Kenya Hospital Association Limited t/a the Nairobi Hospital v John Gichuru Ngunju

3. It was also provided in the letter of appointment that if the respondent wished to leave service, he would give the appellant three (3) months’ notice or forfeit his salary for the period by which his notice would fall short of three (3) calendar months. 4. After successful completion of probation, the appellant conrmed the respondent’s employment by a letter dated 2nd March 2013. 5. Based on his pleading, the respondent began to encounter diculties with his employer in September 2012 when the Human Resource Manager, Christina M. Were, took great exception to the respondent having participated, alongside the Financial Controller, in the hiring, without sanction of the Human Resource Department, of temporary sta. The relationship between the respondent and the Human Resource Manager thereafter appears to have become strained to an extent that the respondent imputed malice and bad faith in the events that followed. 6. According to the respondent, in May 2014 the Human Resource Manager was displeased with an investigation report that the respondent and the Financial Controller submitted concerning fraud in the cashier’s oce at the Hospital and she threatened him that “he would not survive at the Nairobi Hospital.” He averred that on 19th May 2014, he received a memo requiring him to “show cause why disciplinary action should not be taken against [him] for the lack of forthrightness in the manner” he had handled the fraud investigation for allegedly failing to take steps on the fraud despite having been aware of it. 7. A few months later, by a letter dated 2nd August 2014, the appellant suspended the respondent with immediate eect and “prohibited” him “from coming to the Hospital except for medical attention at the sta clinic.” That letter referred “to show cause memo dated 2nd August 2014” and the respondent’s “response” which the respondent contends were non-existent. 8. The circumstances under which that suspension, and the eventual summary dismissal of the respondent occurred are contested. According to the respondent, on Saturday 2nd August 2014, the Finance Director summoned him to his oce at about 10.25 am and demanded his resignation ‘by close of business’; that on seeking the basis of that demand, none was forthcoming beyond that “he should read between the lines” and that “those are intricacies of corporate politics”; that the respondent requested at least the weekend to think through the matter which request was declined and was given the option to resign or be sacked; that after leaving, the Finance Director summoned him back to the oce and presented him with the suspension letter dated 2nd August 2014. 9. With that turn of events, the respondent consulted his advocates, Ms. Nyaencha, Waichari & Company Advocates, who in a letter dated 13th August 2014 addressed to the appellant referred to the letter of suspension dated 2nd August 2014 and then stated: “ To enable us advise our client further, kindly let us have a copy of the alleged memo dated 2nd August 2014 seeking to have our client show cause. Let us also have a copy of his response as you purport in the suspension letter…” 10. There is no record of the appellant having responded to that letter but on the same date, i.e. 13th August 2014, the Finance Director in an inter-oce memorandum addressed to the respondent under the subject “Show Cause” wrote: “ Reference is made to fraudulent transactions resulting in loss of over Kshs. 92 million between 1st January 2013 and 30th April 2014. https://new.kenyalaw.org/akn/ke/judgment/keca/2024/1947/eng@2024-12-20 2

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Show cause why disciplinary action should not be taken against you in this regard. Your response should reach the undersigned by Thursday 14th August 2014, 4.00 pm.” 11. According to the appellant, a disciplinary hearing was scheduled for the respondent before the Finance Director for 14th August 2014, which the respondent failed to attend. As evidence in support of that contention, the appellant produced an email addressed to respondent by one Paul Mucheru, Human Resource Ocer at the Hospital with a date stamp of Thursday, August 14,2014 04:38 pm. We will advert to that email later in the judgment. 12. Moving on swiftly on the same day, 14th August 2014, the appellant summarily dismissed the respondent by a letter of even date titled “Summary Dismissal’ in which, in relevant part, it was stated: “ Reference is made to your failure to attend the meeting with the Finance Director on 14th August 2014 despite having conrmed that you would do so. Your actions contravene the Employment Act 2007 and you are hereby summarily dismissed with immediate eect. Your nal dues will be processed as follows: Pay: Salary up to and including 14th August 2014 Ten(10) days leave earned not yet taken. Less: Any outstanding medical co-pay expenses.” 