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JudgmentAuto Concepts Company Limited VS Robert Otieno Otieno16 min read

Auto Concepts Company Limited VS Robert Otieno Otieno

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

Summary

The Appellant appealed against the trial court's judgment in Robert Otieno Otieno v Autoconcepts Company Limited, arguing that the trial magistrate erred in finding the Respondent's claim did not disclose a cause of action, allowed a frivolous and vexatious claim, failed to properly analyze evidence, and awarded excessive damages. The Appellant contended the termination was unfair under the Employment Act, the Respondent failed to prove unfair termination, and the damages award was disproportionate to comparable cases. The court disposed of the appeal by written submissions, with the Appellant relying on Employment Act provisions and case law to challenge the trial court's findings.


  1. Through the Memorandum of Appeal dated 27th June,2023, the Appellant appeals against the Judgment of Honourable J.A Agonda delivered on 23rd June, 2022) in Ruiru CMEL No. E022 of 2021 (Robert Otieno Otieno v Autoconcepts Company Limited).
  2. The Appeal was based on the grounds that:
    1. The Learned Trial Magistrate erred in law and in fact in falling to make a finding that the Respondent’s suit did not disclose a cause of action as against the Appellant in the entire circumstances of the case.
    2. The Learned Trial Magistrate erred in law and in fact in allowing the Respondent’s claim which taking in to account the entire circumstances of the case was frivolous and vexatious.
    3. The Learned Trial Magistrate erred in law and in fact in failing to fully analyse the evidence tendered by the Appellant herein and giving undue weight to the Claimant’s case and least weight to the Respondent’s case.
    4. The Learned Trial Magistrate erred in law and in fact in that she totally failed to take in to account the Appellant’s case and representation made at the hearing.
    5. The Learned Trial Magistrate erred in law and in fact in finding that the termination of the Respondent was unfair and in awarding the Claimant a total of Kshs 457,142/- when there were no grounds to sustain the finding.
    6. The Learned Trial Magistrate exercised wrong principles in awarding damages so widely different from awards given in comparable cases as to be an erroneous estimate of the damages to which the Respondent was entitled.
  3. The Appellant prayed that the appeal be allowed and the Judgment of Honourable J.A Agonda in favour of Respondent be set aside including its decision on costs and it be awarded the costs of the Appeal. In the alternative the court to make such further orders as it may deem just.
  4. The Appeal was disposed of by written submissions.

