Muthui v Kitui Flour Mills Limited (Cause E019 of 2024) [2025] KEELRC 2114 (KLR)
The bottom line
#An employer won a fraud dismissal case procedurally wrong: the employee got notice pay but zero compensation because his own misconduct tainted the record.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether there was unfair termination of the claimant's employment
- 2.Whether the remedies sought should issue
- 3.Whether the counterclaim has merit
- 4.Who should pay costs
Key legal issues
#Whether the summary dismissal was unfair despite the alleged fraud and criminal charges
The summary dismissal was unfair because the respondent failed to follow the mandatory fair procedure under section 41 of the Employment Act; no show-cause notice was issued and the claimant was not heard, and pending criminal charges did not excuse the employer.
Sections 43, 44 and 45 allow summary dismissal for gross misconduct, but section 41 procedure remains mandatory. The claimant had tendered resignation and offered to serve notice, remaining an employee until 31 August 2021. The employer gave no notice of the allegations or opportunity to make representations. Criminal proceedings arising from the same misconduct did not relieve the employer of its duty to accord due process.
Whether compensation for unfair termination should issue
No compensation awarded; although termination was procedurally unfair, the claimant's admitted gross misconduct made a zero award under section 49 justified.
Section 49 governs compensation, guided by section 45(5), including the employee's conduct and work record. The claimant admitted a shortage of Ksh. 706,600 at the Thika depot and agreed to repay it, and only partially paid. Awarding compensation would reward gross misconduct. Precedent supports zero awards where the work record is tainted by gross misconduct.
Whether the counterclaim has merit
The counterclaim succeeded; the claimant admitted owing Ksh. 706,600, of which Ksh. 250,000 was paid, leaving a balance of Ksh. 456,600 due.
The claimant acknowledged the missing funds and agreed to repay in Ksh. 50,000 monthly instalments, which obligation survived his resignation. He paid Ksh. 250,000 before dismissal, leaving Ksh. 456,600. The court allowed the counterclaim for that balance.
The claimant's monthly salary
The salary was Ksh. 53,470, not Ksh. 130,000; M-Pesa payments were commissions and bonuses for work done, not salary.
The respondent produced the 2021 payment statement showing a monthly wage of Ksh. 53,470, with bonuses and commissions paid via M-Pesa. The court accepted this evidence, so notice pay was computed at Ksh. 53,470.
Legal principles established
#- Even where gross misconduct justifies summary dismissal under sections 43 and 44 of the Employment Act, the employer must still follow the fair procedure mandated by section 41, including notification and hearing.
- An employee who has tendered resignation and offered to serve the notice period remains an employee whose rights subsist until the resignation takes effect.
- An employee's conduct and work record are relevant under section 45(5) of the Employment Act in determining compensation, and a tainted work record can justify zero compensation despite unfair procedure.
Court orders
#- 1.Judgment entered for the claimant for payment of Ksh. 53,470 in notice pay, with no compensation awarded
- 2.Counterclaim allowed for the respondent in the amount of Ksh. 456,600 to be paid by the claimant
- 3.The claimant shall pay the respondent less than his award
- 4.Each party shall bear its costs
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (first-instance employment claim and counterclaim)
Relief refused
#Damages for unfair termination of employment of Ksh. 1,560,000 (compensation under section 49)
The claimant's conduct amounted to gross misconduct; awarding compensation would reward gross misconduct, so a zero award was justified despite lack of due process.
Annual leave for 4 years and 6 months of Ksh. 409,468
Not granted in the final orders; the judgment entered judgment only for notice pay with no compensation.
Service pay for 4 years and 6 months of Ksh. 292,477
Not granted in the final orders; judgment limited to notice pay only.
Notice pay at Ksh. 130,000 as claimed
The court found the salary was Ksh. 53,470, not Ksh. 130,000, as evidenced by the payment statement for 2021.
Costs of the suit
Each party ordered to bear its own costs.
Costs
Each party shall bear its costs.
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.
Due process of law was not followed, resulting in the unlawful and unfair termination of employment. The criminal charges stemming from the shop fioor misconduct did not prevent the respondent, as the employer, from conducting a fair procedure with the claimant.
His resignation did not diminish his employment rights, which took efiect on 31 August 2021.
Even in a serious case involving fraud or misappropriation of funds, the provisions of Section 41 are mandatory
Consequently, judgment is entered for the claimant for payment of Ksh. 53,470 in notice pay, with no compensation awarded; the counterclaim is allowed for the respondent in the amount of Ksh. 456,600 to be paid by the claimant. The claimant shall pay the respondent less than his award. Each party shall bear its costs.
Issues in the judgment
#The judgment states the claimant's notice was for four months in one passage but three months in another
Paragraph 16 states the counterclaim is for Ksh. 706,600 while paragraph 23 and the final orders reduce it to a balance of Ksh. 456,600
The criminal case number is garbled in the judgment
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Muthui v Kitui Flour Mills Limited (Cause E019 of 2024) [2025] KEELRC 2114 (KLR)", Case Analysis (2025). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/2114/eng@2025-07-17
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.