13. He was by the same letter required to hand over to the Finance Director with immediate eect. 14. The respondent’s version of events is that on 12th August 2014, Paul Mucheru, Human Resource Ocer called him and informed him that the Human Resource Manager was giving him a nal chance to resign and that if he failed to do so, he would be summarily dismissed; that he informed Mr. Mucheru there were no reasons for him to resign; that thereafter the respondent consulted his advocates Ms. Nyaencha, Waichari & Company Advocates, who then wrote the letter to the appellant dated 13th August 2014 to which we have already referred; that on the morning of 15th August 2014, the Hospital messenger delivered the termination letter dated 14th August 2014 to him at Imara Daima Estate, the contents of which surprised him. 15. With that, the stage was set for the litigation that followed. In his testimony, the respondent reiterated the averments in his claim. He maintained that prior to his dismissal, he was not given any notice or reasons why he was being dismissed and neither was he given any notice of a disciplinary hearing; and that his suspension letter referred to non-existent memo and non-existent response. 16. Magdalene Mutua, a Human Resource Business Partner, who testied for the appellant stated that the respondent was terminated for failing to attend a meeting with the Finance Director which amounted to insubordination; that a meeting with the Finance Director was to discuss the show cause letter of 13thAugust 2014; that the respondent was called for the meeting on 14th August 2014 which was to take place at 2.00 pm; that the respondent “was invited to a meeting vide a telephone conversation” with Paul Mucheru. 17. Having reviewed the evidence and the submissions before her, the learned Judge framed two issues for determination, namely, whether the dismissal of the respondent was unfair and unjustied, and secondly, whether the respondent was entitled to the prayers he sought. On both issues the court found in favour of the respondent. The reliefs granted included notice pay, which was three months’ salary as per his letter of appointment; salary for 14 days worked in the month of August 2014; outstanding 10 leave days; and 8 months’ salary as compensation for the unlawful and unfair termination. https://new.kenyalaw.org/akn/ke/judgment/keca/2024/1947/eng@2024-12-20 3

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18. Based on the memorandum of appeal and the appellant’s submissions it is urged that the judge had no basis for nding that the respondent was not accorded a fair hearing before his termination; that there is no basis for the nding that no valid reasons were given for the respondent’s termination, and that there's no basis for the award of the reliefs granted. 19. During the hearing of the appeal before us on 5th June 2024 learned counsel Mr. Kigata in highlighting the appellant’s written submissions contended that prior to the show cause letter of 13th August 2014, there was an earlier show cause letter to the respondent dated 19th May 2014 which had not elicited a response from the respondent and characteristically, in keeping with previous conduct, the respondent did not respond to the one of 13th August 2014; that this should have informed the court that the respondent had no intention of responding to the notice to show cause letter of 13th August 2014; that there was evidence that the show cause letter was served on the respondent in the same manner as the termination letter; that the appellant informed the respondent of the disciplinary hearing but he failed to attend and the email of 14th August 2014 attests to this. Counsel concluded as follows: “ …the appellant submits that the respondent was served with the notice to show cause dated 13th August 2014 by hand; That he was informed about the meeting with the Finance Director on 14th August 2014; that he failed to attend the said meeting; That the contents of the e-mail from the appellant dated 14th August 2014 have not been challenged and that reason for dismissal as failure to attend the disciplinary hearing cements the previous averments about knowledge of the meeting.” 20. In support, counsel cited the case of Mathew Lucy Cherusa vs. Poverelle Sisters of Belgano t/a Blessed Louis Palazzalo Health Centre [2013] eKLR; Pamela Nelima Lutta vs. Mumias Sugar Company Limited [2017] eKLR; and Jackson Butiya vs Eastern Produce, Cause 335 of 2011 for the argument that where an employee ignores summons issued by the employer or squanders the internal grievance handling mechanism provided, they cannot complain of being deprived of an opportunity to be heard. 