Mritaugu v New Kenya Co-operative Creameries Ltd (Cause E488 of 2020) [2025] KEELRC 1835 (KLR)
The bottom line
#A Kenyan court ruled an employer's dismissal of a sales rep was justified in substance but unfair in procedure, awarding KShs.300,000 while rejecting a KShs.1.5 million counterclaim.
What this practically means
#Executive summary
#Key legal issues
#Substantive fairness of the termination
The reason for termination - reasonable suspicion of a criminal offence against the employer's property based on the audit report - was valid and fair
The court found the Claimant had accessed the audit report before the hearing and had not denied knowledge of it. Evidence showed he had SAP system access, was issued lower prices by reconciliation clerks, sold at market rate and reconciled at lower prices. Guided by section 43 and section 44(4)(g), and the reasonable-employer test in British Leyland UK Ltd v Swift, the court held the reason for termination was fair and declined to interfere with the respondent's decision.
Procedural fairness of the termination
Although show cause and disciplinary hearing were conducted, failure to determine the Claimant's appeal within clause 27 of the CBA rendered the process unfair
The Claimant was issued a show cause letter, invited to and attended a disciplinary hearing, and was dismissed. However, he appealed and received no response. Clause 27 of the CBA required the company to communicate its decision on appeal in writing within 21 days. Non-compliance with that clause meant due process was incomplete and the termination, though substantively justified, was procedurally unfair.
Reliefs due on a procedurally unfair termination
Notice pay under clause 26 of the CBA and section 35, and half pay for the suspension period under clause 25(II) of the CBA, were awarded; section 49 compensation was refused as the reason was justified
Because the process was flawed, termination was deemed to have occurred under clause 26 of the CBA and section 35 of the Employment Act, entitling the Claimant to one month's notice pay of KShs.120,000/-. Clause 25(II) of the CBA provided for half pay during suspension, yielding KShs.180,000/- for the three months. Compensation under section 49 was withheld because the reason for termination was proved justified.
The counterclaim for alleged fraud losses
Dismissed for failure of proof
Although the court accepted there was a reasonable basis for suspicion of crime against the employer's property sufficient to justify dismissal, the civil burden on the counterclaim required specific proof of the quantified loss. The respondent did not produce the invoices underpinning the Kshs.1,532,598.62 figure, so the court declined to award the counterclaim.
Legal principles established
#- Termination must pass both substantive and procedural fairness under sections 43, 45 and 41 of the Employment Act
- An employer need only have reasonable and sufficient grounds to suspect an employee of a criminal offence against the employer's property to justify summary dismissal under section 44(4)(g)
- A defective appeal process, including non-compliance with the CBA appeal clause, renders termination procedurally unfair
- A counterclaim quantified in an audit report must be independently proved; the report alone is insufficient
Court orders
#- 1.Declaration that the termination is held as lawful but procedurally unfair
- 2.Notice pay of KShs.120,000/-
- 3.Salary at ½ for 3 months of suspension - KShs.180,000/-
- 4.Total amount of KShs.300,000/- payable with interest at court rates from date of judgment
- 5.Certificate of service to issue under section 51 of the Employment Act
- 6.Costs of the suit to the Claimant
- 7.Counterclaim dismissed with no order as to costs
- 8.30 days stay of execution granted
- Jurisdiction invoked
- Original jurisdiction of the Employment and Labour Relations Court under the Employment Act, 2007 over a claim for wrongful and unfair termination of employment
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Mritaugu v New Kenya Co-operative Creameries Ltd (Cause E488 of 2020) [2025] KEELRC 1835 (KLR)", Case Analysis (2025). Memorandum of Claim dated 20th August 2020. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/1835/eng@2025-06-20
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.