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ELRCPartially AllowedNot stated in judgment· [2023] KEELRC 2369 (KLR)

Sitienei v Sirgoi Holdings Ltd & another (Cause 26 of 2019) [2023] KEELRC 2369 (KLR)

Employment and Labour Relations Court
5 October 2023
2,958 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 awarded an executive over Kshs 1.4 million because his employer fired him without a written show cause letter or a hearing.

What this practically means

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Executive summary

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The Claimant, employed as Managing Director of the 1st Respondent on a three-year contract effective 1st January 2018, was ordered by the High Court in July 2018 to step aside following a petition by a shareholder. The order was lifted in November 2018, but the Respondents terminated his services on 26th September 2018 without a disciplinary hearing, citing conflict of interest arising from alleged parallel employment with the University of Eldoret. The Claimant sought Kshs. 7,680,000 comprising notice pay, unpaid salary, salary for the remainder of the contract, accrued leave, gratuity and twelve months' compensation for wrongful termination. The Respondents alleged his employment contract was vitiated by misrepresentation and concealment of his university employment, and filed an unprosecuted counter-claim. The court framed three issues: fairness of termination, entitlement to reliefs, and costs. Holding that procedural fairness under Section 41 and substantive justification under Sections 43 and 45 of the Employment Act are both mandatory, the court found the termination procedurally unfair (no show cause letter or hearing) and substantively unjustified (the reasonableness test not met, as RW1 was unsure of the parallel employment). The court awarded salary for August and September 2018 (Kshs. 340,000), accrued leave (Kshs. 70,000), and six months' salary as compensation (Kshs. 1,020,000), with costs and interest. Claims for notice pay, post-termination salary, remainder-of-contract salary, 2019 leave and gratuity were dismissed, as was the counter-claim. Christine N. Baari, J, delivered the judgment at Kisumu on 5th October 2023.

Key legal issues

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01

Procedural fairness of the termination

Holding

The termination was procedurally unfair as the Claimant was not issued a show cause letter or heard.

Reasoning

Section 41 of the Employment Act requires an employer to explain reasons and hear the employee before termination. RW1 confirmed no show cause letter was issued; the Claimant was only invited by phone to a meeting of unclear purpose. Citing Hosea Akunga Ombwori v Bidco Oil Refineries Limited and Philip Kimosop v Kingdom Bank Limited, the court held the process fell short of Section 41.

p. 4
02

Substantive justification for the termination

Holding

The reasons (parallel employment/conflict of interest) were not valid or fair.

Reasoning

RW1 admitted he was not sure the Claimant was in the service of the University of Eldoret or drawing salaries from it, and the Claimant proved his university employment had been terminated before his appointment. Applying the British Leyland reasonableness test as adopted in John Jaoko Othino v Intrahealth International, the reasons were neither valid nor justified under Sections 43, 45 and 47.

p. 5
03

Compensation for unfair termination

Holding

Six months' salary awarded as sufficient compensation under Section 49(4).

Reasoning

Having found the termination unfair, the court applied the Section 49(4) factors as explained in Alphonce Maghanga Mwachanya v Operation 680 Limited and the proportionality principle in Elizabeth Wakanyi Kibe v Telkom Kenya Ltd, deeming six months' salary (Kshs. 1,020,000/-) sufficient, avoiding unjust enrichment.

p. 6
04

Counter-claim

Holding

Counter-claim dismissed for lack of evidence.

Reasoning

Although the Respondents filed a counter-claim premised on the allegation of parallel employment and double salaries, no evidence was led to prove it. The court dismissed it with costs to the Claimant.

p. 7

Legal principles established

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  • Fairness of termination requires both procedural fairness and substantive justification; absence of either renders the termination unfair and unlawful.
  • Procedural fairness under Section 41 requires a show cause letter and a hearing; failure to issue one renders termination procedurally unfair.
  • The reasonableness test applies to substantive justification: if no reasonable employer would have dismissed the employee, the dismissal is unfair.

Court orders

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  1. 1.That the Claimant's termination is unfair and unlawful.
  2. 2.That the Respondents jointly and severally, pay the Claimant salary for the months of August and September, 2018 at Kshs. 340,000/-
  3. 3.Payment of Kshs. 70,000/- on account of accrued leave.
  4. 4.Six (6) months' salary as compensation for the unfair termination at Kshs. 1,020,000/-
  5. 5.Costs of the suit and interest until payment in full.
  6. 6.The counter-claim is dismissed with costs to the Claimant.

Authorities

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Legislation

  • Employment Act, 2007Section 41
  • Employment Act, 2007Section 43
  • Employment Act, 2007Section 45
  • Employment Act, 2007Section 47(5)
  • Employment Act, 2007Section 49 and 49(4)
  • Employment Act, 2007Section 50
  • ILO Convention 158 of 1982

Cases cited (7)

  • Hosea Akunga Ombwori v Bidco Oil Refineries Limited
    (2017) eKLR
  • Philip Kimosop v Kingdom Bank Limited
    (2022) eKLR
  • John Jaoko Othino v Intrahealth International
    [2022] eKLR
  • British Leyland UK Ltd vs Swift
    (1981)
  • 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 jurisdiction under the Employment Act, 2007 (Sections 41, 43, 45, 47(5), 49 and 50 applied)

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, "Sitienei v Sirgoi Holdings Ltd & another (Cause 26 of 2019) [2023] KEELRC 2369 (KLR)", Case Analysis (2023). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/2369/eng@2023-10-05

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