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ELRCPartially AllowedCause No 459 of 2017· [2023] KEELRC 1573 (KLR)

Anyona v Transline Classic Limited (Cause 459 of 2017) [2023] KEELRC 1573 (KLR)

Employment and Labour Relations Court
22 June 2023
5,045 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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What this practically means

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Executive summary

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The Claimant, employed by the Respondent as an accountant from May 2011, alleged that management forced him to resign in 2016 and claimed unpaid dues for services allegedly rendered to two related companies (ENA Investment Ltd and Classic Parcel Handlers Ltd), together with salary arrears, leave, notice pay, service pay and general damages. The Respondent denied forcing the resignation, contending that the Claimant absconded after being asked to surrender employment and tax records, and counterclaimed for Ksh. 2,421,606.00 in statutory penalties allegedly occasioned by the Claimant's negligence, plus pay in lieu of notice. The court held that the Claimant's letter of 3rd October 2016, which made resignation conditional on payment of dues, was not a valid resignation since a resignation must be unequivocal and unconditional; his absence from work therefore constituted desertion. However, desertion constitutes gross misconduct which the employer may only act upon after complying with section 41(2) of the Employment Act; the Respondent failed to prove reasonable efforts to trace and hear the Claimant, rendering the closure of the contract unlawful. The court found separate corporate personality barred claims against the Respondent for dues from the two other companies. On negligence, only PAYE penalties and interest of Ksh. 70,162.00 were attributable to the Claimant, as no job description established his mandate over other tax dockets and the Respondent was itself dilatory over the NHIF arrears. The Claimant was awarded Ksh. 33,300.00 salary arrears and Ksh. 94,500.00 accrued leave on uncontroverted evidence; notice pay, service pay, general damages and section 49 compensation (unpleaded) were declined. The Respondent was awarded Ksh. 70,162.00 on its counterclaim, with interest and costs to each successful party.

Key legal issues

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01

Whether the Claimant's letter of 3rd October 2016 constituted a valid resignation

Holding

The letter was conditional and did not qualify as a resignation; the contract was not terminated by it, and the Claimant's subsequent absence constituted desertion

Reasoning

The letter stated the Claimant would resign only upon payment of terminal dues. Since the condition was never fulfilled, the resignation never crystallized. The court relied on the principle that resignation must be unequivocal and unconditional, applying Heaven v Whitbread Group plc and Lonah Alumera Anyera v Eldoret Wagon Hotel. The Claimant therefore deserted duty rather than resigned.

p. 3
02

Whether the Respondent lawfully closed the employment relationship despite the Claimant's desertion

Holding

Although desertion constituted gross misconduct justifying summary dismissal, the Respondent failed to comply with section 41(2) of the Employment Act, rendering the closure irregular and unlawful

Reasoning

Section 41(2) obliges an employer to hear and consider an employee's representations before summary dismissal. An employee who deserts does not dismiss himself; the employer must take reasonable steps to trace the employee and subject him to disciplinary process. The Respondent produced no Occurrence Book entry, call logs or show-cause letter to prove efforts to trace the Claimant, so the contract closure was unlawful.

p. 5
03

Whether the Respondent was liable for dues allegedly earned from ENA Investment Limited and Classic Parcel Handlers Limited

Holding

The Respondent, as a distinct legal person, cannot be burdened with the liabilities of the other two companies absent an agency arrangement; the claim against the Respondent failed

Reasoning

Companies are separate and distinct legal entities; common shareholding or directors does not make one liable for the obligations of another. No board resolution or evidence proved that the Respondent requested the Claimant to work for the other companies. Had the Claimant wished to pursue those dues, he ought to have joined the two companies to the action, which he did not do.

p. 5
04

Whether the Claimant was negligent and liable for the Respondent's financial losses

Holding

Only the PAYE penalties and interest of Ksh. 70,162.00 were attributable to the Claimant; the withholding tax, corporate tax and NHIF losses were not

