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JudgmentALEX MUKHWANA KHISA VS KENYA REVENUE AUTHORITY15 min read

ALEX MUKHWANA KHISA VS KENYA REVENUE AUTHORITY

Employment and Labour Relations Court at Nairobi Employment and Labour Relations Court (ELRC) · · J. N. Abuodha

Summary

The Claimant alleged unfair termination of employment on grounds of conflict of interest/abuse of office after 7 years of service, claiming the Respondent breached the Employment Act by failing to issue a certificate of service and terminating without procedural fairness. The Claimant argued the Respondent did not prove grounds for termination, lacked evidence of suspicious transactions, and failed to produce disciplinary committee minutes. The Respondent maintained lawful termination based on internal investigations and disciplinary procedures. The court found the termination unlawful due to lack of procedural fairness and failure to produce evidence, awarding terminal benefits and a certificate of service.


  1. The Claimant through his amended Memorandum of Claim dated 25th October, 2022 pleaded inter alia as follows: -
  2. The Claimant was appointed as a graduate trainee on 24th December 2008 and later employed as a Chemist 11 on 12th July, 2011 earning a monthly salary of Kshs 147,000/.
  3. The Claimant averred that on or about 30th April 2019, the Claimant’s services were terminated on grounds of alleged conflict of interest/ abuse of Office. That these grounds were unfair for he had already been cleared of the said grounds by the court in Criminal case No. 868 of 2017.
  4. The Claimant averred that he was not a member of trade union. That he was in continuous employment of the Respondent for a period of approximately 7 years preceding unfair termination of his services.
  5. The Claimant averred that his record of unparallel good and exemplary performance of work urges one wonder on what basis the Respondent could have terminated his contract of service.
  6. The Claimant further averred that the Respondent’s action breached relevant provisions of the Employment Act specifically sections 43 and 45 and violated his rights hence he has a right to dispute the lawfulness or fairness of the termination. That the Respondent also failed to issue him with certificate of service as required by section 51 of the Employment Act.
  7. The Claimant claim was for terminal benefits ranging from Notice pay, Severance pay, unspent leave and compensation for unfair termination all amounting to Kshs 2,455,500/=
  8. The Claimant in the upshot prayed for the following against the Respondent;
  9. A declaration that the
  10. Claimants employment services with the Respondent were terminated unfairly.
  11. The sum of Kshs 2,455,500/= above
  12. General damages
  13. Certificate of service
  14. Cost of this claim
  15. Interest on b and c until payment in full
  16. The Respondent filed its Memorandum of Response dated 19th November,2019 and averred inter alia as follows;
  17. The Respondent averred that the Claimant was lawfully terminated on confirmed conflict of interest/ abuse of office.
  18. The Respondent averred that on or about 30th July, 2018, it received an intelligence report on suspicious financial transactions involving the Claimant and his spouse.
  19. The Respondent averred that the Claimant had to be interdicted in line with the Respondent’s Code of Conduct to allow for investigations to be carried out, and after which an adverse report dated 28th September 2018 was made thus necessitating a show cause letter dated 7th March, 2019.
  20. The Respondent further averred that the Claimant submitted written presentations vide unreferenced letter dated 14th March, 2019 and on 27th March, 2019 appeared before a disciplinary panel.
  21. The Respondent averred that vide letter Ref: 8224(53) the panel made recommendation for the Claimant’s termination which the Claimant handpicked on 6th May, 2019.
  22. The Respondent averred that the Claimant appealed against the termination which the Respondent rejected there being no new material facts to warrant review of his case.
  23. The Respondent further averred that he owes the Claimant nothing, the Claimant was properly terminated and terminal benefits due paid in full as per the termination letter dated 30th April,2019.
  24. The Respondent denied the allegations of exemplary performance of the Claimant and averred that the Claimant was terminated for confirmed conflict of interest/abuse of office contrary to the Respondent’s Human Resources Manual.
  25. The Respondent averred that it was never a party to Criminal Proceedings No. 868/17 and in which event did not bar the Respondent from conducting its own investigations and taking necessary action.
  26. The Claimant filed its reply to the memorandum of Response dated 29th October,2020 and averred that he raised grounds of time frame required to respond to the show cause letter, time taken to investigate the alleged conduct and allegations of the conflict of interest in his appeal to the disciplinary. In addition, the Claimant averred that in as much as the Respondent was not a party to the criminal court proceedings the alleged investigations by the Respondent were instituted on the premise of the criminal proceedings.

