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ELRCDismissedCause No 2556 of 2016· [2023] KEELRC 2648 (KLR)

Gichana v Security Group Kenya Limited (Cause 2556 of 2016) [2023] KEELRC 2648 (KLR)

Employment and Labour Relations Court
19 October 2023
MNMathews N. Nduma
2,991 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~12 min to read original · ~4 min brief

The bottom line

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A Kenyan court dismissed an executive's Kshs.56 million claims because his high salary contract was with a different company and his dismissal was fairly handled.

What this practically means

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Executive summary

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The claimant, formerly Managing Director of Security Group Tanzania Limited posted to Dar-es-Salaam in November 2012 on a salary of USD 14,300 per month, was transferred to Nairobi in December 2012 where he signed a new contract with the respondent, Security Group Kenya Limited, at a reduced salary of Kshs.525,000. He was suspended on 2/11/2015, issued a show cause letter with 22 charges, and after protracted disciplinary proceedings marked by his alleged evasiveness, was dismissed for gross misconduct by letter dated 28/7/2016. He sued for Kshs.38,915,000 being the difference in salary for 43 months and Kshs.17,160,000 as damages for unfair dismissal. The Court delineated three issues: entitlement to underpayment, whether termination was for valid reasons following fair procedure, and entitlement to damages. On the first, the Court held that Security Group Tanzania Limited is a separate legal entity not before the Court, relying on the separate corporate personality doctrine (Salomon, Kolaba Enterprises, Kenya Breweries), and dismissed the underpayment claim. On fairness, the Court found the respondent complied with Sections 41, 43 and 45 of the Employment Act, the claimant having been afforded ample opportunity to defend himself including with his advocate and a panel partly of his choosing, and found he failed to discharge the burden under Section 47(5). The entire suit was dismissed, but in view of the manner the claimant was moved and his salary reduced over 43 years of service context, each party was ordered to bear their own costs. Judgment delivered virtually at Nairobi on 19 October 2023.

Key legal issues

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01

Whether the claimant could recover the difference between his Tanzania and Kenya salaries from Security Group Kenya Limited

Holding

The claim failed; the higher-salary contract was with Security Group Tanzania Limited, a separate legal entity not joined to the suit.

Reasoning

The claimant's contract at USD 14,300 was with Security Group Tanzania Limited, a distinct legal entity that was not sued. On return to Kenya he entered a new agreement with the respondent at a reduced salary and accepted it without written protest until his suspension. A claim against the Tanzanian entity must be filed in Tanzania and cannot be claimed through its sister company absent piercing of the corporate veil.

p. 5
02

Whether the termination was for a valid reason following a fair procedure

Holding

Yes. The respondent proved valid reasons and accorded the claimant a fair hearing despite his evasive conduct.

Reasoning

The Court considered the 22 charges in the show cause letter, the multiple adjourned hearings caused by the claimant's evasiveness, his demand to nominate panel members which was acceded to, his attendance with his advocate, and the minuted final hearing. The respondent therefore complied with Sections 41, 43(1) and (2) and 45(1) and (2) of the Employment Act, and the claimant failed to prove unfairness under Section 47(5).

p. 6
03

Whether the claimant was entitled to damages for unfair termination

Holding

No. The suit failed in its entirety and no damages were awarded.

Reasoning

Having found substantive and procedural fairness were met, there was no basis for an award of damages. The Court relied on the Court of Appeal decision in Kenya Breweries Limited & 3 Others v Symon Wairobi Gatuma to emphasise the lack of merit of the suit as a whole.

p. 6

Legal principles established

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  • A company is a separate legal entity distinct from its subscribers and directors, and its separate corporate personality can only be departed from where the law permits lifting or piercing of the corporate veil.
  • An employer must establish a valid reason for termination and a fair procedure in compliance with Sections 41, 43 and 45 of the Employment Act, 2007, while the employee bears the burden under Section 47(5) to prove unfairness.

Court orders

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  1. 1.The claim for the difference in salary paid by Security Group Tanzania Limited and Security Group Kenya Limited is dismissed for lack of merit.
  2. 2.The suit by the claimant against the respondent lacks merit in its entirety and is dismissed.
  3. 3.Each party to meet their own costs of the suit.

Authorities

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Legislation

  • Employment Act, 2007Section 41
  • Employment Act, 2007Sections 43(1) and (2)
  • Employment Act, 2007Sections 45(1) and (2)
  • Employment Act, 2007Section 47(5)

Cases cited (3)

  • Kenya Breweries Limited 3 Others –vs- Symon Wairobi Gatuma
    [2017] eKLR
  • Kolaba Enterprises Limited -vs- Shamsudin Hussein Varvani & Another
    [2014] eKLR
  • Salomon & Co. Ltd v Salomon
    [1897] A.C. 22 H.L.
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (first-instance employment claim)

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, "Gichana v Security Group Kenya Limited (Cause 2556 of 2016) [2023] KEELRC 2648 (KLR)", Case Analysis (2023). Cause No 2556 of 2016. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/2648/eng@2023-10-19

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