APPELLANT’S SUBMISSIONS

  1. The Appellant in its submissions dated 17th October, 2023 submitted on the issue of whether the Appeal was merited and relied on the case of Selle v Associated Motor Boat Co.(1968) EA 123 and Gitobu Imanyara & 2 Others vs Attorney General (2016) eKLR to submit on the role of the first appellate court. That is to re-evaluate, re-analyze and re-appraise the facts and evidence and come up with its own conclusion.
  2. On the issue of Respondent’s claim not disclosing a cause of action against the Appellant, the Appellant submitted there was no cause of action against it and the same ought to have been dismissed. Counsel relied on the cases of Drummond Jackson v British Medical Association (1970) 2WLR 66 among other cases on what amounts to a cause of action.
  3. The Appellant submitted that this being an employment matter the court had to critically analyse the statutory provisions more so the Employment Act where it is provided that unfair termination occurs where there is failure to abide with statutory provisions. The appellant relied on the case of CMC Aviation Limited vs Mohammed Noor, civil Appeal No. 199 of 2013. Counsel further submitted that section 49 of the Employment Act calls upon the court to take into account some factors before awarding the Claimant the compensation including his contribution to the termination. Counsel relied on the case of Kenya Power & Lighting Company Limited vs Aggrey Lukorito Wasike(2017) eKLR to submit that justice is a two way highway and courts must endeavour to render justice to employees as well as to the employers.
  4. Counsel proceeded to submit that the Respondent caused his own misfortune leading to his summary dismissal. That he committed acts of being reluctant and failing to respect lawful order from his immediate supervisor.
  5. Counsel submitted that the trial court failed to analyse evidence tendered by the Appellant and gave it less weight while giving the Respondent’s case undue weight. Counsel relied on section 45 of the Employment Act on what amounts to unfair termination and further on the case of George Okello Munyolo v Unilever Kenya Limited (2019) eKLR on burden of proof of each party herein.
  6. Counsel submitted that the Respondent admitted to failing to obey lawful orders given to him by the Appellant’s Manager to paint a gate. That he admitted to repeating the painting which occasioned the Appellants huge losses as clients refused to pay for the repeat jobs and the Appellant shouldered the costs without surcharging the Respondent who was paid all his dues.
  7. Counsel submitted that the Respondent before being summarily dismissed was cautioned verbally and by way of a notices which were filed before trial court and were disregarded. That the burden of proving that he was unfairly terminated, was on the Respondent which burden he did not discharge The trial court’s awards therefore needed to be reviewed downwards.
  8. On the issue of unfair termination of the Respondent and award of Kshs 457,142/-, the Appellant submitted that the burden of proof was on each party under section 47(5) of the Employment Act and relied on the case of Josephine M. Ndugu & Others v Plan International Inc(2019) eKLR among others to submit that the Respondent failed to discharge the burden placed on him as he did not deny through his statement and evidence that he was rightfully dismissed. The respondent on the other hand proved the reasons for termination as proper. The respondent failed obey the Appellants supervisor’s lawful order and in accordance to the Employment Act.
  9. On the issue of whether the trial court exercised wrong principles in awarding damages widely different from awards given in comparable cases, the Appellant submitted on section 49(4) of the Employment Act on the factors the court ought to take into account while awarding damages for unfair termination including the extent of the termination and the extent to which the employee caused or contributed to the termination among others. Counsel in this respect relied on the case of Kenya Broadcasting Corporation v Geofrey Wakio(2019) eKLR and submitted that the court in reversing the trial court’s award of damages must be convinced that the trial court acted on wrong principle of law and the amount awarded was extremely high or so very low as to make it erroneous estimate of the damages which the Plaintiff was entitled to. Counsel relied on the case of Butt vs Khan(1981) KLR 349 on this issue of disturbing the award of damages awarded by trial court and submitted that the trial court applied the wrong principles and not the law laid down under section 49 of the Employment Act.