21. It was submitted that having been established that the respondent was summoned for a disciplinary meeting which he disobeyed by failing to attend, he was guilty of insubordination, which is a ground for summary dismissal under Section 44(4) of the Employment Act as upheld in persuasive decision in Abraham Gumba vs. KEMSA [2014] eKLR; and Kimutai Langat vs. Kenya Credit Traders Limited [2016] eKLR. 22. As regards the awards, it was submitted that the trial court erred in awarding 14 days salary for the month of August 2014 and 10 days outstanding leave when the payment for the same had already been computed and a cheque issued to the respondent prior to the institution of the suit; that the award of 3 months’ pay was also baseless given that the respondent was justiably dismissed for insubordination; that no justication or reasons, in order to accord with Sections 49 and 50 of the Employment Act, were given by the Judge for awarding compensation equivalent to 8 month’s salary; that, if anything, the award should have been based on the notice period in accordance with the contract as held in CMC Aviation Limited vs. Captain Mohammed Noor [2015] eKLR; Directline Assurance Co. Ltd vs. Jeremiah Wachira Ichaura [2016] eKLR. 23. Although there was no appearance for the respondent during the hearing of the appeal despite notice of hearing having been served, the advocates for the respondent led their written submissions dated 9th March 2020 which we have considered. The respondent submitted that there is no basis for interfering with the decision of the learned Judge. It was submitted that the respondent was summarily dismissed without being accorded a hearing whatsoever; that the appellant, which bore the burden of proof https://new.kenyalaw.org/akn/ke/judgment/keca/2024/1947/eng@2024-12-20 4

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to show that the purported memo dated 13th August 2014 was served on the respondent, failed to discharge that burden. 24. Referring to Articles 41 and 47 of the Constitution and Sections 43, 44, 45 of the Employment Act, it was submitted that the appellant violated due process and principles of natural justice in dismissing the respondent and the termination was therefore unfair and unjustied. In support, counsel referred to the decision in Chairman Board of Directors (National Water Conservation and Pipeline Corporation) vs. Meshack M. Saboke & 2 Others [2019] eKLR for the proposition that termination of employment is unfair if based on invalid reasons or if the procedure of termination is unfair. Also cited is the case of Janet Nyandiko vs. Kenya Commercial Bank Limited [2017] eKLR. 25. As regards the reliefs granted by the trial court, the advocates for the respondent submitted that monetary compensation in lieu of reinstatement was sought; that based on the monthly salary of Kshs. 422,570.70, this Court should award the equivalent of twelve months salary in the amount of Kshs. 5,040,848.40 in addition to payment of the equivalent of three months’ salary in lieu of notice based on the appointment letter. We however hasten to observe that absent a cross appeal, the claim for the equivalent of twelve months salary is misplaced. 26. It was submitted that depending on the severity of the breach, the trial court was at liberty to award, in its discretion, up to twelve months salary equivalent and the judge was justied in making the award given the trauma and implication of summary dismissal. 27. Regarding the awards for 14 days salary for the month of August 2014 and for outstanding leave days, counsel submitted that the same was correctly awarded. 28. Having re-appraised the evidence in accordance with our mandate under Rule 31(1)(a) of the Court of Appeal Rules, and having considered the appeal and the submissions, we identify two issues for determination. The rst is whether the Judge was at fault in concluding that the dismissal of the respondent from employment was unfair and unjustied. The second is whether there is any basis for this Court to interfere with the reliefs granted. 