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ELRCPartially AllowedELRC Cause (Kakamega), Statement of Claim dated 31st May 2022· [2023] KEELRC 2809 (KLR)

Ouma v Faulu Microfinance Bank Limited (Cause E015 of 2022) [2023] KEELRC 2809 (KLR)

Employment and Labour Relations Court
9 November 2023
9,251 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~37 min to read original · ~4 min brief

The bottom line

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A Kenyan court ruled Faulu Kenya unfairly fired an employee over unproven sexual harassment claims, awarding him Kshs. 1.32 million because he wasn't shown the evidence against him.

What this practically means

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Executive summary

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The Claimant, a Sales and Service Centre Manager employed by the Respondent bank from March 2019, was summarily dismissed on 10th March 2022 for alleged sexual misconduct with two junior staff, following a whistle-blower email reporting a fight between the two women at the Bondo Branch. He sued for unlawful and unfair dismissal and defamation, claiming compensation of twelve months' salary, notice pay, service pay, unpaid March 2022 salary, exemplary damages, defamation damages and Kshs. 83,493,420 as loss of future earnings. The court framed three issues: lawfulness and fairness of the termination, defamation, and entitlement to reliefs. On substantive fairness, the court found the whistle-blower email was hearsay, neither alleged victim had complained that the conduct was unwanted, and the investigation report rested on rumour; the reason for dismissal was therefore not valid. On procedure, the Respondent's refusal to avail the investigation report and witness statements, and its failure to call the alleged victims for cross-examination, breached section 41 of the Employment Act, the panel being accuser, prosecutor and judge. The defamation claim failed for want of publication to third parties and malice. On remedies, the court awarded one month's notice pay (Kshs. 120,000) and ten months' compensation (Kshs. 1,200,000) under section 49, computed on the documented salary, with interest and costs; service pay, unpaid salary, exemplary damages and loss of future earnings claims failed. A 30-day stay was granted. Judgment delivered at Kakamega on 9th November 2023 by Jemimah Keli, Judge.

Key legal issues

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01

Whether the reason for dismissal (sexual misconduct/sexual harassment) was valid and fair

Holding

The allegations of sexual misconduct were not proved on a balance of probabilities; the reason for dismissal was not valid

Reasoning

The employer relied on a whistle-blower email which was hearsay, and on an investigation report resting on rumours. Neither alleged victim, M.O. nor A.A.M., made any complaint that the conduct was unwanted. There was no direct, physical or corroborative evidence linking the Claimant to the alleged relations, and the altercation between two third parties could not prove sexual harassment by the Claimant.

p. 10
02

Whether the disciplinary process accorded the Claimant procedural fairness under section 41

Holding

The process fell short of procedural fairness because the Respondent failed to avail the investigation report and witness evidence to the Claimant

Reasoning

Section 41 is mandatory. The Claimant requested the witness statements but got no response; the panel carried the investigation report to the hearing while the Claimant was unaware of its contents, making the panel accuser, prosecutor and judge. Failure to call the alleged victims for cross-examination compounded the unfairness, confidentiality having been negated by naming the victims.

p. 13
03

Whether the Claimant was defamed

Holding

No defamation was proved; there was no publication to third parties and no malice

Reasoning

The suspension and dismissal letters went only to the Claimant and the Respondent's senior management. The investigations were undertaken to exercise the employer's mandate against workplace harassment, not maliciously. Anticipated humiliation is not proved humiliation, and no ridicule in public was demonstrated.

p. 15
04

What remedies the Claimant was entitled to

Holding

One month's notice pay under sections 35 and 36 and ten months' compensation under section 49, computed on the documented salary of Kshs. 120,000

Reasoning

Compensation is capped and guided by section 49 factors including conduct, mitigation and employability. The Claimant showed no efforts to mitigate. His claimed salary of Kshs. 143,519 lacked payslip proof, so the consolidated salary in the offer letter (Kshs. 120,000) was used. Loss of future earnings and exemplary damages are not section 49 remedies.

p. 16

Legal principles established

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  • An employer must avail to an employee the evidence against him, including the investigation report and witness statements, for the disciplinary hearing to satisfy procedural fairness; confidentiality cannot be invoked once the accusers are named
  • For a sexual harassment allegation to ground dismissal there must be proof that the victim considered the conduct unwanted; hearsay or whistle-blower rumour is insufficient
  • Defamation requires proof of publication to at least one third party; publication only to the employer's internal management is not enough

Court orders

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  1. 1.Notice Pay of Kshs. 120,000/-
  2. 2.Compensation of Kshs. 1,200,000/- (both awards subject to PAYE deduction only)
  3. 3.Interest at court rates on the notice pay and compensation from the date of judgment until payment in full
  4. 4.Costs of the suit to the Claimant
  5. 5.Stay of 30 days granted
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 over a claim of unfair termination

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (2)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Ouma v Faulu Microfinance Bank Limited (Cause E015 of 2022) [2023] KEELRC 2809 (KLR)", Case Analysis (2023). ELRC Cause (Kakamega), Statement of Claim dated 31st May 2022. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/2809/eng@2023-11-09

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