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ELRCPartially AllowedNot stated in the judgment· [2023] KEELRC 1236 (KLR)

Muema v Kenga Equitorial Hotels Limited t/a Mombasa Continental Resort (Cause E007 of 2022) [2023] KEELRC 1236 (KLR)

Employment and Labour Relations Court
25 May 2023
2,523 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
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The bottom line

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A Kenyan court ruled that firing an employee for alleged fraud without a hearing was unfair, but awarded only one month's salary as compensation.

What this practically means

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Executive summary

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The claimant, employed as chief accountant on 14th August 2018, challenged the termination of his employment on 23rd October 2021 on allegations of involvement in fraudulent activities, contending he was never given a hearing and that his terminal dues were insufficient. He sought compensation of Ksh. 1,980,000, service charge, acting allowance, public holidays, off days, overtime and damages for defamation. The respondent denied the claims, asserting the termination followed the claimant's unsatisfactory explanations for personal cheques issued to him contrary to company policy, that dues including untaken leave were paid, and that the court lacked jurisdiction over the defamation claim. The court held that issuing personal cheques to a finance officer acting as bank agent is common practice, and that allegations of fraud required the employer to conduct a disciplinary hearing under Section 41 of the Employment Act, 2007. Termination without such a hearing was unlawful and unfair contrary to Section 45. Compensation was assessed at one month's salary (Ksh. 165,000), considering the claimant's warning on record and immediate payment of terminal dues. Claims for service charge, acting allowance, public holidays, off days and overtime failed for want of contractual or evidentiary support. On defamation, the court affirmed its jurisdiction over employment-related defamation but dismissed the claim for lack of precisely pleaded particulars linking any publication to the claimant's reputation. Judgment was entered for the claimant with compensation of Ksh. 165,000, and each party was ordered to bear its own costs.

Key legal issues

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01

Procedural fairness in termination

Holding

Termination on allegations of fraudulent activities without a hearing violated Sections 41 and 45 of the Employment Act and was unfair.

Reasoning

The respondent alleged the claimant fraudulently received cheques of Ksh. 503,873 and Ksh. 102,045 contrary to company policy. The court noted that issuing personal cheques to a bank agent in the finance department is common practice, so the allegations called for evidence and, more fundamentally, the claimant was never accorded a hearing as mandated by Section 41 before termination. Failure to follow the mandatory provisions rendered the termination unlawful and unfair under Section 45.

p. 3
02

Assessment of compensation for unfair termination

Holding

Compensation assessed at one month's salary, Ksh. 165,000, under Section 45(5) considering the warning on record and immediate payment of terminal dues.

Reasoning

Although termination was procedurally unfair, the court in assessing compensation considered the claimant's work record under Section 45(5): he had received a warning during employment which he admitted, and his terminal dues were paid immediately upon termination. These factors justified the reduced award of one month's salary rather than the Ksh. 1,980,000 claimed.

p. 4
03

Jurisdiction and proof in employment-related defamation

Holding

The court has jurisdiction over employment-related defamation but the claim failed for want of precise pleading and proof of publication of a defamatory statement.

Reasoning

A defamation claim must establish a defamatory statement published or caused to be published by the respondent referring to the claimant, with particulars pleaded with precision to allow a fair defence. From the claimant's case, only the EACC call regarding Homa Bay County cheques and the police escort from premises emerged; the EACC call was part of its investigative mandate and the police presence was not linked to any defamatory publication. The claim therefore failed.

p. 5
04

Leave and terminal dues

Holding

Untaken leave days should be paid based on basic salary, not gross, and 2021 leave is prorated under Section 28 of the Act; notice pay of Ksh. 165,000 allowed.

Reasoning

For the completed year 2020 the respondent's tabulation of untaken leave was fair as untaken leave is payable on basic salary. For 2021, leave pay due is prorated for months worked under Section 28. The respondent also offered one month's notice pay of Ksh. 165,000, which the court allowed, while noting the claimant offered no labour after 23rd October 2021.

p. 4

Legal principles established

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  • An employee alleged to have engaged in misconduct is entitled to a hearing before termination under Section 41 of the Employment Act, irrespective of holding a management position.
  • A court has jurisdiction over employment-related defamation where an employer publicises statements stigmatising the employee through work records or the employment relationship.

Court orders

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  1. 1.Judgment entered for the claimant with a finding that his employment was terminated unfairly
  2. 2.The claimant shall be paid compensation of Ksh. 165,000 (one month's salary)
  3. 3.Each party to bear own costs

Authorities

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Legislation

  • Employment Act, 2007Section 41
  • Employment Act, 2007Section 45 (including Section 45(5))
  • Employment Act, 2007Section 28
  • Employment Act, 2007Section 27

Cases cited (2)

  • Oyombe v Eco Bank Limited
    (Civil Appeal 185 of 2017) [2022] KECA 540 (KLR) (13 May 2022)
  • Mercy Kawira Mithika v Kenya Women Microfinance Bank PLC
    [2021] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (employment relationship); defamation jurisdiction within the employment relationship asserted by the court

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, "Muema v Kenga Equitorial Hotels Limited t/a Mombasa Continental Resort (Cause E007 of 2022) [2023] KEELRC 1236 (KLR)", Case Analysis (2023). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/1236/eng@2023-05-25

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