Reasoning

No job description was issued, so the Claimant's mandate over withholding income tax and corporate tax could not be established, and the Respondent's witnesses conceded this. The NHIF arrears arose months after the Claimant left and the Respondent failed to act diligently to continue remitting statutory dues after the records were lost. Only the PAYE lapse during the Claimant's tenure was unexplained.

p. 6
05

Whether the Claimant proved his claims for outstanding salary and accrued leave

Holding

The Claimant established a prima facie case which the Respondent failed to rebut, entitling him to Ksh. 33,300.00 salary arrears and Ksh. 94,500.00 leave dues

Reasoning

Under sections 10(6), 10(7) and 74 of the Employment Act, the employer must keep employment records including leave and remuneration particulars. Under section 112 of the Evidence Act, the burden lies on the party with special knowledge of a disputed fact. The Claimant testified on oath and gave notice of his demand; the Respondent offered no evidence to controvert it.

p. 8

Legal principles established

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  • A resignation must be unequivocal and unconditional; a conditional resignation does not crystallize where the condition is not fulfilled
  • An employee who deserts employment does not terminate the contract by abandonment; the employer must close the contract through the disciplinary process required by section 41(2) of the Employment Act
  • Separate corporate personalities mean one company cannot be burdened with the liabilities of another absent an agency arrangement, notwithstanding common shareholding or directors
  • In employment disputes, where satisfaction of a term is contested, the employer bears the burden of producing records under section 10(7) of the Employment Act once the employee establishes a prima facie case
  • General damages are not grantable in ordinary employment disputes; the reliefs are those stipulated in section 49 of the Employment Act read with section 12 of the Employment and Labour Relations Court Act
  • A court cannot grant a relief that was not specifically pleaded; parties are bound by their pleadings

Court orders

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  1. 1.Judgment for the Claimant of Ksh. 33,300.00 to cover salary arrears for September and part of October 2016
  2. 2.Judgment for the Claimant of Ksh. 94,500.00 to cover accrued leave dues from May 2011 to October 2016
  3. 3.Interest on the sums awarded at court rates from the date of the judgment
  4. 4.Costs of the primary claim awarded to the Claimant
  5. 5.Judgment for the Respondent on the counterclaim of Ksh. 70,162.00 being penalties and interest incurred from mishandling of the PAYE account, with interest at court rates from the date of the decision
  6. 6.Costs of the counterclaim awarded to the Respondent
  7. 7.Liberty to the parties to enter into set-offs for the amounts they are entitled to recover from each other

Authorities

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Legislation

  • Employment Actsection 44
  • Employment Actsection 41(2)
  • Employment Actsection 74
  • Employment Actsection 10
  • Employment Actsections 17 and 21
  • Employment Actsection 10(6)
  • Employment Actsection 10(7)
  • Employment Actsection 35(5) and 35(6)
  • Employment Actsection 49
  • Employment and Labour Relations Court Actsection 12
  • Evidence Actsection 112
  • ELRC Procedure RulesRule 28(3)

Cases cited (9)

  • Lonah Alumera Anyera v Eldoret Wagon Hotel
    [2014] eKLR
  • Heaven v Whitbread Group plc
    [2010] UKEAT/0084/10
  • Gibson Namasake v Linksoft Group Ltd
    [2018] eKLR
  • Vincent Makori Momanyi v Techpak Industries Limited
    [2022] eKLR
  • William Gituma Gateere v RAA Limited
    [2020] eKLR
  • Jackson Muiruri Wathigo t/a Murtown Supermarket v Lilian Mutune
    [2021] eKLR
  • Alexander Mutinda Ngila v Paul Iluvya Mutunga & another
    [2022] eKLR
  • Kenya Broadcasting Corporation v Geoffrey Wakio
    [2019] eKLR
  • Karin Anne Challis v The Hon. Attorney General and 6 Others
    [2002] eKLR
Jurisdiction invoked
Jurisdiction of the Employment and Labour Relations Court over employment disputes under section 12 of the Employment and Labour Relations Court Act and the Employment Act

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, "Anyona v Transline Classic Limited (Cause 459 of 2017) [2023] KEELRC 1573 (KLR)", Case Analysis (2023). Cause No 459 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/1573/eng@2023-06-22

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