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ELRCPartially Allowed· [2024] KEELRC 1441 (KLR)

Otieno v National Oil Corporation Of Kenya (Cause E636 of 2021) [2024] KEELRC 1441 (KLR)

Employment and Labour Relations Court
14 June 2024
JRJames Rika
3,300 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~13 min to read original · ~4 min brief

The bottom line

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A Kenyan court awarded an employee Kshs. 3.5 million because his employer unfairly blamed him for a supplier's failure.

What this practically means

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Executive summary

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The Claimant, formerly Assistant Manager, Credit Control with the Respondent, earning Kshs. 294,000 gross monthly, was dismissed on 23rd April 2021 after disciplinary charges premised on failure to reconcile stock accounts, principally the Kenya Ports Authority account handled by third party Great White Investments Limited. He sought a declaration that termination was unfair and unlawful, one month's notice pay, 12 months' compensation, leave pay and exemplary damages. The Respondent maintained dismissal was for gross negligence under Section 44(c) of the Employment Act and that fair procedure was followed, including a KPMG forensic audit, show-cause letter, written responses and a hearing attended with a colleague. The Court found procedure fair under Section 41, but no valid reason under Sections 43 and 45: the Respondent's own witnesses, Karimi and Ringera, corroborated that the third party was contractually bound to provide daily stock reconciliations and reports and failed to do so, hampering the Claimant, who escalated the issue to supervisor Ngumi and sent supervisee Nyaga to the site. The Head of Finance had memoed the Internal Auditor absolving Finance of the variances. The Court held it unreasonable to dismiss the Claimant for a third party's contractual failure and declared the termination unfair. Notice pay of Kshs. 294,000 and compensation of 11 months' gross salary (Kshs. 3,234,000) were awarded, totalling Kshs. 3,528,000. Leave pay and exemplary damages were refused. Costs were awarded to the Claimant with interest at court rate from judgment until payment in full. Judgment delivered at Nairobi on 14th June 2024 by James Rika, Judge.

Key legal issues

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01

Fairness of procedure

Holding

Procedure complied with Section 41 of the Employment Act and the HR Manual

Reasoning

The Claimant was interdicted, investigated including by external audit, issued disciplinary charges, given documents and assistance, responded in writing, heard in the company of a colleague, and informed of the outcome with a right of appeal which he chose not to exercise. The process was slow, deliberate and fair.

p. 5
02

Valid reason for termination

Holding

No valid reasons established; termination unfair for want of valid reason

Reasoning

The Respondent's own witnesses corroborated that the third party, Great White Investments Limited, was contractually bound to supply daily stock reconciliation and reports, and failed to do so. The Head of Finance memo absolved the Finance department. Holding the Claimant responsible for the third party's contractual breach was unreasonable.

p. 6
03

Remedies

Holding

Notice pay and 11 months' compensation granted; leave pay and exemplary damages refused

Reasoning

Notice pay was promised in the termination letter but no evidence of payment was adduced. Compensation of 11 months was awarded for 8 years of unblemished service where the Claimant did not contribute to the termination; exemplary damages and unproven leave claim were refused.

p. 7

Legal principles established

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  • An employer cannot validly dismiss an employee for failure of a contractual responsibility vested in a third party.
  • Termination requires both fair procedure under Section 41 and valid reasons under Sections 43 and 45 of the Employment Act.

Court orders

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  1. 1.Declaration that termination was unfair and unlawful
  2. 2.Payment of notice pay at Kshs. 294,000
  3. 3.Compensation for unfair termination equivalent of 11 months' gross salary at Kshs. 3,234,000 (total Kshs. 3,528,000)
  4. 4.Costs to the Claimant
  5. 5.Interest at court rate from the date of Judgment till payment in full
Jurisdiction invoked
Original employment and labour relations jurisdiction (Employment Act; Employment and Labour Relations Court Act)

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, "Otieno v National Oil Corporation Of Kenya (Cause E636 of 2021) [2024] KEELRC 1441 (KLR)", Case Analysis (2024). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/1441/eng@2024-06-14

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