Olake v Kituo Cha Sheria (Legal Advice Centre) (Cause 22 of 2020) [2023] KEELRC 1158 (KLR)
The bottom line
#A Kenyan court ruled that even when an employer has good reason to dismiss, skipping proper disciplinary procedure makes the dismissal unfair and payable.
What this practically means
#Executive summary
#Key legal issues
#Whether the Claimant was an employee from March 24, 2017 or a consultant
The court found the Claimant was an employee from March 24, 2017 on a balance of probabilities.
Attendance records showed clocking in 8am to 5pm; an email from the Executive Director dated March 23, 2017 offered him a position to report the following day; he was listed as an employee in a staff list; he received consistent monthly payments of Kshs 76,000/= from May 22, 2017; the Respondent produced no consultancy agreement, invoices or withholding tax certificates. Section 2 of the Employment Act recognises oral contracts of service.
Whether the Claimant was discriminated against
Discrimination proved only in respect of non-payment of acting allowance and non-payment of salary during suspension; all other discrimination claims failed.
The Claimant acted as Co-ordinator Finance and Administration from December 7, 2017 to March 26, 2018 per the clearance form and Executive Director's email, yet was not paid acting allowance as other acting staff were; his supervisor on suspension received full salary while he received nothing, contrary to the suspension letter's half-pay promise, with no policy basis. Claims on medical cover, provident fund, team building, leave and discriminatory dismissal lacked proof.
Whether termination was substantively justified
Valid and fair reason established on the documentary evidence despite absence of a show cause letter.
The audit report by Carr Stanyer Gitau & Co revealed irregularities: unauthorised diversion of Kshs 225,650/= from the Rapid Project, mix up of petty cash and uber payments, and unauthorised cash payments. The Claimant admitted some irregularities and did not respond to others. Under Section 43(2) the employer's genuine belief at termination is what matters, and the Respondent discharged this burden.
Whether the termination procedure was fair under Section 41
Procedural fairness was breached; termination was unfair for want of procedural propriety.
No notice to show cause itemising specific allegations was issued; the invitation letter made no specific allegations; only pages 7-9 of the disciplinary minutes were filed, omitting attendees, agenda and the Claimant's representations; the Respondent breached Clause 31(3) of its own HR Manual; the appeal outcome was not communicated. Applying Postal Corporation of Kenya v Andrew K. Tanui, the four elements of Section 41 were not met.
The Counter-claim for Kshs 263,150/= for negligence and loss
Counter-claim unproven and dismissed.
Neither RWI nor RWII testified on negligence or unjust enrichment; particulars of negligence were not disclosed; RWII could not confirm any money was lost; the audit report made no reference to negligence or unjust enrichment by the Claimant.
Legal principles established
#- For termination to pass muster it must be substantively justifiable and procedurally fair under Sections 41 and 45 of the Employment Act.
- An employer must notify the employee of the specific allegations by way of notice to show cause before a disciplinary hearing; failure to do so breaches Section 41.
- An oral contract of service is recognised; absence of a consultancy agreement, invoices or withholding tax certificates defeats a claim that a person was a consultant.
- The burden of proving discrimination shifts to the employer only once the employee establishes prima facie discrimination under Section 5(7) of the Employment Act.
- House allowance is a statutory entitlement unless salary is consolidated or housing is provided; 15% of basic pay is a reasonable rate.
Court orders
#- 1.Declaration that termination of the Claimant's employment was unfair.
- 2.Declaration that the Claimant was discriminated by non-payment of acting allowance and salary during suspension.
- 3.Unpaid salary for 6 days (March 24, 2017 to March 31, 2017).
- 4.Unpaid acting allowance.
- 5.Unpaid salary during suspension.
- 6.Unpaid salary for 6 days September 2019.
- 7.Accrued annual leave.
- 8.Leave travelling allowance 2018/2019.
- 9.House allowance at 15% of actual basic salary from October 2, 2017 to the date of termination of employment.
- 10.One (1) month's salary in lieu of notice.
- 11.Equivalent of 2 months salary as compensation for unfair termination.
- 12.General damages Kshs 200,000/=.
- 13.Certificate of service.
- 14.Costs of the suit to the Claimant.
- 15.Interest at court rates from the date of judgment till payment in full.
- 16.Counter-claim dismissed as unproven.
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (first-instance employment claim and Counter-claim)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Olake v Kituo Cha Sheria (Legal Advice Centre) (Cause 22 of 2020) [2023] KEELRC 1158 (KLR)", Case Analysis (2023). Cause No 22 of 2020. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/1158/eng@2023-05-16
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.