29. On the rst issue, the learned Judge found as a fact that the respondent was not served with the memo of 13th August 2014 and neither was the respondent called or notied of the purported disciplinary hearing. The Judge stated that “the only inference this Court can make is that there was no such call and there was (no) service of the show cause letter.” The Judge referred to Section 45(2) of the Employment Act before concluding: “ There is apparently no valid reason to warrant the dismissal and there is also no proof that the Claimant was accorded a fair hearing before his dismissal as envisaged under Section 41 of the Employment Act. It is therefore my nding that a Claimant’s dismissal was unfair and unjustied, and I declare it so.” 30. Was that conclusion supported by the evidence and was the Judge wrong in so concluding? The beginning point is the reason or justication the appellant gave for termination. In that regard, Section 43 of the Employment Act on proof of reason for termination is pertinent. It provides as follows: 43(1)(1) In any claim arising out of termination of a contract, the employer shall be required to prove the reason or reasons for the termination, and where the employer fails to do so, the termination shall be deemed to have been unfair within the meaning of section 45. [Emphasis added] https://new.kenyalaw.org/akn/ke/judgment/keca/2024/1947/eng@2024-12-20 5

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2)The reason or reasons for termination of a contract are the matters that the employer at the time of termination of the contract genuinely believed to exist, and which caused the employer to terminate the services of the employee. 31. Therefore, it was incumbent upon the appellant to prove the reason for terminating the respondent’s employment. To that end, the reason given by the appellant in its letter of 14th August 2014 by which it summarily dismissed the respondent was his alleged “failure to attend the meeting with the Finance Director on 14th August 2014 despite having conrmed that [he] would do so” which was tantamount to insubordination. The appellant needed to show, and establish on a balance of probabilities, that there was a scheduled disciplinary meeting with the Finance Director on 14th August 2014 and that the respondent had due notice of that meeting but failed to attend. As already mentioned, the evidence the appellant tendered was a somewhat intriguing email addressed to respondent by one Paul Mucheru, Human Resource Ocer at the Hospital with a date stamp of Thursday, August 14, 2014 04:38 PM in which, it was stated: “ Dear John Reference is made to our telephone conversation discussion on Tuesday 12th August 2014 when you advised that you were not available for a meeting with the Finance Director scheduled for Wednesday 13th August 2014 but conrmed that you would attend the meeting today 14th August 2014 at 2:00pm. At approximately 2:45 pm however, you called me to say you were not attending but did not oer a reason for not attending when asked why. Regards.” 32. It is noteworthy that the email is sent on Thursday, August 14, 2014 04:38 PM presumably to document events that had occurred. Whereas the respondent acknowledged having had a telephone conversation with the said Paul Mucheru on 12th August 2014, his testimony was that in that conversation the said Mucheru oered the respondent an opportunity to resign rather than be dismissed. 33. It is also noteworthy, that the conversation between the respondent and the said Paul Mucheru on 12th August 2014 took place before the appellant purportedly issued the notice to show cause to the respondent the following day on 13th August 2014. And even assuming for a moment that the notice to show cause of 13th August 2014 was served on the respondent, what was required of him was to show cause why disciplinary action should not be taken against him in connection with “fraudulent transactions resulting in loss of over Kshs. 92 million between 1st January 2013 and 30th April 2014”. For a start, that is not the reason the appellant gave in its summary dismissal letter for summarily terminating the respondent’s employment. Neither was there any reference in the notice to show cause of 13th August 2014 to a scheduled meeting. On the face of it, what was required of the respondent by that notice to show cause was to respond by 4.00 pm on 14th August 2014. There was absolutely no mention of a meeting. 34. The irresistible inference is that having failed to persuade the respondent to tender his resignation, the appellant, seemingly desperate, became innovative. As the learned Judge correctly stated, neither the Finance Director nor the said Paul Mucheru were called as witnesses. Magdalene Mutua who testied on behalf of the appellant had no personal knowledge of the matters and was of little assistance to the court in that regard. https://new.kenyalaw.org/akn/ke/judgment/keca/2024/1947/eng@2024-12-20 6

