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ELRCPartially AllowedCause No. E043 of 2022· [2023] KEELRC 2238 (KLR)

Mesa v Gusii Mwalimu Sacco Society Ltd (Cause E043 of 2022) [2023] KEELRC 2238 (KLR)

Employment and Labour Relations Court
28 September 2023
CBChristine N. Baari
4,984 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Employment Court ruled a Sacco unfairly fired its ICT head after a coerced confession, awarding seven months' salary and dismissing the employer's counterclaim.

What this practically means

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Executive summary

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This first-instance judgment of the Employment and Labour Relations Court at Kisumu concerned a claim by a former Head of Department, Information Management, dismissed by a Sacco on 24th July 2020 over the alleged unauthorised production of a local ATM card and fraudulent withdrawals. The Claimant sought declarations, terminal benefits, reinstatement and exemplary damages; the Respondent counterclaimed for Kshs. 1,183,000 allegedly fraudulently withdrawn. The Court framed two issues: whether the termination was unfair, and whether the Claimant was entitled to the reliefs sought. On procedure, the Court found the Respondent failed to meet the irreducible minimum of a fair hearing under Section 41 of the Employment Act: there was no invitation to a disciplinary hearing, no notification of the right to representation, and new charges were introduced at the hearing. On substance, the Court held that the Claimant's admission of liability of 9th November 2019 was procured by coercion, as his genuine denial had been lodged within the two-week timeline of the interdiction letter. The Respondent also failed to avail CCTV footage and system logs, and evidence suggested fabricated charges. The termination was held both procedurally and substantively unfair. The Court awarded seven months' salary (Kshs. 1,319,263.96) as compensation, finding the Claimant may have contributed by virtue of his supervisory position. Claims for terminal dues, reinstatement (barred by the three-year limit in Section 12(3)(viii) of the ELRC Act) and exemplary damages were dismissed. The counterclaim failed as an afterthought, founded on charges never levelled against the Claimant. Costs of the suit and of the counterclaim were awarded to the Claimant, with interest until payment in full.

Key legal issues

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01

Procedural fairness of the termination

Holding

The termination did not meet the irreducible minimum principles of a fair hearing, rendering it procedurally unfair.

Reasoning

Other than the interdiction letter, there was no invitation to a disciplinary hearing and no evidence the Claimant was informed of his right to a representative. The court could not determine whether he had sufficient preparation time. New charges (production of ATM cards for dormant accounts) were introduced at the hearing beyond the single charge in the interdiction letter, contrary to Section 41 of the Employment Act.

p. 7
02

Substantive justification for the termination

Holding

The Respondent failed to prove fair, valid and justified reasons; the termination was substantively unfair.

Reasoning

The admission of liability dated 9/11/2019 was found to have been procured by coercion, the Claimant having submitted a genuine denial within the two-week timeline set by the interdiction letter. The Respondent failed to avail CCTV footage and system logs that would have established culpability, and RW3's evidence showed the Claimant's role did not involve direct ATM card production. Employment of directors' kin after the dismissal lent credence to fabrication of charges.

p. 8
03

Appropriate compensation

Holding

Seven months' salary awarded as compensation under Sections 49 and 50 of the Employment Act, the Court finding the Claimant may have contributed to the termination given his supervisory position.

Reasoning

Unfair termination entitles the Claimant to compensation under Sections 49 and 50, guided by the thirteen factors in Section 49(4). Although not directly involved in ATM production, his position as head of ICT may have given him opportunity to tamper with systems, justifying a partial contribution and an award of seven months' salary rather than the twelve-month maximum.

p. 9
04

The Respondent's counterclaim

Holding

The counterclaim for Kshs. 1,183,000 was dismissed as an afterthought founded on charges never levelled against the Claimant.

Reasoning

The interdiction letter contained a single charge regarding one ATM card and a complaint about Kshs. 8,000. No charge referenced the dormant accounts or the amount claimed. The audit that purportedly discovered the withdrawals should have preceded the disciplinary process. The court found the entire affair a fabrication intended to terminate the Claimant or defraud the insurance company.

p. 10

Legal principles established

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  • An admission of liability obtained through coercion and intimidation in a disciplinary process cannot sustain a termination.
  • Where an employee alleges unfair termination, the legal and evidential burden of proving the reasons for termination rests on the employer.
  • Fair termination requires both procedural fairness under Section 41 and substantive justification under Sections 43 and 45 of the Employment Act.
  • A counterclaim founded on charges never levelled against the employee in the disciplinary process is an afterthought and fails.

Court orders

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  1. 1.A declaration that the Claimant's termination is unfair and unlawful.
  2. 2.An order for payment of Seven (7) Months' salary as compensation for the unfair termination at Kshs. 1,319,263.96/-
  3. 3.Costs of the suit and interest until payment in full.
  4. 4.The Respondent's Counterclaim is dismissed with costs.

Authorities

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Legislation

  • Employment Act, 2007Sections 41, 43, 43(2), 45, 45(2), 47(5), 49, 49(4), 49(4)(c), 50
  • Employment and Labour Relations Court ActSection 12(3)(viii)

Cases cited (7)

  • Josephine M. Ndungu & others v Plan International Inc
    [2019] eKLR
  • Choitram v. Nazari
    (1992) eKLR
  • Judicial Service Commission v. Gladys Boss Shollei & Another
    (2014) eKLR
  • Mwajuma Juma Kunde vs KAPS Municipal Parking Service Ltd
    ELRC Cause No. 57 of 2012 (2013) eKLR
  • Alphonce Maghanga Mwachanya v Operation 680 Limited
    [2013] eKLR
  • Elizabeth Wakanyi Kibe v Telkom Kenya Ltd
    [2014] eKLR
  • D.K. Marete v Teachers Service Commission
    Cause No. 379 of 2009
Jurisdiction invoked
Employment and Labour Relations Court Act, Section 12(3)

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, "Mesa v Gusii Mwalimu Sacco Society Ltd (Cause E043 of 2022) [2023] KEELRC 2238 (KLR)", Case Analysis (2023). Cause No. E043 of 2022. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/2238/eng@2023-09-28

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