EVIDENCE

  1. The Claimant’s case was heard on 20th September, 2023. The Claimant (CW1) adopted his witness statement together with his documents filed in court as his evidence in chief.
  2. In cross examination CW1 confirmed that he was working as a Chemist and later as a Data Processing Officer at Document Processing Centre herein referred as DPC. CW 1 stated that DPC was a restricted area with only staff and Clearing agents allowed in and that Clearing agents were the key stakeholders. He further stated that the Clearing agents never sent him or his wife, Pamela Aboo money nor had there been any integrity issue on them. It was his evidence that Asset Recovery Agency took him and his wife to court over some financial transactions which led to his dismissal where he was accused of conflict of interest.
  3. CW1 testified that he has never cleared with the Respondent and money owed to him upon termination was never paid. He confirmed that he had not been issued with a certificate of service.
  4. In Re-examination he clarified that Criminal Case No. 868 of 2017 was dismissed and he was not aware of any criminal case against his wife. CW1 clarified that there was no evidence of transactions sent to his wife’s phone number. He further confirmed that he was never shown any statements from people who claimed they sent him money. He confirmed that he never cleared with the Respondent due to this case.
  5. The Respondent’s case on the other hand was heard on 24th October,2023 where it called 2 witnesses, the Investigator (RW1) who came in place of Emily Malei who had since left employment with the Respondent and HRM (RW2). RW1 testified and adopted the Respondent’s documents filed in court as his evidence in chief. He stated that he was part of the team that investigated the matter. A report dated 28/9/2018 was prepared of the investigations of alleged corruption and bribery against the Claimant. They investigated bank accounts and Mpesa statements of the Claimant and his spouse and they established suspicious Bank and Mpesa transactions and recommended the Claimant be dealt with in accordance with KRA Code of Regulations and Integrity Laws. The report was before court.
  6. In cross examination RW 1 confirmed that he was part of the team that prepared the report. That they were six in number and further that he had worked with the Respondent since April 2018. He confirmed that intelligence report was received in 2016 before he joined Respondent and investigations commenced immediately where they were handed over to him. He confirmed not being aware if the bank statements were filed in court. RW1 also confirmed that there were no recommendations made by the time he took over. He confirmed knowing the responsibility of DPC officers who normally do not interact with clearing agents. He further confirmed that in this case the Claimant interacted with clearing agents. RW1 further stated that the statements from agents of clearing firms recorded were not filed in court.
  7. RW 1 informed the Court that the report had seven recommendations which included internal disciplinary process. In re-exam RW1 clarified that his signature was appended on the report. That the Claimant filed the report in court. That the Claimant was supplied with investigation report and he never asked for any additional document.
  8. RW2 the Respondent’s HRM also testified and adopted her statement signed while she was the manager discipline during the material time and the Respondent’s documents filed in court as her evidence in chief. In cross- examination RW2 confirmed having worked for the Respondent since 1996. It was her evidence that she received the suspicious transactions report. The report was usually from intelligence to the Human Resource in form of a memo. The Memo was not before court.
  9. RW2 confirmed that the Claimant’s interdiction was supported by its Code of conduct. That the code of conduct was not filed before the court.
  10. RW 2 testified that it is not a requirement that minutes be taken before termination. The Claimant was called for disciplinary hearing and heard before the Chair of the committee, the investigator and members. She could not remember how many members were there but they were not less than three.
  11. RW2 stated that before termination there is usually deliberations and notes taken and the decision to terminate would be communicated by the HR. She confirmed that the decision to terminate is by management upon recommendation by the disciplinary committee. She did not have the recommendation in court. It was further her evidence that the Claimant had not been prosecuted in any criminal court.
  12. RW2 testified that the Claimant had worked for 7 years at the time of termination and had no previous disciplinary cases he was however charged with failure to declare taxes. The Claimant omitted to declare some of his assets and liabilities which was an offense for a public officer.
  13. In re-exam RW2 clarified that the report was internal and it was an intelligence report. Further that the Claimant was aware of the code of conduct. RW2 confirmed that claimant never complained about the disciplinary hearing and the composition of the committee. That the Claimant has never requested for the minutes of the disciplinary hearing.

