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ELRCPartially AllowedNot stated in the judgment· [2024] KEELRC 851 (KLR)

Kenya Union of Commercial Food and Allied Workers v Marumi Farmers Co-operative Society Limited (Cause E011 of 2023) [2024] KEELRC 851 (KLR)

Employment and Labour Relations Court
5 April 2024
3,216 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 upheld a worker's dismissal for fraud but still ordered his cooperative employer to pay Kshs.339,500 in unpaid leave, gratuity, and wages.

What this practically means

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Executive summary

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The claimant union sued on behalf of its member (the grievant), a Cherry Recorder employed by the respondent cooperative, seeking terminal dues of Kshs.1,254,178.50 comprising notice pay, accrued leave, public holiday pay, service gratuity and underpayment of wages over four years of service from October 2017 to October 2021, plus interest and costs. The respondent denied liability, asserting the grievant was dismissed for gross misconduct (fraud through false cherry entries causing a loss of Kshs.1,500,000) during his probation period after years of casual employment. The court framed two issues: whether the dismissal was unlawful and whether the reliefs were payable. It found the dismissal fair both substantively and procedurally: the Management Committee minutes proved the reason for dismissal on a balance of probability, and the grievant was heard on 27th October 2021. However, the court held that the grievant's four years of continuous monthly-paid service converted him from casual to regular employee under section 37 of the Employment Act, and that the CBA covered all unionisable employees regardless of union membership. Judgment was entered for the claimant for Kshs.339,500.00, being leave (Kshs.24,500), gratuity per clause 4 of the CBA (Kshs.168,000) and salary underpayment including 15% house allowance (Kshs.147,000), subject to statutory deductions, with costs and interest at court rates from filing. Notice pay, compensation and the public holidays claim were declined.

Key legal issues

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01

Whether the grievant's dismissal during probation was substantively and procedurally fair

Holding

The dismissal was fair: the respondent proved the reason (false cherry entries/fraud) on a balance of probability and accorded the grievant a hearing before the Management Committee

Reasoning

The respondent produced minutes of the Management Committee meetings of 20th and 27th October 2021. The grievant, when confronted with alleged false entries, blamed them on computer error rather than admitting or denying them. The court found these minutes corroborated RW1 and RW2's testimony and proved the reason for dismissal. Procedurally, the grievant attended a hearing on 27th October 2021 and had an opportunity to defend himself, satisfying sections 41, 43 and 45 of the Employment Act.

p. 5
02

Whether the grievant was a casual or permanent employee and whether the CBA applied to him

Holding

By dint of four years' continuous service, the grievant converted to a regular employee under section 37 of the Employment Act; the CBA covered all unionisable employees whether or not they were union members

Reasoning

The court found no dispute that the grievant worked continuously from October 2017 on a monthly salary paid through the bank, defeating the casual label. Section 37 deems contracts of casually engaged employees exceeding the statutory thresholds to be monthly contracts with the terms of a regular employee. The CBA preamble covered all unionisable employees, excluding only temporary employees under clause 18, which did not apply to the grievant.

p. 6
03

Entitlement to terminal benefits: leave, service gratuity and underpayment

Holding

Leave awarded at 21 days per year over four years (Kshs.24,500), gratuity per clause 4 of the CBA (Kshs.168,000) and underpayment computed as house allowance at 15% for three years plus CBA rate for the fourth year (Kshs.147,000)

Reasoning

The grievant was denied leave throughout his continuous four-year service despite working for a monthly salary. Clause 4 of the CBA entitles an employee to three months' current basic salary for each completed year of service as gratuity. For underpayment, the first three years yielded unpaid house allowance at the conventional 15% of basic pay, while in the fourth year the CBA rate for a Cherry Recorder (Group D) of Kshs.14,000 plus 15% house allowance was used against the Kshs.7,000 actually paid.

p. 7

Legal principles established

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  • An employer must prove both a valid reason and fair procedure for termination; failure on either renders termination unfair
  • A casual employee engaged continuously for periods aggregating to one month or more is deemed to be employed on monthly terms and entitled to the terms of a regular employee under section 37 of the Employment Act
  • A CBA covering 'all unionisable employees' applies to employees regardless of union membership
  • Courts conventionally award house allowance at 15% of basic pay

Court orders

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  1. 1.Judgment entered for the claimant in the sum of Kshs.339,500.00 comprising leave Kshs.24,500.00, gratuity Kshs.168,000.00 and salary underpayment Kshs.147,000.00
  2. 2.The sum awarded is subject to statutory deductions
  3. 3.Claimant awarded costs of the suit
  4. 4.Interest at court rates from the date of filing suit

Authorities

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Legislation

  • Employment Act, 2007section 28
  • Employment Act, 2007section 35(1)(c)
  • Employment Act, 2007section 37
  • Employment Act, 2007section 41
  • Employment Act, 2007section 42(1)
  • Employment Act, 2007section 43
  • Employment Act, 2007section 44(3) and (4)
  • Employment Act, 2007section 45(1) & (2)
  • General Wage Ordernot specified
  • ELRC (Procedure) RulesRule 28(3)

Cases cited (1)

  • British Leyland UK Ltd v Swift
    (1981) IRLR 91
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act and Labour Relations Act (first-instance trade dispute; specific enabling provision not quoted in the judgment)

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, "Kenya Union of Commercial Food and Allied Workers v Marumi Farmers Co-operative Society Limited (Cause E011 of 2023) [2024] KEELRC 851 (KLR)", Case Analysis (2024). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/851/eng@2024-04-05

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