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ELRCPartially AllowedCause No 1061 of 2018· [2025] KEELRC 258 (KLR)

Kenya Union of Commercial, Food and Allied Workers v Wanandege Sacco Ltd (Cause 1061 of 2018) [2025] KEELRC 258 (KLR)

Employment and Labour Relations Court
30 January 2025
OKOcharo Kebira
3,926 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~16 min to read original · ~4 min brief

The bottom line

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A Kenyan Sacco was ordered to pay two dismissed cashiers over KSh 1.5 million because it fired them based on a speculative fraud audit without solid evidence.

What this practically means

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Executive summary

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The Claimant, a trade union, sued on behalf of two members summarily dismissed by the Respondent, a Sacco, for alleged fraudulent transactions. The Grievants, formerly a Chief Cashier and a Cashier, were sent on compulsory leave in December 2015, interdicted without pay, and dismissed on 21st April 2016. The court framed two issues: whether the summary dismissal was unfair, and whether the reliefs sought were available. On procedural fairness, the court found the dismissal fair, since both Grievants admitted due process was followed. On substantive justification, however, the court found the external audit report inconclusive and speculative, recommending further investigation on mere suspicion of fraud. The Respondent failed to address evidence of systemic weaknesses in its computer system, including use of a manager's credentials while on leave, and admitted auditors had recommended a forensic audit without explaining why. The court drew an adverse inference against the Respondent, noted the Banking Fraud Unit had exonerated the Grievants, and held that no reasonable employer would have dismissed them as the Respondent did. The court also held it inequitable for an employer to dismiss employees on matters fuelled by its own systemic challenges, and that the withholding of salaries during the four months of compulsory leave was unlawful. Judgment was entered for the Grievants: a declaration of substantive unfairness, six months' gross salary compensation under section 49(1)(c) of the Employment Act for each Grievant, unpaid salaries for the interdiction period, one month's salary in lieu of notice, interest, and costs of the suit. The conciliator's recommendation for reinstatement was not adopted; compensation was awarded instead.

Key legal issues

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01

Procedural fairness of the summary dismissal

Holding

The dismissal was procedurally fair; the Grievants admitted due process was followed.

Reasoning

The court found the Claimant did not contest procedural fairness. Both Grievants admitted in cross-examination that due process was followed, including show-cause letters, responses, invitations to disciplinary hearings, accompaniment by union representatives, and communication of reasons for dismissal. Procedural fairness under section 41 of the Employment Act was therefore satisfied.

p. 6
02

Substantive justification of the summary dismissal

Holding

The dismissal was substantively unfair; the Respondent failed to discharge its burden under section 45(2).

Reasoning

The audit report relied on was speculative and inconclusive, recommending further investigation on 'suspicion of fraudulent activity' with no evidence of follow-up. The Grievants showed systemic weaknesses in the Respondent's system, including use of a manager's credentials while on leave, and the Banking Fraud Unit exonerated them. The court drew an adverse inference against the Respondent for its flat denial regarding the forensic audit recommendation and found no reasonable employer would have dismissed as it did.

p. 8
03

Unlawful withholding of salaries during compulsory leave/interdiction

Holding

The Respondent unlawfully withheld four months' salaries during interdiction and must compensate.

Reasoning

The Respondent did not challenge the evidence that salaries were withheld during the four months of compulsory leave, and cited no policy, CBA stipulation or legal basis for doing so. The applicable CBA provided for suspension on half pay, not unpaid interdiction. The withholding was therefore unlawful and compensation was awarded.

p. 8
04

Entitlement to compensatory relief under section 49(1)(c)

Holding

Compensation of 6 months' gross salary was granted to each Grievant in the circumstances of the case.

Reasoning

The court considered that the dismissals were based on an inconclusive and speculative audit report, that the Grievants may have been condemned unfairly instead of the Respondent's systemic challenges, the industry concerned, the negative impact of dismissal on future employment prospects, and length of service, concluding compensation at 6 months' gross salary for each Grievant was appropriate.

p. 8

Legal principles established

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  • The employer bears the burden of demonstrating that a summary dismissal was both procedurally and substantively fair.
  • It is inequitable for an employer to dismiss an employee on matters fuelled by the employer's own systemic challenges.
  • Whether misconduct justifies dismissal requires assessment of context and gravity, not mere labelling of gross misconduct.

Court orders

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  1. 1.Declaration that the summary dismissal against the Grievants was substantively unfair
  2. 2.Compensation under section 49(1)(c) of the Employment Act of 6 months' gross salary: KShs. 449,234 for the 1st Grievant and KShs. 362,982 for the 2nd Grievant
  3. 3.Unpaid salary during the period of interdiction: KShs. 302,156 for the 1st Grievant and KShs. 249,200 for the 2nd Grievant
  4. 4.One month's salary in lieu of notice: KShs. 76,539 for the 1st Grievant and KShs. 60,497 for the 2nd Grievant
  5. 5.Interest on the compensation and notice sums at court rates from the date of judgment till full payment
  6. 6.Interest on the unpaid interdiction salaries at court rates from the date the salaries fell due till full payment
  7. 7.Costs of the suit to the Claimant

Authorities

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Legislation

  • Employment ActSections 41, 43, 44(3), 44(4), 44(4)(c), 45, 45(2), 47(5), 49(1)(c)

Cases cited (4)

  • White and Carter [Councils] v McGregor
    [1962] AC 413
  • Laws v London Chronicle Limited
    [1959] 2 ALL E.R 285
  • Sinclair v Neighbour
    [1967] 2 QB
  • Violate Kasada Shitsuka v Kenya Post Savings Bank
    [2020] eKLR
Jurisdiction invoked
Employment and labour relations dispute referred after conciliation under the Employment Act and Labour Relations Act; specific constitutional/statutory basis not stated 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 Wanandege Sacco Ltd (Cause 1061 of 2018) [2025] KEELRC 258 (KLR)", Case Analysis (2025). Cause No 1061 of 2018. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/258/eng@2025-01-30

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