Resort Kenya Ltd v Waithaka

3. The background is that the respondent was employed by the appellant on 18th February 2003 as a trainee Food & Beverage Controller at the appellant’s Mayfair Casino Club. The terms of employment were set out in a letter of engagement dated 10th February 2003. He worked for the appellant for about 9 years. By the time he was dismissed from employment by letter dated 27th March 2012, he was serving the appellant as an Accountant, having been promoted to that position eective 1st January 2010. 4. In its summary dismissal letter dated 27th March 2012 addressed to the respondent, the Human Resource Manager of the appellant wrote: “ Johnson Waithaka Kuboba Dear Sir, RE: Summary Dismissal The management regrets to inform you that due to serious breach of rules and regulations of the company and gross misconduct in performing your duties, you are summarily dismissed. The Fact The company has come to know and after investigations got prove that fake invoices were taken to accounts and paid. This amounts were then paid to the people involved. Because of this you are summarily dismissed with immediate eect and without benets. Upon returning company’s property in your possession, you will be paid your dues as follows: Due salaries.Annual leave if any. The company reserve the right of any further legal action. The company will retain your nal dues until the total loss suered will be determined and refunded. Kind regards. Paul Mbugu Kamau Human Resource Manager.” 5. With that, the respondent moved to the then Industrial Court to challenge his dismissal. In his Memorandum of Claim dated 21st May 2012, the respondent averred that he was wrongfully and unlawfully dismissed from employment; that the appellant violated Section 41(1) of the Employment Act as reasons for the intended dismissal were never explained to him; that he was not given a chance to dispute the correctness of the accusations; and that he was not given a termination notice. 6. In its Statement of Defence, the appellant pleaded that as its Accountant, the respondent was responsible for checking and posting invoices, preparing creditors payment vouchers, preparing cheques for the payment of suppliers; that the respondent had a duty to discharge those duties honestly and diligently; that on 26th March 2012 it came to the attention of the appellant that in cahoots with some suppliers and with the connivance of fellow employees, the respondent was involved in a scheme where he would obtain blank invoices from suppliers, ll them out with ctitious details of purported supplies, and thereafter process payment in favour of suppliers. The suppliers would upon receiving payment from the appellant for the ctitious supplies, in turn make pay outs to the respondent. The https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1781/eng@2026-09-25 2

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appellant contended that the respondent abused his duciary position, and caused it loss, and was therefore justied in its action of summarily terminating the respondent’s employment. 7. In his testimony, the respondent stated that he was summoned to the Managing Director’s oce on 13th March 2012 where the Managing Director and the Finance Controller where he was informed that the appellant had lost money. That he was asked to explain his relationship with the vegetable and meat suppliers. That he stated that he merely knew them as suppliers. That when asked to explain in writing what he knew, he said he knew nothing else and was then asked to wait outside the oce in the waiting area where the summary dismissal letter was handed over to him by the Human Resource Manager and was escorted out of the appellant’s premises. 8. Under cross examination, the respondent acknowledged that it was a term of his employment contract that dishonesty could lead to termination of his employment. He however maintained that he did not collude with suppliers. He acknowledged having received payments on numerous occasions through Mpesa on his telephone number from one Mercy Njenga, the owner of Sunhill Ventures, a supplier. He asserted that the payments he received were an “appreciation from Mercy Njenga” but denied the payments constituted “kickbacks”. He acknowledged that he was a member of NSSF and gratuity was payable under CBA. In re-examination, the respondent reiterated that “I was given some money by Mercy as appreciation for paying them in time.” 9. The appellant’s Human Resource Manager Paul Mbugu Kamau testied that the respondent, was working for the appellant as an accountant at a salary of Kshs. 44,400.00 at the time he was dismissed; that he was dismissed after he was found to have been involved in fraudulent activities after payments were made based on fake invoices; that investigations including a statement by Mercy Njenga of Sunhill Ventures, a supplier, revealed a scheme where blank invoices would be lled out, processed and paid, without any actual deliveries, that after payments were made based on the fake invoices, Mercy Njenga would then pay the respondent kickbacks via Mpesa. He referred to a bundle of invoices produced as evidence of the fraudulent transactions; and bank statements of Mercy Njenga of Sunhill Ventures which captured the transactions. He stated further that the respondent was called by the Managing Director and the Finance Controller for a hearing but that he did not explain how that happened. On those grounds, the respondent was dismissed. 10. He testied further that gratuity claimed by the respondent was not payable; that the respondent was not entitled to notice pay as he was summarily dismissed; that the total amount due to the respondent is Kshs. 123, 700.00. 11. Under cross examination, the witness stated that Mercy Njenga of Sunhill Ventures was called and explained the dealings with the respondent. He also stated that the respondent was entitled to leave days from 2010 to 2012. 12. Stephen Ndenge Nyarino (RW2), a storekeeper employed by the appellant stated that the respondent was dismissed from employment for fabricating invoices in collusion with suppliers; that he discovered in March 2012 his signature had been forged when he was shown various invoices purporting to bear his signature. 13. Joseph Muriithi Rukaria (RW3) a store attendant stated that on 26th March 2012, he was summoned to the oce of the Finance Controller and shown documents and invoices of suppliers which purported to bear his signatures showing that he had received produce; that he saw that his signature on them was forged as he was on leave when he purportedly received deliveries; that through the scheme, the appellant lost about Kshs. 400,000.00; that the respondent was shown the documents in his presence, but he could not explain. https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1781/eng@2026-09-25 3

