Ngugi v Orient Sacco Society Limited (Cause 154 of 2020) [2024] KEELRC 1304 (KLR)
The bottom line
#Kenya's Employment Court upheld a Sacco CEO's summary dismissal for gross misconduct but ordered the employer to issue his certificate of service within 21 days.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the parties were in a contract of service
- 2.How the contract of service was terminated
- 3.Whether the dismissal was fair in procedure and reasons
- 4.How the Counterclaim should be dealt with
- 5.Whether the claimant's other claims (salary arrears, house allowance, service pay, severance, accrued leave, certificate of service) are merited
Key legal issues
#Fairness of the summary dismissal
The dismissal was fair in both procedure and reasons; the claimant admitted culpability at the special meeting of 07.12.2016, was confronted with the forensic report, attended the meeting of 11.03.2017, and thereafter absconded
The Court found the regulator SASRA played a role, the claimant admitted the reasons for termination at a members' special meeting, and later saw the forensic report and attended the meeting of 11.03.2017. Notice and hearing under section 41 would have been superfluous. The dismissal met the fairness standards of section 45 and fell under section 44 for gross misconduct, collapsing claims for notice pay and compensation.
Counterclaim for loan and surcharge
The Court declined to determine the counterclaim as those issues were pending before the Co-operative Tribunal
The claims for the loan of Kshs. 4,701,572.00 and the surcharge of Kshs. 42,150,800.00 were already before the Co-operative Tribunal in Citmisappl/E13/2022 and Ctc 127/21. The Court held parties must exhaust the alternative statutory path and declined to interfere with those proceedings.
Service pay and severance
Neither service pay nor severance was payable
Service pay was barred because the claimant was an NSSF member under section 35(5) as read with section 35(6)(a) of the Employment Act. Severance was inapplicable because the termination was summary dismissal for gross misconduct under section 44, not a redundancy contemplated under section 40 of the Act.
House allowance and accrued leave
Both claims failed
The claimant earned a consolidated salary deemed inclusive of housing under section 31(2) of the Act and gave no contractual basis for a separate house allowance. The accrued leave claim lacked evidence: no leave forms under clause 7.1.1 of the HR Manual were exhibited, no grievance was raised during service, and the claim was found to be an afterthought.
Legal principles established
#- Where an employee admits the reasons for termination and absconds, subjecting them to notice and hearing under section 41 of the Employment Act would be a superfluous process; summary dismissal for gross misconduct requires no notice
- Service pay is not payable to an employee who is a member of NSSF under section 35(5) read with section 35(6)(a) of the Employment Act
- A consolidated salary is deemed to include provision for reasonable housing under section 31(2) of the Employment Act, defeating a separate house allowance claim
Court orders
#- 1.The respondent to deliver the certificate of service within 21 days from the date of judgment
- 2.Each party to bear own costs of the suit
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
- Jurisdiction invoked
- Employment and labour relations jurisdiction over the contract of service (Employment Act, 2007); counterclaim matters left to the Co-operative Tribunal
Relief refused
#One-month notice pay of Kshs. 199,500.00
Summary dismissal for gross misconduct under section 44(1) of the Employment Act; dismissal was not unfair
Salary arrears January to March 2017 (Kshs. 598,500.00)
Claimant absconded and was on suspension; did not work and did not prove non-payment
House allowance of Kshs. 2,513,700.00
Claimant earned consolidated salary deemed to include housing provision under section 31(2) of the Act; no contractual basis given
Service pay of Kshs. 209,475.00
Claimant was a member of NSSF; service pay not due under section 35(5) as read with section 35(6)(a) of the Act
Severance payment of Kshs. 498,750.00
Summary dismissal under section 44, not redundancy under section 40 of the Act
Accrued annual leave of Kshs. 977,550.00
No evidence of leave forms or grievance during service; claim an afterthought
Respondent's counterclaim (loan of Kshs. 4,701,572.00 and surcharge of Kshs. 42,150,800.00)
Matters pending before the Co-operative Tribunal; parties must exhaust the alternative statutory forum
Costs
Each party to bear own costs of the suit
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
The respondent to deliver the certificate of service within 21 days from today.
Each party to bear own costs of the suit.
The Court returns that the respondent had not adopted unfair procedure to dismiss the claimant and the reasons were valid.
the submission that he ought to have been subjected to a notice and a hearing per section 41 of the Employment Act, 2007 would amount to a superfluous process
the issues in the Counterclaim are before other lawful forum in Co-operative Tribunal Citmisappl/ E13/2022 and Ctc 127/21 and the Court will not interfere as parties must exhaust that alternative statutory path.
it was a case for summary dismissal under section 44 of the Act and not redundancy under section 40 of the Act
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Ngugi v Orient Sacco Society Limited (Cause 154 of 2020) [2024] KEELRC 1304 (KLR)", Case Analysis (2024). Not stated in the judgment as provided. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/1304/eng@2024-05-29
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.