CLAIMANTS’ SUBMISSIONS

  1. The Claimant filed written submissions dated 27th November, 2023.On the issue of Whether the Claimant's employment was unfairly terminated the Claimant submitted while relying on Section 41 of the Employment Act that for a termination of employment to pass the fairness test, it must be shown that there was not only substantive justification for the termination but also procedural fairness while relying on among others the case of Walter Ogal Anuro v Teachers Service Commission [2013] eKLR.
  2. It was the Claimant’s submission that that the Respondent's disciplinary committee's report recommending termination was not produced in court as well as the minutes of the committee's meeting. Further that there was no evidence to show that the Claimant was accorded an opportunity to defend himself before the committee thus the hearing could not be said to be fair. Counsel relied on the case of Albert Yawa Katsenga v Kenya Revenue Authority [2020]eKLR.
  3. The Claimant further submitted that the Human Resource Manager, RW2, had to rely on the minutes and the investigation report before issuing a letter of termination and since they were not produced it was logical to conclude that the Claimant's employment was unfairly terminated.
  4. On the issue of whether the Claimant was entitled to reliefs sought, the Claimant submitted that the Respondent had failed to adduce evidence to show that there were grounds for termination of the Claimant's employment. That is to say conflict of interest/abuse of office hence the Respondent failed to discharge its duty under the Section 47 (5) of the Employment Act,2007 which places the burden of justifying the grounds for the termination of employment or wrongful dismissal on the employer.
  5. It was the Claimant’s submission that RW1 produced an investigation report that did not include bank statements to point towards abuse of office by the Claimant.
  6. The Claimant further submitted that no evidence was adduced to show that the people interviewed by the Investigating Officer, to inform the report, were indeed KRA clearing agents.
  7. The Claimant submitted that he discharged his burden of proving illegality or procedural impropriety on the part of the Respondent while relying on section 47 (5) of the Employment Act, 2007 and the case of Hellen Mwanza Mule v Kenyatta University [2018] eKLR among others.
  8. On the issue of who bears the cost of the suit the Claimant submitted that it was trite law that costs follow the event and relied on the case of Stanley Kaunga Nkarichia v Meru Teachers College & another [2016] eKLR.

RESPONDENT’S SUBMISSIONS

  1. On the other hand, the Respondents filed their written submissions dated 12th March 2024 and on the issue of whether or not the Claimant’s employment was unfairly terminated, it was the Respondent’s submission that upon receiving intelligence report on suspicious financial transactions involving the Claimant and his spouse, the Claimant was interdicted in line with the Respondent’s code of conduct so that investigations into the intelligence report could be carried out.
  2. The Respondent submitted that its acted from the time it received the intelligence report of the suspicious financial transaction up to the time the Claimant appeared before the disciplinary panel. And the respondent complied with the constitutional and statutory requirements.
  3. The Respondent submitted that the Claimant was informed of the charge against him, and he was given sufficient details to answer to the charges which was in compliance with the provisions of section 41 of the Employment Act.
  4. The Respondent submitted that the Claimant was equally given adequate time to prepare his defence as evidenced by the fact that the Claimant submitted his letter dated 14th March 2019. The Claimant was further given a chance to appear before a disciplinary panel on 27th March 2019 and his response and defence was considered before a decision was rendered.
  5. It was the Respondent’s submission that the Claimant having been employed by the Respondent was a public servant and therefore bound to follow and comply with among others the provisions of Article 75 of the Constitution which outlines expected conduct of state officers.
  6. It was the Respondent’ submission that in light of the provisions of Articles 50 and 75 of the Constitution; and in light of the outcome of the investigations into the reports of suspicious transactions, and in light of the defence mounted by the Claimant, the respondent came to the conclusion to terminate the claimant’s contract on account of conflict of interest and abuse of office which directly violated the constitutional provisions of Article 75 of the Constitution.
  7. The Respondent submitted that the Claimant had not proved the claim that he was unfairly terminated from work, the respondent had to the contrary discharged its burden of proof under section 45 of the Employment Act by demonstrating that there were valid constitutional reasons for the Claimant to be terminated and that due and fair process was adhered to before the decision was arrived at.
  8. On the issue of whether or not the claimant was entitled to the reliefs sought the Respondent submitted that the maxim is very clear that he who comes to equity, must come with clean hands. The Claimant seeks the intervention of this honourable Court to be given equitable remedies but falls short of stating that his hands were already soiled by his own actions of engaging in financial impropriety as revealed by the investigations that led to the termination of his employment.
  9. The Respondent submitted that the Claimant had not met, proven or satisfied any element required for the successful prosecution of a claim of unfair termination. The Respondent further submitted that preceding issue having been found in the negative, Section 49(c) of the Employment Act did not come into play and as such, the Claimant was not entitled to receive the reliefs sought.
  10. On the issue of who bears the cost of this suit the Respondent submitted that Section 12(4) of the Employment and Labour Relations Court Act as read with Rule 29 empowers the court to make such Orders as to costs as it deems fit and relied on the case of Jasbir Singh Rai and others-Vs- Tarlochan Singh Rai and Others [2014]Eklr at paragraph 18.
  11. The Respondent submitted and urged the Court to find that the Claimant being the dominus litis, and having brought forth and maintained unmeritorious suit, ought to reimburse the Respondent all costs incurred in defending the same.