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14. In her judgment, the learned trial judge noted that the respondent was dismissed for what was indicated in the dismissal letter as serious breach of rules and regulations of the appellant and for gross misconduct in performing his duties after what the appellant averred it had found after investigations that “fake invoices were taken to accounts and paid for.” However, in concluding that the appellant did not establish that it had valid reasons to dismiss the respondent summarily, the judge stated that there was no proof that the respondent “was the one responsible for paying for these fake invoices” and that no investigation report was produced before the trial court to conrm that the respondent was responsible for making fake invoices. 15. During the hearing of the appeal on 12th November 2025, learned counsel for the appellant Mr. Duncan Otieno, in urging the Court to set aside the judgment orally highlighted his written submissions dated 8th February 2021. It was urged that the trial judge wrongly concluded that the respondent was not given a hearing; that on the contrary, the respondent was given a chance to defend himself before the Managing Director and Financial Controller but failed to do so; that the absence of a formal investigation report or minutes does not mean that no investigation took place. The decision in the case of Pius Machafu Isindu vs. Lavington Security Guards Limited [2017] eKLR was cited in support. 16. As regards the reasons for dismissal and evidence of gross misconduct, it was urged that the judge failed to properly evaluate the evidence on collusion; that the judge ignored "overwhelming evidence" of a scheme where the respondent colluded with suppliers; that it was demonstrated that the scheme involved using blank invoices with forged signatures to prepare cheques for suppliers, who then sent "kickbacks" to the Respondent via M-Pesa; that indeed the respondent admitted to receiving these MPesa transfers but claimed they were "appreciation," an explanation the appellant argues is implausible. 17. As regards the remedies granted by the trial court, it was submitted that the award of Kshs.432,000.00 in gratuity was erroneous because the "Collective Bargaining Agreement" (CBA) cited was never produced in court. That in any event, the incomplete extract of the CBA agreement that was produced does not show who the parties to it are. Furthermore, because the respondent was an NSSF member, he was not legally entitled to service pay. As regards notice pay, it was submitted that on account of the gross misconduct summary dismissal without notice was justied under the Employment Act. Regarding the award of compensation for eight months' salary (Kshs.384,000), it was submitted that the same was arbitrary and "capricious"; that no justication under Section 49 of the Employment Act was made; and that the judge failed to consider the respondent's own role in the termination; that the discretion must be exercised judiciously as held in Ol Pejeta Ranching Limited vs. David Wanjau Muhoro [2017] eKLR. 18. Learned counsel Ms. Jepchirchir holding brief for Mr. Kirwa for the respondent relied on written submissions dated 31st January 2023 which she also orally highlighted. It was submitted that the dismissal of the respondent from the appellant’s employment was both procedurally and substantively unfair. It was submitted that the respondent was summoned by management, asked about missing money, and immediately issued a dismissal letter without a chance to defend himself, thus violating Section 41 of the Employment Act. It was urged that no notice to show cause was issued to the respondent; no invitation was extended to him to attend a hearing and no minutes of the hearing were produced. 19. Counsel cited the case of Donald Odeke v Fidelity Security Limited, Cause No. 1998 of 2011 to emphasize that an employee must be given an adequate opportunity to respond to charges before disciplinary action is taken; the case of Samuel Kigima Kamau v Invesco Assurance Company Limited [2018] eKLR for the argument that employers must have internal systems for investigating misconduct https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1781/eng@2026-09-25 4