RESPONDENT’S SUBMISSSIONS

  1. The Respondent filed his submissions dated 16th November, 2022 and submitted that the trial magistrate was right in holding that the termination of the Claimant’s employment was unfair within the meaning of section 45 of the Employment Act. Counsel relied on the case of Joseph Mwaniki Nganga v United Millers Limited (2022) eKLR on reasons and procedure for termination being paramount. Counsel also relied on section 45 of the Employment Act on failure to give fair and valid reason and a fair procedure in termination of employment.
  2. On the issue of whether there was a fair and valid reason for termination the Respondent relied on sections 43,45(2),47(5) of the Employment Act to submit that the employer must prove reasons for termination and where employer fails the termination was deemed unfair.
  3. Counsel for the Respondent submitted that the Appellant terminated the respondent’s service for reason of poor performance that allegedly led to various complaints by the Appellant’s customers; huge losses as a result of repeat jobs and his attitude towards duty. Section 43(2) of the Employment Act defines reasons for termination to be those which the employer believed to exist and which caused the termination of the employee. In this regard, Counsel relied on the case of Joseph Mwaniki above and Jane Samba Mukala v Ol Tukai Lodge Limited Industrial Cause No. 823 of 2010(2010) LLR 255 (ICK) on the question of poor performance. Counsel submitted that the Appellant’s witness during cross examination confirmed to the court that he had not produced any performance policy/employment practice before the court that was used to measure good performance as against poor performance. This was noted by the trial magistrate and hence the Appellant failed to demonstrate a valid and fair reason for terminating the Respondent’s service.
  4. On the issue of fair procedure followed by the Respondent, Counsel relied on section 41 of the Employment Act and the case of Kenya Union of commercial Food and Allied Workers vs Meru North Farmers Sacco Ltd(20130 eKLR and the Court of Appeal decision in the case of CMC Aviation Limited vs Mohammed Noor (2015) eKLR.
  5. It was the Respondent’s submissions that he was not accorded an opportunity to defend himself and make his representations. This position was corroborated by the Appellant’s Witness who confirmed to the court that the Appellant had not produced a notice to show cause letter, any disciplinary hearing minutes and a notice of termination.
  6. Counsel in conclusion submitted that the Appellant failed to follow a mandatory procedure of section 41 of the Employment Act; hence procedurally unfair and the trial court was proper in holding the said termination to be unfair.
  7. On the issue of whether the trial court erred in making the award it made, counsel submitted that the respondent was never issued with one month’s notice or pay in lieu. In addition, the summary dismissal letter issued to the Respondent dated 30th May, 2021 was to take effect on 1st June, 2021 a day after the letter. There was no evidence of payment of salary in lieu of notice hence the trial court was proper in awarding the same.
  8. On the salary for days worked on public holiday the Respondent submitted that the trial court went silent on this issue despite being pleaded. That the Appellant claimed to have paid the Respondent but did not produce documents to the court to support this hence the trial court erred in not awarding the same to the tune of Kshs. 93,076.92/-.
  9. On the issue of house allowance the Respondent submitted that the trial court did not determine the issue despite being pleaded. Counsel submitted that the Appellant’s witness during cross examination admitted to not providing a housing for the Respondent as the same was not provided for in the appointment letter.
  10. Counsel submitted that housing allowance was provided for under section 31(1) of the Employment Act as read together with Regulation 4 of the Regulation of Wages(General ) Order. In this respect, counsel relied on the case of Kenya Union of Sugar Plantation & Allied Workers v Butali Sugar Mills Limited(2021) eKLR and submitted that housing allowance was an entitlement at 15% of basic salary which aggregates to Kshs 198,000./=
  11. On the issue for damages for wrongful termination the Respondent relied on section 49 of the Employment Act and the factors the court was to take into account under subsection 4. In this case both substantive and procedural requirements were not met despite the Respondent serving the Appellant for more than 5 years the award of Kshs. 274,200/- was therefore merited.
  12. On the issue of unutilized leave days the Respondent submitted that he was entitled to leave after working for the Appellant for over a year as per section 28 of the Employment Act. That evidence of taking leave or pay in lieu was expected to be with the Appellant as the employer as the person who keeps employment records. He relied on section 112 of the evidence Act and the cases of Associated Motors Co.Ltd v Blue Sea Services Ltd(2019) eKLR, Trevar- Marambe v For you Chinese Restaurant(2021) eKLR.
  13. Counsel submitted that during cross examination Appellant’s witness confirmed to the court not having produced a schedule of attendance and or leave application forms that would guide the court in ascertaining whether the Respondent had taken his leave days as alleged.
  14. On the award of service pay the Respondent submitted that the trial court did not address this issue as well despite the Appellant’s witness admitting that he did not produce official NSSF receipts to confirm that the Appellant remitted the Respondent’s statutory deductions as captured in the proceedings.
  15. Counsel submitted that the Respondent was entitled to the said service pay having worked with Appellant for over 5 years without statutory deductions like the NSSF and NHIF. This he quantified at Kshs. 55,000/- hence the trial court erred in not awarding the same.

Analysis & determination.

  1. The duty of a first appellate court was well stated in the Court of Appeal in Selle vs Associated Motor Boat Company Limited [1968] E.A 123 thus:

“An appeal to this court from a trial by the High Court is by way of retrial and the principles upon which this court acts in such an appeal are well settled. Briefly put they are that this court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in this respect. In particular, this court is not bound necessarily to follow the trial judge’s findings of fact if it appears either that he has clearly failed on some point to take account of particular circumstances or probabilities……..or if the impression based on the demeanour of a witness is inconsistent with the evidence in the case generally.”

  1. In determining the Appeal herein, this Court shall similarly seek to re-analyze the evidence tendered before the Trial Court against the court’s conclusion and disposition.
  2. In this case, the judgment of trial court was a declaration that the termination of the Claimant’s employment was unfair and the dues payable were as follows;
      1. Compensation for unfair termination –Kshs 274,200/=
      2. One month salary in lieu of notice _Kshs 22,850/=
      3. Unpaid salary for 16 days worked - Kshs 12,192/=
      4. Overtime Nil
      5. Refund of deducted union dues -Kshs 10,800/=
      6. Annual Leave _Kshs 137,100/=

Total _Kshs 457,142/=

  1. The undisputed facts were that the Respondent was employed by the Appellant as a sprayer/painter vide an appointment letter of 18th December,2015 until 17th May,2021 when he was first suspended from work for two weeks then summarily dismissed by a letter dated 30th May,2021 taking effect on 1st June,2021. His last salary at the time of termination was Kshs. 22,000/=.
  2. From the grounds in the memorandum of Appeal and pleadings of the parties two major issues arise for determination. That is whether:
      1. the Respondent’s employment was unfairly terminated.
      2. the Respondent was entitled to reliefs awarded by the trial Court.Aa. aa.

