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ELRCPartially AllowedELRC Claim dated 28th May 2020· [2023] KEELRC 2680 (KLR)

Muragu v Unaitas Sacco Limited (Cause 230 of 2020) [2023] KEELRC 2680 (KLR)

Employment and Labour Relations Court
27 October 2023
SRStella Rutto
3,873 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court ruled that suspending an employee for over two years without updates was a disguised sacking, awarding him Kshs 2.75 million.

What this practically means

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Executive summary

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The Claimant, employed as a Senior T24 Analyst, was arrested in June 2018 and charged with conspiracy to defraud contrary to Section 317 of the Penal Code. He was suspended by letter dated 14th June 2018 pending investigations and never received communication of the investigation outcomes. He sued claiming constructive dismissal and sought reinstatement or salary, special damages, general damages for financial embarrassment, costs, and a certificate of service. The Respondent denied terminating him, contending that the suspension was temporary, fully justified by reasonable suspicion of manipulation of its core banking system, and in line with its Human Resource Manual. The court framed two issues: whether the suspension constituted constructive dismissal and whether the Claimant was entitled to the reliefs sought. Adopting the test in Coca-Cola East & Central Africa Limited v Maria Kagai Ligaga, the court held that suspension is a right due to an employer and not per se unfair, but a suspension spanning more than two years, indefinite and without any communication of investigation findings, breached a fundamental term going to the root of the contract, entitling the Claimant to treat himself as constructively dismissed and unfairly terminated. On reliefs, the court awarded unpaid salary for the suspension period, four months' gross salary as compensatory damages under Section 49 of the Employment Act, and prorated leave pay, totalling Kshs 2,753,291.67, with interest and costs. Reinstatement, pay for the unexpired contract term, and general damages for financial embarrassment were declined. Judgment dated 27th October 2023 at Nairobi by Stella Rutto, Judge.

Key legal issues

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01

Whether indefinite suspension without communication constitutes constructive dismissal

Holding

The prolonged indefinite suspension without communicating investigation outcomes amounted to constructive dismissal and unfair termination

Reasoning

Applying the Coca-Cola v Ligaga test, the court found the employer suspended the Claimant to pave way for investigations but never communicated the outcome over more than two years. This showed the employer no longer intended to be bound by the employment contract - a fundamental breach going to the root of the contract entitling the Claimant to treat himself as constructively dismissed.

p. 6
02

Whether suspension itself is unfair per se

Holding

Suspension is a legitimate employer right; only indefinite suspension without communication is unfair

Reasoning

Adopting Charles Muturi Mwangi v Invesco Assurance and Mary Chemweno Kiptui v Kenya Pipeline, the court held suspension pending investigations is an ordinary disciplinary tool and a right due to an employer. The unfairness arose only from the indefinite nature and lack of communication, not from the suspension itself.

p. 6
03

Entitlement to salary during suspension

Holding

Full salary was payable during suspension absent a clear rule permitting withholding

Reasoning

Following the Court of Appeal in the Khaemba case, absent an express or implied provision allowing salary withholding during suspension, the employee cannot be penalised. The Respondent also gave no justification for withholding the salary, so the Claimant was awarded unpaid salary for June 2018 to May 2019.

p. 7

Legal principles established

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  • A suspension is a right due to an employer and cannot in itself be deemed unfair, but an indefinite suspension without communication from the employer cannot be deemed fair
  • A prolonged indefinite suspension without communication of investigation outcomes amounts to constructive dismissal
  • An employee on suspension pending establishment of culpability is entitled to full salary

Court orders

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  1. 1.Award of unpaid salary from June 2018 to May 2019 of Kshs 2,028,000.00
  2. 2.Award of compensatory damages of Kshs 676,000.00 being four months' gross salary
  3. 3.Award of Kshs 49,291.67 being prorated unpaid leave
  4. 4.Total award of Kshs 2,753,291.67
  5. 5.Interest on the total award at court rates from the date of judgment until payment in full
  6. 6.Costs of the suit to the Claimant

Authorities

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Legislation

  • Penal CodeSection 317
  • Employment Act, 2007Section 41
  • Employment Act, 2007Section 49 (including 49(3)(a) and 49(4))
  • Employment Act, 2007Section 74(1)(f)
  • Societies Act2008
  • Civil Procedure RulesOrder 21 Rule 1
  • Civil Procedure ActSection 1B
  • Constitution of KenyaArticle 159(2)(d)
  • Constitution of KenyaArticle 48
  • Judicial Service Actnot specified

Cases cited (8)

  • Risper Nyandwaki Nyambane v Viva Afya Limited
    (2022) eKLR
  • Rem Ogodo Ogana v Kenya Sugar Board
    (2016) eKLR
  • Thomas Sila Nzivo v Bamburi Cement Limited
    (2014) eKLR
  • Coca-Cola East & Central Africa Limited v Maria Kagai Ligaga
    [2015] eKLR
  • Charles Muturi Mwangi v Invesco Assurance Co. Ltd
    [2019] eKLR
  • Mary Chemweno Kiptui v Kenya Pipeline Company Limited
    [2014] eKLR
  • Chief Justice and President of the Supreme Court of Kenya & another v Khaemba
    (Civil Appeal 522 of 2019) [2021] KECA 322 (KLR) (17 December 2021)
  • David Mwangi Gioko and 51 others v Nairobi City Water & Sewerage Company Limited
    [2013] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over employment disputes 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, "Muragu v Unaitas Sacco Limited (Cause 230 of 2020) [2023] KEELRC 2680 (KLR)", Case Analysis (2023). ELRC Claim dated 28th May 2020. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/2680/eng@2023-10-27

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