DETERMINATION

  1. I have reviewed and considered the pleadings, testimonies and submissions by both counsel in support and opposition to the case. I have also considered authorities relied on by Counsels.
  2. I have come up with two main issues;
      1. Aa. aa.Whether the Claimant’s termination of employment was unfair and unlawful
      2. WHEHWWwWhetherWhetherWheWhether the Claimant is entitled to the reliefs sought.

Whether the Claimant’s termination of employment was unfair and unlawfulI have WhethrWWhwr

  1. The claimant was accused of involvement in cases of conflict of interest and failure to declare monetary gifts, soliciting for bribes and facilitating tax evasion while performing official duties. He was consequently interdicted pending investigations. In this instant case, the Respondent alleged that they terminated the Claimant on grounds of conflict of interest/ abuse of Office as well as corruption and bribery and failure to declare his assets and liabilities. The investigation the report was produced by the Claimant.
  2. The report clearly indicated that there were large and frequent financial (MPESA) transactions involving the claimant’s spouse and relatives. The claimant did not account well for what business his spouse was doing with the persons who sent money to her. The investigation report showed that the persons who sent money to the claimant were clearing agents registered with the respondent. The claimant was the respondent’s employees working closely with the agents yet was prohibited from having and direct contact with them. It could therefore be only deduced that the claimant used his wife and relatives to receive money and bribes or inducement to return whatever favour to the agents. Further the investigation report listed Bank Accounts in the name of the Claimant and his spouse Pamela Aboo where large sums of money were deposited and held. The report also noted that the claimant used to receive money from his colleagues through his MPESA line. He did not adequately account for the reason why his colleagues were sending him money.
  3. The Claimant complained that the evidence against him was purely circumstantial and that direct evidence was necessary to prove his guilt. In a criminal trial, a Court of law can convict on circumstantial evidence. This is the more reason this Court being a Civil claims Court, and where the standard of proof is less than in criminal cases, that is on a balance of probability, can rely on circumstantial evidence to conclude that it was more probable than not that the employee must have involved themselves in the issues they are being accused of.
  4. As observed above, the claimant did not satisfactorily account for the large and frequent transactions in his wife’s account yet from the report he attached with his pleadings showed she was a house wife and further that Africanus Otiengino was the father to his wife. It was incumbent upon the claimant rebut the allegations in the report he himself filed in Court.
  5. The above observations having been made the Court is satisfied that there existed valid reasons for the termination of the Claimant’s service.
  6. Regarding procedural fairness it is now an established principle that for termination to pass fairness test there should be both substantial and procedural fairness in a number of cases including in the case of Janet Nyandiko versus Kenya Commercial Bank Limited (2017) eklr and Walter Ogal Anuro v Teachers Service Commission [2013] eKLR.
  7. Further Section 41. Provides for Notification and hearing before termination on grounds of misconduct which provides that the employee to be explained the reason for termination in language he understands and consider the representations by such an employee who should have an employee of his choice.
  8. The Respondent gave the Claimant a show cause letter dated 7th March,2019 where the Claimant was to respond in 7 days upon receipt of the letter. The Claimant did respond to the show cause letter on 14th March,2019.
  9. The Respondent interdicted the claimant via a letter dated1st August, 2018 and by a letter dated 7th March, 2019, was called upon to show cause why disciplinary action should be taken against him. The Show Cause Letter was quite elaborate and detailed the offences the claimant was being accused of. He given 7 days to respond to the letter. The claimant responded to the same which the respondent found unacceptable and proceeded to terminate the claimant’s service. The Court is in the circumstances satisfied that due process was followed.
  10. In Conclusion the Court finds and holds that there existed valid reasons for the termination of the claimant’s service and that the termination was in accordance with fair procedure. The claim is therefore found without merit and is dismissed with costs save that the respondent shall pay the claimant his terminal dues as stated in the termination letter subject to the claimant clearing with the respondent. The respondent shall further issue the claimant with a certificate of service.
  11. It is so ordered.

Dated at Nairobi this ……day of …………………………..2024

Delivered virtually this ………day of………………….., 2024

Abuodha Nelson Jorum

Judge

    ALEX MUKHWANA KHISA VS KENYA REVENUE AUTHORITY ALEX MUKHWANA KHISA VS KENYA REVENUE AUTHORITY