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ELRCDismissedNot stated in the judgment (Employment and Labour Relations Court cause; counterclaim dated 9 May 2024)· [2024] KEELRC 2808 (KLR)

Muthui v Kitui Flour Mills Limited (Cause E019 of 2024) [2024] KEELRC 2808 (KLR)

Employment and Labour Relations Court
14 November 2024
MMM. Mbarũ
1,302 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan employer can still recover money an employee owes through salary or terminal dues deductions, even when a counterclaim faces a limitation challenge.

What this practically means

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Executive summary

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The claimant, an employee, filed a Memorandum of Claim on 14 March 2024 alleging unfair, unlawful and wrongful summary dismissal and non-payment of terminal dues. The respondent employer filed a Response and a counterclaim dated 9 May 2024 seeking judgment of Ksh.706,600, alleging the claimant admitted misappropriation and theft at its Thika depot on 25 February 2021 and agreed to repay through monthly instalments of Ksh.50,000, and further issued fake LPOs worth Ksh.704,000. The claimant raised a preliminary objection that the counterclaim is time-barred under Section 89 of the Employment Act, filed more than three years after the cause of action, relying on authorities including Mikisa Biscuits, Hart v Schenker, Mwaniki v Kenya Wildlife Service and Ddaiddo v Bank of India, submitting that a counterclaim is a counter-suit subject to statutory limitation. The respondent countered that when it discovered the fraud and that Section 89 is not absolute raises questions of fact requiring a full hearing. The court held that under Rules 29(g) and 31(2) of the ELRC (Procedure) Rules, 2024 a counterclaim is a new suit regulated as a claim on its merit and subject to Section 89 where founded on the employment relationship; however, the employer's entitlement to deduct amounts owed under Sections 17 and 19 operates regardless of a counterclaim, and whether the claimant had repaid or still owed amounts at resignation are matters of evidence. The court declined the objections and ordered costs to abide by the outcome of the claim, delivering the ruling virtually on 14 November 2024.

Key legal issues

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01

Whether the counterclaim is time-barred under Section 89 of the Employment Act

Holding

The court declined to strike out the counterclaim, holding that the matters it raises - admission of misappropriation, agreed repayment instalments, and any unpaid balances at separation - require interrogation in evidence and fall within the deductions regime of Sections 17 and 19 of the Employment Act

Reasoning

The court accepted that a counterclaim is a separate suit subject to Section 89 limitation. However, it found that the employer's entitlement to deduct amounts owed under Sections 17 and 19 operates whether or not there is a counterclaim, and whether the employee had repaid or still owed amounts at resignation are questions of fact requiring evidence. The objection could therefore not be determined as a pure point of law.

p. 3
02

Status of a counterclaim under the ELRC (Procedure) Rules, 2024

Holding

A counterclaim is part of the pleadings a respondent may file with its response and is treated as a new suit regulated as a claim on its merit

Reasoning

Under Rule 29(g) a respondent may include a counterclaim in its response; under Rule 31(2) the counterclaim is a new suit regulated as a claim on its merit, and where its foundation is the employment relationship it is governed by Section 89 of the Employment Act.

p. 2

Legal principles established

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  • A counterclaim is a new suit regulated as a claim on its merit and, where founded on the employment relationship, is subject to the limitation period in Section 89 of the Employment Act
  • Where Sections 17 and 19 of the Employment Act are invoked, whatever the employee owes the employer is recoverable through deductions from terminal dues regardless of whether there is a counterclaim

Court orders

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  1. 1.Objections to the counterclaim declined
  2. 2.Costs to abide by the outcome of the claim

Authorities

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Legislation

  • Employment ActSection 89
  • Employment ActSection 98 (as cited by claimant)
  • Employment ActSection 35(4)
  • Employment ActSection 17
  • Employment ActSection 19(1)(b),(d),(h)
  • Penal CodeSection 389
  • Employment and Labour Relations Court (Procedure) Rules, 2024Rules 29(g) and 31(2)

Cases cited (4)

  • Mikisa Biscuits Manufacturing Ltd v West End Distributors
    [1969] EA
  • Hart v Schenker Limited
    Cause No. 4 of 2019
  • Mwaniki v Kenya Wildlife Service
    Cause No. 729 of 2017
  • Ddaiddo v Bank of India (K) Ltd
    Civil Appeal E082 of 2021
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over claims arising from the employment relationship, under the Employment Act and the Employment and Labour Relations Court (Procedure) Rules, 2024

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Muthui v Kitui Flour Mills Limited (Cause E019 of 2024) [2024] KEELRC 2808 (KLR)", Case Analysis (2024). Not stated in the judgment (Employment and Labour Relations Court cause; counterclaim dated 9 May 2024). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/2808/eng@2024-11-14

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