awarded to the respondent, pegged on the final award, since the appeal substantially collapsed.

Key legal issues

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01

Substantive justification for summary dismissal

Holding

The employer failed to prove a valid and fair reason; the audit report was unsigned, unattributed and generic

Reasoning

The court examined the audit report relied on as the basis of dismissal and found serious evidential gaps: it was unsigned, unowned, its author and period unknown, and its content generic. These gaps lowered its probative value, so the employer failed to discharge the Section 43 burden and the dismissal was substantively unfair.

p. 5
02

Procedural fairness of the dismissal

Holding

No evidence of a show-cause letter, hearing or correspondence; the Section 41 process was not undertaken

Reasoning

The court found no evidence that a show cause letter was issued, that the audit report was shared with the respondent, or any correspondence inviting him to respond. Applying Postal Corporation of Kenya vs Andrew K Tanui, Section 41 sets minimum procedural standards, and failure to comply rendered the dismissal procedurally unfair.

p. 6
03

Remedies: rest days and overtime

Holding

The burden of proving overtime rests on the employee; award set aside

Reasoning

Relying on Rogoli Ole Manadiegi vs General Cargo Services Limited, the court held that an employee claiming overtime must establish hours or days served in excess of the legal maximum; the employer's custody of records does not shift that burden. No such proof was tendered, so the award could not stand.

p. 8
04

Remedies: service pay and NHIF

Holding

Service pay unavailable to an NSSF member; NHIF not payable to the employee in the form of an award

Reasoning

The respondent was a registered NSSF member and therefore excluded from service pay under Section 35(6). The NHIF statement proved remittances for the months exhibited and did not show non-remittance; the proper remedy would be an order for remittance to the Fund, not an award to the employee.

p. 8
05

Remedies: annual leave

Holding

Leave entitlement is mandatory and cannot be diminished by industry practice; employer must keep records of off days

Reasoning

Under Section 28 of the Employment Act, leave entitlement is mandatory. The employer claimed off days in the off-peak season constituted leave but produced no records. The respondent was entitled to leave for the 18 months preceding exit under Section 28(4).

p. 7

Legal principles established

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  • The employer bears the burden of proving valid and fair reasons for termination; default renders termination unfair
  • Section 41 of the Employment Act sets mandatory minimum procedural requirements for dismissal
  • An unsigned, unattributed audit report has little probative value as a basis for dismissal

Court orders

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  1. 1.The finding by the trial Court that the respondent's dismissal was unfair and unlawful is sustained.
  2. 2.The award of 6 months' salary as compensatory damages is sustained in the sum of Kshs 360,000.00.
  3. 3.The award of one month's salary in lieu of notice is sustained in the sum of Kshs 60,000.00.
  4. 4.The award of salary for the month of June, 2019 is sustained in the sum of Kshs 60,000.00.
  5. 5.The award of salary for 4 days in the month of July, 2019 is sustained in the sum of Kshs 8,000.00.
  6. 6.The award of annual leave is sustained but limited to 18 months hence Kshs 63,000.00.
  7. 7.The awards in respect of unremitted NHIF, service pay, rest days and overtime are set aside.
  8. 8.The decretal amount of Kshs 1,308,168.00 is set aside and the award is determined at Kshs 549,000.00.
  9. 9.Interest on the final award at court rates from the date of the judgment until full payment.

Authorities

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Legislation

  • Employment ActSection 41(1), 41(2), 43(1), 45(2), 45(2)(c), 47(5), 35(6), 28, 28(4), 44(3), 44(4)
  • Civil Procedure RulesOrder 21 Rule 1
  • Civil Procedure ActSection 1B
  • Constitution of KenyaArticle 159(2)(d), Article 48

Cases cited (6)

  • Kenya Revenue Authority vs Menginya Salim Murgani
    Civil Appeal No 108 of 2009
  • CFC Stanbic Bank Limited vs Danson Mwashako Mwakuwona
    (2015) eKLR
  • Kenya Revenue Authority vs Reuwel Waithaka
    (2019) eKLR
  • Abok James Odera t/a A J Odera & Associates vs John Patrick Machira t/a Machira & Co Advocates
    [2013] eKLR
  • Postal Corporation of Kenya vs Andrew K Tanui
    [2019] eKLR
  • Rogoli Ole Manadiegi vs General Cargo Services Limited
    [2016] eKLR
On appeal from
Chief Magistrate's Court at Milimani (ELRC)
ELRC No 2466 of 2019
Jurisdiction invoked
First appellate court over the ELRC claim decided by the Chief Magistrate's Court at Milimani

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, "Delta Point Distributors Ltd t/a Milele Lounge v Ndichu (Employment and Labour Relations Appeal E169 of 2021) [2023] KEELRC 865 (KLR)", Case Analysis (2023). Appeal against the decision in ELRC No 2466 of 2019, Chief Magistrate's Court at Milimani. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/865/eng@2023-04-14

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