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ELRCDismissedPreviously E020 of 2022 (Bungoma), transferred to Kakamega· [2023] KEELRC 2196 (KLR)

Amuhaya v Kati & another (Claim E012 of 2023) [2023] KEELRC 2196 (KLR)

Employment and Labour Relations Court
22 September 2023
JKJemimah Keli
8,028 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~32 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court ruled a water company lawfully fired its Managing Director for unverified payments that lost public funds, dismissing his unfair termination claim entirely.

What this practically means

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Executive summary

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The Claimant, former Managing Director of the 2nd Respondent (a public water company), challenged his administrative leave, interdiction, show cause and termination of 14th July 2022, seeking a declaration of unlawfulness, reinstatement, salary for the unexpired three-year renewed contract, compensation, interest and costs, together with interim injunctive and conservatory orders by Notice of Motion consolidated with the claim. The Respondents maintained the extension of his contract was irregular, that a WASREB audit and subsequent audits revealed financial malpractices under his watch in the Condition Liquidity Support Project, and that proper disciplinary process preceded his dismissal. The court framed three issues: regularity of the contract extension, lawfulness and fairness of the termination, and entitlement to reliefs. It held the extension was regular - the first term expired on 2nd July 2021 and the board renewed it by resolution of 21st July 2021, confirmed by conduct. On substantive fairness, the court found valid reasons: admitted payments without verification, absence of completion certificates and retention clauses, losing approximately Kshs. 7 million, applying the reasonable-employer test from British Leyland v Swift. Procedural fairness was satisfied through show cause, response, hearing and the claimant's own acknowledgments of fairness. Expert evidence of forgery was rejected as incomplete, and the salary-increase allegation failed. The claim was dismissed in its entirety, the Notice of Motion dismissed, and each party ordered to bear its own costs, with liberty to finalise the separation process.

Key legal issues

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01

Regularity of the contract extension

Holding

The extension was regular; the contract expired on 2nd July 2021 and was renewed on 21st July 2021 by board resolution, confirmed by conduct.

Reasoning

The court held the Board, not the Claimant, was responsible for appraisal and renewal. The renewal letter communicated a board resolution. The employer failed to produce minutes disproving board deliberation, and by allowing the claimant to continue working and drawing salary until April 2022 confirmed the renewal by conduct. Construing the contract's effectiveness clause, the first term expired 2nd July 2021, so the renewal came after expiry and was not pre-emptive.

p. 6
02

Substantive fairness - validity of reasons for termination

Holding

There were valid reasons: willful neglect and careless performance leading to loss of about Kshs. 7 million in CLSP project payments.

Reasoning

The claimant admitted at the disciplinary hearing to paying Kshs. 1.5 million for a project on which no work had been done without verification, paying other projects without completion certificates, and failing to include retention clauses. As accounting officer he bore responsibility for prudent use of public funds. Absence of contractor complaints or criminal investigation did not exonerate him; the reasonable-employer test from British Leyland v Swift was met.

p. 11
03

Procedural fairness

Holding

The process was procedurally fair; the claimant was heard and knew the case against him.

Reasoning

The claimant received a show cause letter, responded in detail, attended the disciplinary hearing, was allowed to be accompanied by an expert of his choice, and acknowledged in closing remarks that the Board had been fair. Following Walter Ogal Anuro v TSC as upheld in Freddy Kipkorir Lang'at, the audit report was not essential to his defence since the payment matters were within his personal knowledge.

p. 15
04

Alleged forgery and unilateral salary increase

Holding

The expert report was incomplete and could not establish forgery; the salary increase claim failed as the WASREB Report showed salaries of all employees were increased.

Reasoning

The forensic report gave a bare conclusion without identifying dissimilarities, depriving it of probative value. On the salary issue, the WASREB Report at page 81 confirmed company-wide salary increases, the contract allowed yearly salary review, and the respondents continued paying 165,000/- rather than the alleged 130,000/-, so the allegation could not stand and was not a ground of termination.

p. 13

Legal principles established

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  • The burden of proving valid reasons for termination lies on the employer under section 43 of the Employment Act.
  • A board's communication of its resolution to renew a contract is sufficient basis for the employee to accept the renewal; an employer cannot fault its own failure to conduct appraisals.
  • An expert opinion on forgery must identify the dissimilarities between known and questioned signatures to be of value.
  • An accounting officer Managing Director bears responsibility for prudent use of public funds, and payments made without verification may constitute valid grounds for dismissal.

Court orders

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  1. 1.The claim for unlawful termination is dismissed in its entirety.
  2. 2.The Notice of Motion application is dismissed.
  3. 3.The claimant is at liberty to comply and finalise the separation process regarding the retained half salary and benefits due after clearance.
  4. 4.Each party shall bear its own costs.

Authorities

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Legislation

  • Employment Actsection 45
  • Employment Actsection 43
  • Employment Act, 2007sections 41, 41(1), 41(2)
  • Employment Actsection 44(4)(c)
  • Constitution of KenyaChapter Six

Cases cited (10)

  • John Njuru V AIC Kijabe Station Management
    (2020) eKLR
  • Elizabeth Cherono Kurgat versus Kenya Literature Bureau
    [2014] eKLR
  • Ezra Chiloba versus Wafula Wanyonyi Chebukati & 7 others
    [2018] eKLR
  • Protus Wanjala Mutike V Anglo African Properties t/s Jambo Mutara Lodge Laikipia
    (2021) eKLR
  • Kenfreight (E.A) Limited V Benson K. NGuti
    (2019) eKLR
  • British Leyland UK Limited v Swift
    (1981) I.R.L.R 91
  • Christopher Ndaru Kagina v Esther Mbandi Kagina & another
    [2016] eKLR
  • Pius Machafu Isindu v Lavington Security Guards Limited
    [2017] eKLR
  • Freddy Kipkorir Lang'at v Co-operative University of Kenya
    [2021] eKLR
  • Walter Ogal Anuro v Teachers Service Commission
Jurisdiction invoked
Original jurisdiction under the Employment Act, 2007 (sections 41, 43, 44 and 45)

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, "Amuhaya v Kati & another (Claim E012 of 2023) [2023] KEELRC 2196 (KLR)", Case Analysis (2023). Previously E020 of 2022 (Bungoma), transferred to Kakamega. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/2196/eng@2023-09-22

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