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ELRCPartially AllowedCause No 833 of 2018· [2023] KEELRC 3018 (KLR)

Mwangi v CPF Financial Services Limited (Cause 833 of 2018) [2023] KEELRC 3018 (KLR)

Employment and Labour Relations Court
24 November 2023
5,319 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~21 min to read original · ~4 min brief

The bottom line

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Even when an employee deserves discipline, Kenyan employers lose in court if they rush the disciplinary hearing or spring surprise charges.

What this practically means

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Executive summary

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The Claimant, employed as an Assistant Stakeholder Advocacy and Relations Officer on a six-year renewable contract from 8th February 2016 at a monthly salary of Kshs 88,266.32, claimed Kshs 8,751,591 for one month's salary in lieu of notice, compensation for wrongful termination and salary underpayments following her summary dismissal on 11th December 2017. The Respondent defended the dismissal, contending the Claimant backdated her confirmation contract to 10th August 2016 when she received it on 9th October 2017, and dishonestly insisted on an erroneous salary of Kshs 114,746.20 inserted into the contract by a typing error, contrary to her salary band. The court framed three issues: substantive justification, procedural fairness and reliefs. On substance, the court held the higher salary was a mistake since the Claimant's grade and the Respondent's Salary and Grading Structure fixed her pay at Kshs 88,266.32, and found she backdated the contract and refused to sign the corrected one, giving the employer valid reasons to discipline her. On process, however, the court found the termination procedurally unfair: the disciplinary hearing letter was served the day before the hearing, leaving the Claimant less than a day to prepare, and fresh charges not in the Notice to Show Cause were introduced at the hearing, contrary to Sections 41 and 45 of the Employment Act. The underpayment and accrued leave claims were declined, accrued leave having formed part of terminal dues. Judgment was entered for the Claimant for Kshs 353,065.28 (one month's notice pay of Kshs 88,266.32 plus three months' compensation of Kshs 264,798.96), with interest at court rates from the date of judgment and costs of the suit.

Key legal issues

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01

Whether the termination was substantively justified

Holding

Yes. The Claimant took advantage of a mistaken salary insertion, backdated the contract, and refused to sign the corrected contract, giving the Respondent valid grounds for disciplinary action.

Reasoning

The court found the salary of Kshs 114,746.20 in the confirmation contract was a typing error, since the Claimant's grade and salary band (7)(1A) were fixed at Kshs 88,266.32 in the appointment letter and the Salary and Grading Structure. The Claimant received the contract on 9th October 2017 yet dated it 10th August 2016, which the court found illogical and evidence of backdating. Her insistence on the erroneous salary and refusal to sign the corrected contract gave the employer valid reasons to discipline her.

p. 8
02

Whether the termination followed a fair procedure

Holding

No. The notice of the disciplinary hearing was unreasonably short and fresh charges were introduced at the hearing without prior notice, rendering the termination procedurally unfair.

Reasoning

The Claimant was served with the disciplinary hearing letter on 7th December 2017 for a hearing on 8th December 2017, leaving her less than a day to prepare, which the court, applying Nebert Mandala Ombajo v ICPAK, found oppressive and unfair. Additionally, the Notice to Show Cause only alleged backdating, yet fresh allegations concerning refusal to sign the corrected contract were introduced midstream at the hearing, amounting to an ambush contrary to Section 41 of the Employment Act.

p. 9
03

Whether the Claimant is entitled to the reliefs sought

Holding

Partially. She was awarded one month's salary in lieu of notice and three months' gross salary as compensation; underpayment and accrued leave claims were declined.

Reasoning

Because substantive justification existed but the process was flawed, the court exercised its discretion under Section 49 to award limited compensation of three months' gross salary, factoring in the short period served. The underpayment claim failed because the court found the correct contractual salary was Kshs 88,266.32, and the accrued leave claim failed as it formed part of the terminal dues already paid.

p. 10

Legal principles established

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  • An employer must prove both substantive justification (valid and fair reasons) and procedural fairness under Sections 43 and 45 of the Employment Act
  • Adequate notice of a disciplinary hearing is essential; serving a hearing letter the day before the hearing is oppressive and unfair and vitiated the disciplinary process
  • An employee must not be confronted with fresh charges at a disciplinary hearing that were not contained in the Notice to Show Cause

Court orders

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  1. 1.The Claimant is awarded the sum of Kshs 88,266.32 being one (1) month's salary in lieu of notice
  2. 2.The Claimant is awarded compensatory damages in the sum of Kshs 264,798.96 being equivalent to three (3) months of her gross salary
  3. 3.The total award is Kshs 353,065.28
  4. 4.Interest on the total award at court rates from the date of Judgment until payment in full
  5. 5.The Claimant shall have the costs of the suit

Authorities

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Legislation

  • Employment Act, 2007Section 43
  • Employment Act, 2007Section 45(2)(a), (b) and (c)
  • Employment Act, 2007Section 41(1)
  • Employment Act, 2007Section 44(4)(g)
  • Constitution of Kenya, 2010Article 159(2)(d)
  • Constitution of Kenya, 2010Article 48
  • Civil Procedure Act (Chapter 21, Laws of Kenya)Section 1B
  • Civil Procedure RulesOrder 21 Rule 1

Cases cited (4)

  • Kenfreight (EA) Ltd vs Benson K. Nguti
    (2016) eKLR
  • Galgalo Jarso Jillo vs Agricultural Finance Corporation
    (2021) eKLR
  • Patrick Njuguna Kariuki vs Del Monte (K) Limited
    (2012) eKLR
  • Nebert Mandala Ombajo vs Institute of Certified Public Accountants of Kenya (ICPAK)
    Nakuru Civil Appeal No. 62 of 2018
Jurisdiction invoked
Original jurisdiction of the Employment and Labour Relations Court over employment and labour relations claims (Article 162(2) of the Constitution implied by the nature of the cause; not expressly cited)

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, "Mwangi v CPF Financial Services Limited (Cause 833 of 2018) [2023] KEELRC 3018 (KLR)", Case Analysis (2023). Cause No 833 of 2018. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/3018/eng@2023-11-24

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