Kaloki v Fracht Kenya Limited (Cause E043 of 2022) [2023] KEELRC 2885 (KLR)
The bottom line
#A Kenyan court awarded a dismissed CEO USD 63,950 because her employer fired her without a hearing, even though it had valid reasons.
What this practically means
#Executive summary
#Key legal issues
#Whether the Respondent had a valid and fair reason to terminate the Claimant
Yes - the Claimant's negligent handling of the Acciona account, which she admitted and offered to shoulder, gave the Respondent a valid and fair reason
The termination letter cited failure to provide reports, going on leave without ensuring handover, and negligent handling of the Acciona account causing losses of USD 30,000-50,000. The Claimant's email of 10th November 2019 admitted her mistake over the Blue Jay storage contract and offered to shoulder the costs. Her improper performance fell within Section 44(4)(c) of the Employment Act as gross misconduct justifying dismissal.
Whether the termination was procedurally fair
No - no hearing or disciplinary process under Section 41 was undertaken, rendering the termination procedurally unfair despite substantive justification
Section 41 requires notification of allegations and an opportunity to be heard. RW1 admitted the Claimant was not taken through a disciplinary process. Following Kenfreight (E.A.) Limited v Benson K. Nguti, the employer was duty-bound to explain the reasons and hear her representations before terminating. Non-compliance with Section 41 was a fatal procedural flaw.
Whether the ELRC has jurisdiction over the counterclaim based on the Business Purchase Agreement
No - the Business Purchase Agreement is a separate commercial agreement between the Respondent and Edinguele Services Limited, outside Section 12 of the ELRC Act
The Agreement was executed by the Respondent as buyer and Edinguele Services Limited as seller, with the Claimant signing only as principal shareholder. It was separate from the Employment Contract. The claims relating to motor vehicles KBV 414C and KBW 148E arise from that commercial agreement and cannot be sustained in this Court, especially as Edinguele Services Limited is not a party to the suit.
Whether the Respondent proved the alleged misappropriation of Kshs 43,528,898.96
No - the Special Audit Report lacked primary source documents and the fraud allegations were not proved to the required higher standard
Fraud must be distinctly alleged and proved. The Respondent exhibited a Special Audit Report but did not produce the underlying bank statements, cheques or payment vouchers showing actual movement of funds. A report alone, without backup evidence, cannot satisfy the heightened standard of proof applicable to fraud allegations.
Legal principles established
#- An employer must prove both a valid reason for termination and procedural fairness under Sections 43 and 45 of the Employment Act; termination without either is unfair
- Even where a valid reason exists, an employer must afford the employee a hearing under Section 41 before termination
- Negligent or improper performance of work causing the employer loss amounts to gross misconduct justifying summary dismissal under Section 44(4)(c)
- Allegations of fraud must be distinctly pleaded and proved to a standard higher than the ordinary balance of probabilities
- The ELRC lacks jurisdiction over disputes arising from a commercial agreement executed separately from the employment contract
Court orders
#- 1.Judgment entered in favour of the Claimant against the Respondent
- 2.Three months' salary in lieu of notice awarded at USD 33,000
- 3.Compensatory damages of USD 11,000 equivalent to one month's gross salary
- 4.Unpaid leave covering 18 months awarded at USD 11,550
- 5.Salary for the month of September 2021 awarded at USD 8,400
- 6.Total award of USD 63,950 with interest at court rates from the date of Judgment until payment in full
- 7.Claimant awarded costs of the suit
- 8.Counterclaim dismissed with no orders as to costs
- Jurisdiction invoked
- Article 162(2)(a) of the Constitution; Section 12 of the Employment and Labour Relations Court Act
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Kaloki v Fracht Kenya Limited (Cause E043 of 2022) [2023] KEELRC 2885 (KLR)", Case Analysis (2023). Cause No E043 of 2022. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/2885/eng@2023-11-10
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.