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ELRCPartially AllowedCause No E442 of 2021· [2024] KEELRC 1174 (KLR)

Musyoki v Afya Co-operative Savings & Credit Society Ltd (Cause E442 of 2021) [2024] KEELRC 1174 (KLR)

Employment and Labour Relations Court
7 May 2024
3,936 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
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The bottom line

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A Kenyan employer who fires a worker without a hearing and cannot prove its reasons must pay compensation, even if misconduct is suspected.

What this practically means

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Executive summary

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The Claimant, employed by the Respondent from 8th November 2004 as a Clerical Officer and rising through promotions, was suspended on 4th July 2018 over suspect ATM transactions through his computer and IP address, responded by memo dated 9th July 2018, and was summarily dismissed by letter dated 16th August 2018 on allegations of posting Kshs.2,363,441 into a deceased former employee's account later withdrawn via M-Pesa. He sued for a declaration of unfair termination, 12 months' gross pay, unpaid salaries, service pay, notice pay, penalty for non-issuance of a certificate of service, reinstatement or certificate of service, pro rata leave, exemplary damages, costs and interest. The Respondent admitted the employment, justified the dismissal, and counter-claimed Kshs.5,090,883 in loans, surcharge and a FOSA advance. The court found the dismissal substantively unfair because the Respondent failed to prove a valid and fair reason, no notice to show cause was issued, and the Claimant's detailed response went unanswered; it was procedurally unfair because no hearing was accorded under Section 41 of the Employment Act. On reliefs, the court awarded a declaration, three months' salary in lieu of notice, six months' gross salary as compensation, and a certificate of service. Reinstatement, unpaid anticipatory salaries, service pay, pro rata leave, exemplary damages and the penalty prayer were all dismissed. The counter-claim failed for want of documentary proof; a payslip is not a contractual document and the Respondent's own letter of 27th February 2019 showed loans had been offset and recovered from guarantors. Judgment of Kshs.1,127,970 plus 50% of costs and interest was entered for the Claimant.

Key legal issues

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01

Whether the summary dismissal was substantively unfair

Holding

The Respondent failed to prove a valid and fair reason for the dismissal.

Reasoning

The suspension letter made no reference to any investigation; the IT report was tendered by neither party; RWI was unaware of the documents; no notice to show cause was issued despite the Claimant's detailed response seeking particulars which went unanswered. Under Sections 43 and 47(5) of the Employment Act, the employer bore the burden of proving the reason and failed to discharge it.

p. 6
02

Whether the dismissal was procedurally fair

Holding

Procedure under Section 41 was not followed; dismissal was procedurally unfair.

Reasoning

The Respondent issued a suspension letter and next communicated the summary dismissal; there was no notice to show cause, no invitation to a hearing, and the Claimant did not attend the directors' meeting of 15th August 2018 whose minutes were not produced. RWI confirmed the Claimant was never invited to any meeting before dismissal, breaching the mandatory Section 41 precepts.

p. 7
03

Whether the counter-claim for Kshs.5,090,883 was proved

Holding

Counter-claim not proved and disallowed.

Reasoning

The Respondent produced neither loan agreements nor repayment schedules; a payslip is not a contractual document. Further, the Managing Director's letter of 27th February 2019 showed the dormant loan had been offset from shares and the balance recovered from guarantors, undermining the claim.

p. 9
04

Jurisdiction over the counter-claim

Holding

The court has jurisdiction since the loans were accessed by virtue of employment.

Reasoning

The Claimant argued the loan dispute was severable from employment, but the court held the employment and borrowing contracts were interdependent, the facilities being enjoyed by reason of employment status, estopping the Claimant from asserting severability.

p. 9

Legal principles established

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  • A termination must be both substantively justifiable and procedurally fair; failure of either renders it unfair.
  • The employer bears the burden of proving the reasons for termination; failure renders termination unfair under Section 45.
  • A payslip is not a contractual document and cannot prove loan agreements.
  • The ELRC has jurisdiction over matters incidental to employment, including employee loans accessed by virtue of employment.

Court orders

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  1. 1.Declaration that termination of employment was unlawful
  2. 2.Three months' salary in lieu of notice Kshs.376,050/=
  3. 3.Equivalent of six months gross salary Kshs.751,920/= (total Kshs.1,127,970/=)
  4. 4.Certificate of service
  5. 5.50% of the costs
  6. 6.Interest at court rates from date of judgment till payment in full

Authorities

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Legislation

  • Employment Act, 2007Section 47(5)
  • Employment Act, 2007Section 43
  • Employment Act, 2007Section 45
  • Employment Act, 2007Section 41
  • Employment Act, 2007Section 49(1)(c)
  • Employment Act, 2007Section 51
  • Employment Act, 2007Section 35(6)
  • Employment Act, 2007Section 17
  • Employment Act, 2007Section 20
  • Employment and Labour Relations Court Act, 2011Section 12(3)(vii)
  • Evidence Actburden of proof
  • Civil Procedure RulesOrder 21 Rule 1
  • Civil Procedure ActSection 1B
  • Constitution of Kenya, 2010Article 159(2)(d); Article 48

Cases cited (18)

  • Peter Otabong Ekisa V County Government of Busia
    (2017) eKLR
  • Emmanuel Mambo Oduory V One Acre Fund
    (2020) eKLR
  • Joseph Ndung'u V Mastermind Tobacco (K) Ltd
    (2014) eKLR
  • Mary Nduku Mumo V ALS Ltd
    (2015) eKLR
  • Ngatia V Airmac Ltd
    (2022) KEELRC 1259
  • Peter Kihiko V Blessed T.C World-Class Spares Ltd
    (2015) eKLR
  • Godfrey Julius Ndumba Mbogori & another V Nairobi City County
    (2018) eKLR
  • Kenfreight (EA) Ltd V Benson K. Nguti
    (2019) eKLR
  • B.O.M Ng'araria Girls Secondary School V KUDHEIHA Workers
    (2017) eKLR
  • Geofirey Cheruiyot Kirui V Mogogosiek Tea Factory Co. Ltd
    (2022) eKLR
  • Osota Paul Osiemo V Intersecurity Services Ltd
    (2021) eKLR
  • John Njoroge V National Bank of Kenya Ltd
    (2018) eKLR
  • Walter Ogal Anuro V Teachers Service Commission
    (2013) eKLR
  • Naima Khamis V Oxford University Press (EA) Ltd
    (2017) eKLR
  • Pius Machafu Isindu V Lavington Security Guards Ltd
    (2017) eKLR
  • Postal Corporation of Kenya V Andrew K. Tanui
    (2019) eKLR
  • Rookes V Barnard
    (1964) AC 1129
  • Grain Pro Kenya Inc. Ltd V Andrew Waithaka Kiragu
    (2019) eKLR
Jurisdiction invoked
Employment and Labour Relations Court Act, 2011; Employment Act, 2007

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, "Musyoki v Afya Co-operative Savings & Credit Society Ltd (Cause E442 of 2021) [2024] KEELRC 1174 (KLR)", Case Analysis (2024). Cause No E442 of 2021. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/1174/eng@2024-05-07

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