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ELRCPartially AllowedCause No 321 of 2019· [2024] KEELRC 85 (KLR)

Ooko v Quest Holdings Limited & another (Cause 321 of 2019) [2024] KEELRC 85 (KLR)

Employment and Labour Relations Court
31 January 2024
5,050 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 the audit manager's dismissal unfair because the employer skipped show-cause letters, hearings and warnings, awarding about Kshs. 990,000.

What this practically means

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Executive summary

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The Claimant, employed by the 1st Respondent as Internal Audit and Compliance Manager on 1st April 2016, had his contract terminated by the 2nd Respondent, the Group CEO, on 18th April 2019. He claimed the termination was procedurally unfair, without valid reasons, and motivated by victimisation for raising red flags over unremitted PAYE tax and an undisclosed loan. The Respondents maintained the termination was for poor performance, lateness and undisclosed conflict of interest, and followed the contract and Employment Act. The Court found termination procedurally unfair: the CEO conceded no show-cause letter was issued, no disciplinary hearing was held, no warnings given, and the company's own disciplinary procedure was not followed. The refusal to consider the Claimant's appeal lodged through his lawyers was also faulted. On substance, the letter of termination stated no reasons, and the allegations of poor performance and lateness were not established - no biometric records were produced, appraisal forms were unsigned, the Claimant was never placed on a Performance Improvement Plan, and the CEO himself failed to approve the audit work plans necessary for audit reports. The Court rejected the Respondents' reliance on UK authority espousing procedural voidance, holding UK EAT decisions are not judicial authorities on Kenyan employment law. The claim against the 2nd Respondent was rejected, the CEO being an employee, not the employer. The Claimant was granted a declaration of unfair termination, compensation of 5 ½ months' gross salary (Kshs. 990,000) with interest, with no order on costs; terminal benefits already offered and the certificate of service required no further orders.

Key legal issues

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01

Procedural fairness of termination

Holding

Termination was procedurally unfair - no show cause letter, no disciplinary hearing, no warnings, own policy not followed

Reasoning

The CEO conceded in evidence that no notice to show cause was issued, no disciplinary hearing was convened, no charges communicated, and the company's disciplinary procedure was not followed. Late reporting required a graduated warning process which was not invoked. The failed appeal through lawyers ought to have been considered. These departures conflicted with Sections 41 and 45 of the Employment Act.

p. 8
02

Validity of reasons for termination

Holding

No valid reasons established - allegations of poor performance and lateness not proved

Reasoning

The letter of termination gave no reasons beyond citing clause 11. The biometric report on lateness was not exhibited; the appraisal form was unsigned; the Claimant was never placed on PIP; and the CEO failed to approve audit work plans, disabling the Claimant from producing audit reports. Allegations were never specifically put to the Claimant.

p. 10
03

Joinder of the CEO

Holding

The 2nd Respondent was improperly joined as he was an Employee, not the Employer

Reasoning

The CEO had no contract with the Claimant; the primary employer (the 1st Respondent company) was never in dispute. The broad statutory definition of employer guards against concealment of the actual employer, not joinder of every supervisor. The CEO's value was as a witness. The Court followed the Akinyi v KEMRI decision.

p. 7
04

Remedies for unfair termination

Holding

Compensation of 5 ½ months' gross salary (Kshs. 990,000) granted; severance, duplicated damages and terminal dues refused

Reasoning

The Claimant served 3 years and did not cause or contribute to termination, but mitigation evidence was unclear. The duplicated compensation prayers were consolidated into one Section 49 inquiry. Terminal benefits of Kshs. 263,283 and the certificate of service were already on offer, so no further order was needed.

p. 10

Legal principles established

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  • Sections 41 and 45 of the Employment Act are mandatory; prescribed procedure cannot be disregarded even where trust and confidence has broken down or where procedure would not change the outcome
  • An appeal through an Employee's Lawyers meets the requirement of a written appeal and must be considered
  • UK Employment Appeals Tribunal decisions are not judicial authorities on Kenyan employment law
  • The broad definition of 'employer' in section 2 of the Employment Act was not intended to allow employees to join CEOs and supervisors where the primary employer is identifiable

Court orders

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  1. 1.The Claim against the 2nd Respondent is declined with no order on the costs
  2. 2.Declaration that termination was unfair
  3. 3.The 1st Respondent shall pay to the Claimant compensation equivalent of the Claimant's 5 ½ months' gross salary at Kshs. 990,000
  4. 4.No order on the costs
  5. 5.Interest allowed at court rate, from the date of Judgment, till payment is made in full

Authorities

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Legislation

  • Employment ActSection 41
  • Employment ActSection 43
  • Employment ActSection 45
  • Employment ActSection 49
  • Employment ActSection 2
  • Employment and Labour Relations Court ActSection 12
  • Electronic Case Management Practice Directions 2020Practice Direction 6[2]

Cases cited (11)

  • Mary Chemweno Kiptui v Kenya Pipeline Company Limited
    [2014] eKLR
  • Pamela Nelima Lutta v Mumias Sugar Company Limited
    [2017] eKLR
  • Dennis Nyagaka Ratemo v Kenya Film Corporation & Another
    [2014] eKLR
  • Peter Kamau Mwaura & Another v National Bank of Kenya
    [2020] eKLR
  • Akinyi & 4 Others v Kenya Medical Research Institute [KEMRI] & Another
    [Petition E001 of 2023] [2023] KELRC 2060 [KLR]
  • Kenya Revenue Authority v Reuwel Waithaka Gitahi & 2 Others
    [2019] eKLR
  • Palkey v A.E. Dayton Services Limited
    [1988] AC 344
  • Linda Gallacher v Abello Scotrail Limited
    4102245/2017
  • USIU v Eric Rading Outa
    [2016] eKLR
  • Kenya Broadcasting Corporation v Geoffrey Wakio
    [2019] eKLR
  • Jane Samba Mukala v Ol Tukai Lodge Limited
Jurisdiction invoked
Sections 49 of the Employment Act and Section 12 of the Employment and Labour Relations Court Act (first-instance employment claim)

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, "Ooko v Quest Holdings Limited & another (Cause 321 of 2019) [2024] KEELRC 85 (KLR)", Case Analysis (2024). Cause No 321 of 2019. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/85/eng@2024-01-31

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