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before terminating an employee; and the case of Mary Chemweno Kiptui v Kenya Pipeline Company Limited [2014] eKLR for the argument that terminating an employee without a hearing is a violation of natural justice. 20. As to the substantive reasons for termination, it was submitted that no evidence was tendered to show that the respondent was responsible for processing invoices, no investigation report was produced and nothing to link him to the alleged loss beyond the unsubstantiated allegations. It was urged that the appellant failed to produce cogent evidence of the alleged "kickbacks" or theft. 21. Regarding remedies, it was submitted that the same were justied; that under Clause 20 (C) of the CBA agreement that was produced, the respondent was entitled to gratuity having worked for the appellant for more than 5 years; that the judge was also right in awarding salary in lieu of notice; that the contract of employment provided for 2 months’ notice for termination; that the award of 8 months’ salary as compensation was also justied considering that Section 49(1)(c) places the limit at 12 months. 22. We have considered the appeal and submissions in keeping with our mandate on a rst appeal to reconsider the evidence, evaluate it ourselves, and draw our own conclusions bearing in mind that the trial court was at an advantage which we lack of seeing and hearing the witnesses. See Selle vs. Associated Motor Boat Co. [1968] EA 123. We also bear in mind as stated in that case that: “ …this Court is not bound necessarily to follow the trial judge’s ndings of fact if it appears either that he has clearly failed on some point to take account of particular circumstances or probabilities materially to estimate the evidence or if the impression based on the demeanor of a witness is inconsistent with the evidence in the case generally (Abdul Hameed Saif vs. Ali Mohamed Sholan (1955), 22 E. A. C. A. 270).” 23. We are also alive to the warning sounded in Peters vs. Sunday Post Limited [1958] EA 424 that: “ It is a strong thing for an appellate court to dier from the nding, on a question of fact, of the judge who tried the case and who has had the advantage of seeing and hearing the witnesses. An appellate court has, indeed, jurisdiction to review the evidence in order to determine whether the conclusion originally reached upon that evidence should stand. But this is a jurisdiction which should be exercised with caution. It is not enough that the appellate court might itself have come to a dierent conclusion.” 24. With those principles in mind, three issues arise in this appeal for our determination. First is whether the judge erred in concluding that the appellant did not establish that it had valid reasons to dismiss the respondent summarily. The second issue is whether the nding by the trial judge that the respondent was not given an opportunity to present his case as envisaged under Section 41 is well founded in evidence. The third issue is whether the remedies granted to the respondent are legally justied. 25. Starting with the question whether the appellant established that it had valid reasons to summarily dismiss the respondent, Section 44(3) of the Employment Act provides that subject to the provisions of the Act, an employer may dismiss an employee summarily when the employee has by his conduct indicated that he has fundamentally breached his obligations arising under the contract of service. Under Section 43 of the Act, the burden lies with the employer to prove the reason or reasons for termination. Section 43 (2) then provides that, “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, https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1781/eng@2026-09-25 5

