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ELRCPartially AllowedCause No 1716 of 2017· [2023] KEELRC 2022 (KLR)

Wangui v Unaitas Sacco Limited (Cause 1716 of 2017) [2023] KEELRC 2022 (KLR)

Employment and Labour Relations Court
31 July 2023
3,771 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court ruled a Credit Administrator's dismissal unfair because the employer couldn't prove its reasons or follow fair procedure, awarding Kshs 1.19 million.

What this practically means

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Executive summary

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The Claimant, employed by the Respondent from 4th June 2012 and rising to Credit Administrator at the Ongata Rongai Branch, was suspended on 15th July 2016 following an audit report alleging non-compliance with lending procedures, and terminated by letter dated November 2016. He claimed unfair and unlawful termination, seeking compensatory damages, unpaid suspension salary, notice pay, leave pay, gratuity, service pay, aggravated damages and a Certificate of Service. The Respondent defended the termination on grounds of gross negligence, contending a fair process was followed, and elected not to call oral evidence. The court framed three issues: justifiable cause, procedural fairness, and entitlement to reliefs. On substance, the audit report relied upon was never produced in evidence and the allegations were general and unparticularised, so the Respondent failed to prove valid and fair reasons under Sections 43(1) and 45(2) of the Employment Act. On procedure, there was no evidence the Claimant was notified of the allegations, the nature of the 1st November 2016 meeting, or his right to be accompanied, contrary to Section 41; an adverse inference was drawn against the Respondent. The court declared the dismissal unfair and unlawful, awarding one month's notice pay (Kshs 99,000), seven months' compensatory damages (Kshs 693,000), unpaid suspension salary (Kshs 396,000) and leave pay (Kshs 5,520), totalling Kshs 1,193,520 with interest and costs. Service pay, gratuity and aggravated damages were refused. A Certificate of Service was ordered to issue within 30 days.

Key legal issues

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01

Substantive justification for termination

Holding

Respondent failed to prove valid and fair reasons; termination was unfair

Reasoning

The audit report of 2nd November 2016 relied upon by the Respondent was never produced in evidence. The allegations (refinancing defaulted loans, splitting loans, advancing unsecured loans, compromising due diligence) were general and lacked particulars. Consequently no evidence justified the termination, failing the test under Section 43(1) as read with Section 45(2)(a) and (b) of the Employment Act.

p. 5
02

Procedural fairness under Section 41

Holding

Termination was procedurally unfair as the Claimant was not notified of the allegations or the nature of the disciplinary hearing, nor of his right to be accompanied

Reasoning

The Claimant was merely called by the receptionist to attend a meeting whose purpose was not disclosed. No evidence of a notification letter was produced. The suspension letter referred to ongoing investigations, so allegations had not crystallised. Adverse inference drawn against the Respondent for failing to prove procedural compliance.

p. 6
03

Salary during suspension

Holding

Claimant entitled to salary for the suspension period as the suspension letter did not state it was unpaid

Reasoning

The suspension was involuntary; the letter did not state it was without pay and the Respondent produced no Human Resource Manual or policy providing for unpaid suspension. Salary from 15th July 2016 to 16th November 2016 was awarded.

p. 6

Legal principles established

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  • An employer bears the burden of proving valid and fair reasons for termination; failure renders the termination unfair under Sections 43(1) and 45(2) of the Employment Act
  • General allegations without particulars against an employee cannot justify termination
  • Where an employer fails to produce evidence of notification of disciplinary allegations, an adverse inference is drawn against it
  • Suspension must be expressly stated to be without pay; otherwise salary during suspension is payable

Court orders

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  1. 1.A declaration that the Claimant's dismissal was unfair and unlawful
  2. 2.One (1) month's salary in lieu of notice being Kshs 99,000.00
  3. 3.Compensatory damages in the sum of Kshs 693,000.00 being equivalent to seven (7) months of the Claimant's gross salary
  4. 4.Unpaid salary during the Claimant's suspension from 15th July, 2016 to 16th November, 2016 being Kshs 396,000.00
  5. 5.Unpaid leave pay being Kshs 5,520.00
  6. 6.Total award of Kshs 1,193,520.00
  7. 7.Interest on the total award at court rates from the date of Judgment until payment in full
  8. 8.Costs of the suit to the Claimant
  9. 9.Certificate of Service to issue within 30 days from the date of Judgment in line with Section 51(1) of the Employment Act

Authorities

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Legislation

  • Employment ActSection 43(1)
  • Employment ActSection 45(2)
  • Employment ActSection 41(1)
  • Employment ActSection 44(4)
  • Employment ActSection 74(1)(f)
  • Employment ActSection 35(6)
  • Employment ActSection 51(1)
  • Civil Procedure RulesOrder 21 Rule 1
  • Civil Procedure ActSection 1B
  • Constitution of KenyaArticle 159(2)(d)
  • Constitution of KenyaArticle 48

Cases cited (12)

  • Lawrence Lien Shoona vs East Africa Portland Cement Company Limited
    [2018] eKLR
  • James Andako vs National Industrial Training Authority
    [2021] eKLR
  • Charles Muthusi Mutua vs Kathi No Kakoka Services Limited
    [2022] eKLR
  • Sabina Mutua vs Amedo Centre Kenya Limited
    [2017] eKLR
  • Andrew K. Tanui vs Postal Corporation of Kenya
    (2014) eKLR
  • Ken Aluoch vs Postal Corporation of Kenya
    (2016) eKLR
  • Kenya Revenue Authority vs Reuwel Waithaka Gitahi & 2 others
    [2019] eKLR
  • Jacob Juma Makokha vs Radar Security (K) Limited
    [2018] eKLR
  • Charles Muema Munuve & another vs Safaricom PLC
    (2021) eKLR
  • Ol Pejeta Ranching Limited vs David Wanjau Muhoro
    [2017] eKLR
  • Nebert Mandala Ombajo vs Institute of Certified Public Accountants of Kenya (ICPAK)
    Nakuru Civil Appeal No. 62 of 2018
  • David Mwangi Gioko and 51 others vs Nairobi City Water & Sewerage Company Limited
    [2013] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (Sections 41, 43, 45, 74, 35(6), 51(1))

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, "Wangui v Unaitas Sacco Limited (Cause 1716 of 2017) [2023] KEELRC 2022 (KLR)", Case Analysis (2023). Cause No 1716 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/2022/eng@2023-07-31

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