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ELRCPartially AllowedCause No E502 of 2020· [2023] KEELRC 2383 (KLR)

Mwangi v Bunson Travel Services Limited (Cause E502 of 2020) [2023] KEELRC 2383 (KLR)

Employment and Labour Relations Court
28 September 2023
MMM. MBARŨ
3,517 words in judgment
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The bottom line

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Kenya's Employment Court ruled a finance director's firing unfair because he never got a fair hearing or saw the evidence against him.

What this practically means

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Executive summary

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The claimant, employed by the respondent from 1 February 2009 and promoted to finance director in July 2014, was sent on compulsory leave on 17 February 2020, issued a notice to show cause on 20 March 2020, subjected to a proposed 70% salary reduction which he declined, and terminated on 23 April 2020 with effect from 28 April 2020 for alleged under-performance as finance director. The respondent alleged poor performance, weak financial controls, ballooning debts and KRA tax compliance failures, relying on an expert report by Peter Mwangi. The court framed three issues: whether termination was unfair, whether remedies should issue, and costs. It held that where poor performance is alleged, the employer must satisfy Section 41(1) by demonstrating evaluation measures, support to the employee, and a fair hearing. The claimant never saw the auditor's report or the matters against him before the disciplinary hearing; there was thus no process or justice, and the termination was unfair. The 70% salary reduction was unlawful absent the claimant's written consent under Section 10(5). The court awarded three months' gross compensation (Ksh. 948,750) rather than the twelve months sought, unpaid April salary and allowances, salary for the handing-over period to 5 May 2020 (Ksh. 52,709), accrued leave of Ksh. 439,081.50, and an admitted vehicle transfer payment of Ksh. 68,100, plus a pension transfer letter and a certificate of service under Section 51. The claim partially succeeded with costs to the claimant. Judgment delivered at Mombasa on 28 September 2023 by M. Mbarũ J.

Key legal issues

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01

Whether termination was for a valid reason and conducted fairly under Sections 41, 43 and 45 of the Employment Act

Holding

Unfair termination; no process or justice attended the termination and the under-performance finding was premature

Reasoning

The claimant was sent on leave and directed to hand over duties before being shown the matters against him. The auditor's report on which the allegations rested was prepared after his departure and never put to him. Poor performance requires evaluation measures and support before termination. The Section 41 threshold was not met, rendering the termination unfair under Sections 41, 43 and 45.

p. 6
02

Whether the 70% unilateral salary reduction was lawful

Holding

Unlawful; variation requires consultation and the claimant declined to execute the reviewed contract

Reasoning

Section 10(5) requires variation of contract terms in consultation with the employee and written notification. The claimant was issued a reviewed contract but did not execute it. Membership of the Association of Travellers and its resolutions did not negate his employment rights. The unpaid 70% salary for April 2020 was due.

p. 6
03

Whether the claimant was entitled to accrued leave days and other dues

Holding

Accrued leave of 34.71 days at Ksh. 439,081.50 awarded; vehicle transfer payment of Ksh. 68,100 admitted as due

Reasoning

Section 28(2) allows accumulation of leave over 18 months; the respondent admitted untaken leave days. Part of the leave was taken under compulsory leave. The vehicle transfer payment for March 2020 was admitted as due.

p. 7
04

Quantum of compensation for unfair termination

Holding

Three months' gross wage awarded at Ksh. 948,750

Reasoning

The claimant served from 1 February 2009 to 23 April 2020 last earning a gross salary of Kshs. 316,250. The court awarded compensation at three months' gross wage rather than the twelve months sought.

p. 6

Legal principles established

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  • An employee's right to be heard under Section 41 of the Employment Act before termination applies regardless of seniority of position
  • Where poor performance is alleged, the employer must demonstrate measures taken to support the employee before termination
  • A unilateral salary reduction without the employee's written consent is unlawful

Court orders

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  1. 1.A declaration that employment terminated unfairly
  2. 2.Compensation awarded at Ksh. 948,750
  3. 3.70% unpaid salary Ksh. 172,681.50
  4. 4.Ksh. 150,000 salary for April 2020
  5. 5.Ksh. 52,709 salaries for May 2020
  6. 6.Ksh. 439,081.50 for leave days not taken
  7. 7.Ksh. 68,100 being vehicle transfer payment for March 2020
  8. 8.The respondent shall issue the claimant with a letter of no objection to Bunson Travel Pension Scheme for transfer of his pension contributions to a Pension Scheme of his choice
  9. 9.A certificate of service be issued in terms of Section 51 of the Employment Act, 2007
  10. 10.Costs of the suit to the claimant

Authorities

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Legislation

  • Employment Act, 2007Section 41(1)
  • Employment Act, 2007Section 42(1)
  • Employment Act, 2007Section 43
  • Employment Act, 2007Section 45
  • Employment Act, 2007Section 10(5)
  • Employment Act, 2007Section 28(2)
  • Employment Act, 2007Section 51
  • Employment Act, 2007Section 8

Cases cited (4)

  • Violet Kadala v Post Bank Limited
    [2020] eKLR
  • David Gichana Omuya v Mombasa Maize Millers Limited
    [2014] eKLR
  • George Okoth Okello v Africa Blooms Limited & another
    [2022] eKLR
  • National Bank of Kenya v Samuel Nguru Mutonya
    [2019] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007

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, "Mwangi v Bunson Travel Services Limited (Cause E502 of 2020) [2023] KEELRC 2383 (KLR)", Case Analysis (2023). Cause No E502 of 2020. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/2383/eng@2023-09-28

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