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ELRCPartially AllowedCause (ELRC) – Statement of Claim filed 13.11.2019· [2023] KEELRC 2918 (KLR)

Gichimu v Higher Education Loans Board (Cause 769 of 2019) [2023] KEELRC 2918 (KLR)

Employment and Labour Relations Court
16 November 2023
BOByram Ongaya
10,141 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~41 min to read original · ~4 min brief

The bottom line

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Kenya's employment court reinstated a CFO fired for refusing an unlawful salary instruction, awarding him Kshs.36 million.

What this practically means

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Executive summary

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The claimant, formerly Chief Finance Officer (CFO) of the Higher Education Loans Board (HELB), sued challenging the termination of his employment by letter dated 27.09.2019. He sought declarations that the termination was wrongful, unfair and discriminatory, rescission, reinstatement, damages and costs. The dispute arose from the claimant's refusal to implement the CEO's instruction to increase the Chief Operations Officer's basic salary without a board resolution, in circumstances where over sixty other officers had similar salary discrepancies. The claimant was issued show cause letters, subjected to disciplinary hearings before an Ad-hoc Disciplinary Committee and the Board, and terminated on grounds of failure to obey a lawful command and unauthorised absence. The Court found the parties were in a contract of service which was terminated by the letter of 27.09.2019. On the merits, it held the impugned instruction was irregular, discriminatory and without board authority, vindicated by the Ethics and Anti-Corruption Commission's findings against the CEO. The termination was therefore unlawful and unfair for want of a valid reason under sections 43 and 45 of the Employment Act, and discriminatory under Article 27, Article 236(a) of the Constitution and section 5 of the Employment Act, on grounds of the claimant's belief, conscience and steadfast opinion that public service must be delivered in accordance with the law. The Court held that where a public officer's termination is found null and void under Articles 2 and 236(a), automatic reinstatement follows notwithstanding the three-year limitation in section 12(3)(vii) of the ELRC Act. Judgment was entered for the claimant: a declaration of nullity; automatic reinstatement with back payment of Kshs.26,247,054.50 less PAYE; Kshs.10,000,000.00 for discrimination; interest if unpaid by 31.03.2024; and costs of the suit.

Key legal issues

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01

Validity of the CEO's instruction on the COO's salary increment

Holding

The instruction was irregular, discriminatory and without board authority; there was no board resolution supporting it

Reasoning

The Court found the impugned instruction lacked a board resolution, relied on a defective memo signed by the Acting HR in the CEO's designated space, and was discriminatory as it benefited only the COO among over sixty officers with similar salary discrepancies. The claimant was therefore justified in refusing it and entitled to rely on legal advice from the HLSC.

p. 7
02

Whether the termination was unfair and for a valid reason

Holding

The termination was unlawful and unfair for want of a valid reason under sections 43 and 45 of the Employment Act

Reasoning

Since there was no lawful order for the claimant to disobey, the charges of failure to obey lawful command and negligence could not stand. EACC investigations vindicated the claimant, finding the CEO's award of incremental credits irregular. Dismissal upon refusal to obey an unlawful instruction was unreasonable.

p. 9
03

Whether the termination was discriminatory

Holding

Discrimination established under Article 27, Article 236(a) of the Constitution and section 5 of the Employment Act, on grounds of political opinion, belief and conscience

Reasoning

The claimant was punished for steadfastly performing his duties in accordance with the Constitution, statutes and public service ethics, and for reporting the CEO to the EACC. Other officers who similarly declined to approve the increment were not disciplined. This amounted to discrimination and victimisation contrary to Articles 27 and 236(a) and section 5 of the Employment Act.

p. 11
04

Availability of reinstatement despite lapse of three years

Holding

Automatic reinstatement issues as a consequence of the nullity, outside the three-year limitation in section 12(3)(vii) ELRC Act

Reasoning

Relying on Judicial Service Commission v Lucy Muthoni Njora, the Court held that where a dismissal of a public officer is adjudged null and void, reinstatement is automatic and the statutory three-year limitation does not diminish the Court's jurisdiction, since a nullity puts the parties back as though no termination occurred. No bar (such as abolition of office) was shown here.