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and which caused the employer to terminate the services of the employee.” As this Court stated in Pius Machafu Isindu vs. Lavington Security Guards Limited [2017] eKLR: “ There can be no doubt that the Act, which was enacted in 2007, places heavy legal obligations on employers in matters of summary dismissal for breach of employment contract and unfair termination involving breach of statutory law. The employer must prove the reasons for termination/dismissal (section 43); prove the reasons are valid and fair (section 45); prove that the grounds are justied (section 47 (5), amongst other provisions. A mandatory and elaborate process is then set up under section 41 requiring notication and hearing before termination.” 26. The terms of employment as set out in the letter of engagement dated 10th February 2003 to which we have already referred provided that in the event of dishonesty, gross misconduct, neglect of duty or any other act prejudicial to the Company’s interests, the respondent may be summarily dismissed without notice or payment in lieu of such notice. In its statement of defence dated 1st April 2014 in response to the respondent’s memorandum of claim, the appellant pleaded that it had established that the respondent was involved in a scheme where he would use invoices purporting the same to have been issued by the appellant’s suppliers Sunhill Ventures Limited and Veggie Fresh Supplies, ll them out with ctitious supplies, obtain endorsements from the store and kitchen personnel and enter them in the accounting system for payment. 27. In paragraph 9 of the statement of defence, the appellant particularized in detail extracts from Safaricom M-Pesa Statements relating to Mercy Wanjiru Njenga showing numerous transactions including at least ten transfers of funds from the said Mercy Wanjiru Njenga to the respondent by Mpesa over the period April 2011 to March 2012. 28. During the hearing, and as already indicated above, the respondent admitted receiving the said payments but explained they constituted ‘expressions of gratitude’. The testimonies of the store keeper and store attendant (RW2 and RW3) corroborated the appellant’s claim that the respondent was indeed involved in the scheme which involved presentation of fake invoices without actual deliveries of supplies and on the strength of which payment would be processed. 29. The learned trial judge did not at all evaluate that evidence for had she done so, she would no doubt have arrived at the conclusion that the appellant duly discharged its burden under Section 43 of the Act, and established that it had valid reasons for terminating the respondent’s employment. The conclusion by the trial judge that the appellant did not have valid reasons for dismissing the respondent summarily is against the weight of the evidence. 30. As for the procedure, Section 41(2) of the Employment Act requires that before terminating an employee or summarily dismissing an employee, the employer shall hear and consider any representations which the employee may make. In that regard, the evidence before the trial court shows that the respondent was summoned to the Managing Director’s oce where he was asked to explain, in writing, his relationship with the suppliers. He was then sent out to the waiting area where he was handed the letter summarily dismissing him and escorted out of the premises. It is not evident that the respondent had prior notice of the reason he was summoned to the Managing Director’s oce or that he had notice of the charge or complaint against him. The opportunity given to him was not adequate and we agree with the trial judge that the respondent was not given an opportunity to defend himself and did not have any letter inviting him to a disciplinary meeting. We uphold the nding that the termination was procedurally inrm even though substantively justied. https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1781/eng@2026-09-25 6

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31. Turning to the remedies, having upheld the nding by the trial judge that the dismissal was procedurally inrm, we are unable to interfere with the award in respect of 2 months’ salary in lieu of notice as per the letter of appointment. Based on the salary of Kshs. 44,400.00 (as opposed to Kshs. 48,000.00 which the judge used) the amount payable under this head is Kshs. 88,800.00 and not Kshs. 96,000.00. The payment for leave days for the period 2010 to 2012 was admitted by RW1 and we are unable to interfere with the same. 32. As for the award of gratuity, even assuming there was in place a CBA, the extract of CBA agreement the respondent produced clearly indicates that gratuity was not payable where an employee is summarily dismissed for gross misconduct. Moreover, the respondent acknowledged that he was an NSSF member. There is no basis for the award of Kshs. 432,000.00. 33. As for the award of Kshs. 384,000.00 being 8 months’ salary compensation for unfair termination, the learned Judge did not at all indicate what informed this award. As submitted by counsel for the appellant, the discretion conferred on the court in making an award is not unfettered. Section 49 of the Act spells out factors for consideration including taking into account the extent to which the employee contributed to his predicament. 34. In the present case, the respondent as an Accountant held a position of trust, which it was demonstrated by cogent evidence, he abused by colluding with suppliers to defraud the appellant. That in our view disentitles the respondent to favorable exercise of discretion. We set aside that award in its entirety. 35. The salary award of Kshs. 43,300.00 was admitted and is upheld. 36. In conclusion, the appellant’s appeal succeeds to the extent that: 1. The nding that the appellant did not establish that it had valid reasons to dismiss the respondent summarily is set aside. 2. The award in favour of the respondent in the amount of Kshs. 1,021,100.00 is hereby set aside and substituted with a total award of Kshs. 197,900.00 made up as follows: 3. a. 2 months’ salary in lieu of notice Kshs. 88,800.00 b. Leave days for 2010 to 2012 Kshs. 65,800.00 c. Salary admitted Kshs. 43, 300.00 Each party will bear its own costs of the appeal. DATED AND DELIVERED AT NAIROBI THIS 25TH DAY OF SEPTEMBER, 2026. S. GATEMBU KAIRU, FCIArb, CArb. ...................................... JUDGE OF APPEAL P. NYAMWEYA ..................................... JUDGE OF APPEAL A. O. MUCHELULE https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1781/eng@2026-09-25 7

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..................................... 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/2026/1781/eng@2026-09-25 8

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