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35. Based on our re-appraisal of the evidence the appellant did not prove, as required under Section 43 of the Employment Act, the reason for terminating the respondent’s employment. Related to that is the import of Section 45 (2)(c) of the Employment Act which provides that termination of employment by an employer is unfair if the employer fails to prove that the employment was terminated in accordance with fair procedure. There was no evidence at all, beyond the discredited email of Paul Mucheru, that the respondent was notied of any meeting, least of all a disciplinary meeting, with the Finance Director. All in all, we uphold the nding by the learned Judge that the termination was invalid and that the termination was unfair and unjustied. 36. What remains is a consideration of the justication for the reliefs granted. Regarding the award of Kshs. 190,838.40 being 14 days salary for the month of August 2014 and outstanding 10 leave days being Kshs. 162,527.20, the appellant submitted in paragraph 43 of its closing submissions before the trial court as follows: “ 43. Prayers (ii) and (iv) sought were already granted by the Respondent upon terminating the services of the Claimant. The Respondent processed the payment of (10) days of leave days earned but not taken and salary for up to 14th August 2014. The Claimant is at liberty to pick the cheque.” 37. There was therefore no contest over those two items and the same were properly granted by the court. 38. As to the award of Kshs.1,267,712.00 being the equivalent of three months’ salary in lieu of notice; we have already referred to the contractual provision in the letter of appointment that the contract was terminable by giving three months ‘salary in lieu of notice. Section 49 of the Employment Act on remedies for wrongful dismissal and unfair termination provides that: 1. Where in the opinion of a labour ocer summary dismissal or termination of a contract of an employee is unjustied, the labour ocer may recommend to the employer to pay to the employee any or all of the following— a. the wages which the employee would have earned had the employee been given the period of notice to which he was entitled under this Act or his contract of service; b. …, or c. the equivalent of a number of months wages or salary not exceeding twelve months based on the gross monthly wage or salary of the employee at the time of dismissal. 39. We see no basis for faulting the award of three month’s salary in lieu of notice. 40. There is then the award of 8 months’ salary as compensation for the unlawful and unfair termination. In making that award, the learned Judge simply pronounced that “the Claimant is also awarded 8 months’ salary as compensation for the unlawful and unfair termination= 8 x 422,570=3,380,560.” The factors for consideration under Section 49(4) of the Employment Act that inuenced the decision of the judge to award the equivalent of eight months are not manifest. One of the factors for consideration is the length of service with the employer. Having been employed in July 2012 and terminated in August 2014, the respondent had only served for slightly over two years only. Had the Judge taken this factor into account, we do not think that she would have awarded the equivalent of 8 months’ salary. In our view, considering the award of three months’ salary in lieu of notice already granted and the length of service, we think an award of the equivalent of three months’ salary as https://new.kenyalaw.org/akn/ke/judgment/keca/2024/1947/eng@2024-12-20 7

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compensation for unfair termination would have suced. To that extent, we are inclined to interfere with the exercise of the Judge’s discretion. We set aside the award of 8 months’ salary and substitute therefor an award of 3 months’ salary as compensation. 41. 42. In conclusion therefore: a. We uphold the nding by the judge that the termination of the respondent’s employment was unfair and unjustied. b. We uphold the award of three months’ salary in lieu of notice. c. We uphold the award of salary for 14 days worked in August 2014. d. We uphold the award of 10 leave days earned and not taken. e. We set aside the award of 8 months’ salary and substitute therefor an award of 3 months’ salary as compensation. The appeal succeeds to that extent only. We order each party to bear its own costs of the appeal. DATED AND DELIVERED AT NAIROBI THIS 20TH DAY OF DECEMBER, 2024. S. GATEMBU KAIRU, FCIArb .............................. JUDGE OF APPEAL S. ole KANTAI ............................... JUDGE OF APPEAL J. MATIVO ................................ JUDGE OF APPEAL I certify that this is a true copy of the original. Signed DEPUTY REGISTRAR https://new.kenyalaw.org/akn/ke/judgment/keca/2024/1947/eng@2024-12-20 8

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