p. 14
05

Compensation for discrimination

Holding

Kshs.10,000,000.00 awarded as compensation for discrimination and victimisation

Reasoning

Guided by its own decision in Masoud v Kenya Revenue Authority, the Court awarded Kshs.10,000,000.00, considering the automatic reinstatement and its monetary consequences, the claimant's clean record, and his reporting of the matter to the EACC in protection of the Constitution and public interest, under Articles 23(3)(e) and 19(2)(b).

p. 17

Legal principles established

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  • Where a termination of a public officer's employment is found to be a nullity for contravention of Article 236(a) of the Constitution, automatic reinstatement follows as a consequence of the nullity, and the three-year limitation in section 12(3)(vii) of the ELRC Act does not bar it
  • A public officer who declines to implement an unlawful or irregular instruction acts within his proper powers and is protected from victimisation under Article 236 of the Constitution
  • A termination for want of a valid reason is unfair regardless of the procedure followed (sections 43 and 45, Employment Act)

Court orders

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  1. 1.Declaration that the termination of the claimant's employment with HELB was wrongful, unfair, discriminatory and null and void or rescinded
  2. 2.Order of automatic reinstatement/continuation of the contract of employment effective the date of termination, with full back payment of Kshs.26,247,054.50 payable less PAYE, the claimant to continue as Chief Finance Officer with attendant remuneration and benefits, to be deployed forthwith and treated as if the contract had not been terminated
  3. 3.Respondent to pay the claimant Kshs.10,000,000.00 as compensation for discrimination
  4. 4.Sums in orders (2) and (3) payable by 31.03.2024, failing interest at court rates from date of judgment until full payment
  5. 5.Respondent to pay the claimant's costs of the suit

Authorities

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Legislation

  • Employment Actsections 5, 5(3)(a), 35, 41, 43, 44(4)(c), 44(4)(e), 45, 46, 49, 49(4)(a)-(m), 50
  • Employment and Labour Relations Court Actsection 12(3)(vi), 12(3)(vii)
  • Constitution of Kenya, 2010Articles 2, 19(2)(b), 23(3)(e), 27, 80(c), 232(1)(e), 232(1)(i), 232(3), 236, 252(1)(a)(d)
  • Former Constitution of Kenyasection 82(2), 82(3)
  • Leadership and Integrity Actsection 35(c), section 4(2), section 42(10)
  • Public Finance Management Actsection 196(5)
  • Ethics and Anti-Corruption Commission Actsection 11
  • Anti-Corruption and Economic Crimes Actsection 65
  • Leadership and Integrity Regulationsparagraph 22(8)
  • Public Service Code of ConductPart II (10)(a), (10)(c)
  • Public Service Commission Human Resource Policies and Procedures Manual for Public Service (May, 2016)Part c.2 (2)(1) to (iv) - incremental credits

Cases cited (5)

  • Judicial Service Commission and Another -Versus- Lucy Muthoni Njora
    (Civil Appeal 486 of 2019) [2021] KECA 366 (KLR) (7 May 2021)
  • Sotik Highlands Tea Estates -Versus- Kenya Plantation and Agricultural Workers Union
    [2017] eKLR
  • Benedict Abonyo Omollo -Versus- Judiciary and 2 Others
    Cause No.47 of 2015
  • Masoud -Versus- Kenya Revenue Authority
    (Cause 906 of 2016) [2022] KEELRC 1393 (KLR) (22 July 2022)
  • New Zealand Educational Institute –Versus- Board of Trustees of Auckland Normal Intermediate Schools
    [1994] 2 ERNZ 414 (CA)
Jurisdiction invoked
Employment and Labour Relations Court Act, section 12(3); Articles 2, 23(3)(e), 27, 232 and 236 of the Constitution; Employment Act 2007 sections 5, 35, 41, 43, 45, 49 and 50

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, "Gichimu v Higher Education Loans Board (Cause 769 of 2019) [2023] KEELRC 2918 (KLR)", Case Analysis (2023). Cause (ELRC) – Statement of Claim filed 13.11.2019. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/2918/eng@2023-11-16

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