Whether the Respondent’s employment was unfairly terminated

  1. The Appellant alleged that on 15th May,2021 the Respondent ignored orders to repaint a garage gate hence suspended the Respondent for two weeks. The Appellant thereafter summarily dismissed the respondent vide a letter dated 30th May, 2021 taking effect on 1st June,2021. The Reasons for the dismissal was stated as poor performance leading to complaints by customers, huge losses due to repeat jobs and the Respondent’s attitude towards duty. The suspension letter alleged lack of seriousness, ignoring orders from the manager and always not being in work station when needed.
  2. It is not disputed that the Respondent was terminated by the Appellant who stated that he summarily terminated the Respondent on account of gross misconduct.
  3. It is now a well-established requirement that for termination to pass the fairness test there should be both substantive and procedural fairness. On substantive fairness the Appellant submitted that the reason for the summary dismissal was given as poor performance, huge losses due to repeat jobs and the attitude towards duty.
  4. Whereas the Court notes that the reasons in the suspension letter and the dismissal letter were not the same and the respondent denied receiving any warning letter I agree with the trial court that the Appellant did not have a substantive reason which was fair and valid before terminating the Respondent’s service. The Respondent who had served the Appellant for over 5 years did not just become a poor performer overnight, change his attitude towards duty hence the said losses.
  5. It is noteworthy that the reason for termination must be a valid and fair as provided for under section 43 of the Employment Act. The duty to prove the grounds lies with the employer under section 47(5) and that even if the same allegations falls under categories of gross misconduct under section 44(4) of the Employment Act the Appellant ought to prove the reason for termination and demonstrate that it really existed in the first place.
  6. I do agree on the authorities cited by the trial court on the measures of poor performance. It is therefore clear that the Appellant dismissed the Respondent without a valid and fair reason.
  7. The Appellant’s assertion that it did summarily dismiss the Respondent for gross misconduct does not go in tandem with the law. In the case of Prof. Macha Isunde  vs  Lavington Security Guards Limited [2017] eKLR, the Court of Appeal stated:

“There can be no doubt that the Act, which was enacted in 2007,places a heavy obligation on the employers in matters of summary dismissal (Emphasis mine) for breach of employment contract and unfair termination involving breach of statutory law.  The employer must prove the reasons for terminating (section 43) – prove that the grounds are justified (section 47 (5), among other provisions mandatory and elaborate process is then set up under section 41 requiring notification and hearing before termination.”

  1. From the above case it is clear the Appellant was bound to prove the reason for termination which it failed to do before the trial court.
  2. This brings me to the issue of procedure followed in carrying out the termination. The Appellant confirmed summarily dismissing the Respondent without hearing him. There was no show cause letter given to the Respondent, the Respondent did not make any representation on the said accusations, the Respondent was never called for any disciplinary hearing. This therefore means that the Respondent was condemned unheard. I agree with the lower court on this finding.
  3. Section 41 of the Employment Act is couched in a mandatory terms and should be followed. This was the holding in Kenya Union of Commercial Food & Allied Workers vs Meru North Farmers Sacco Ltd(2014) eKLR that such termination would be unfair where section 41 of the Employment Act is not followed.
  4. In conclusion therefore, the Appellant did not meet both the substantive justification and procedural fairness; hence the Respondent’s termination of employment was unfair.

Whether the Respondent was entitled to reliefs awarded.

  1. I note that the trial court proceeded on erroneous calculations since the last salary the Respondent received was Kshs 22,000/= not Kshs 22,850/=. A party is also bound by its pleadings. This means the Appellants assertions on this issue succeeds.
  2. On the 12 months compensation for unlawful termination awarded by the trial court I would only interfere with this award which is discretionary on special circumstances. This court as an appellate court can only interfere with such discretion if there was an error on some matters leading to erroneous decision as was held in the case of Kenya Revenue Authority & 2 others v Darasa Investments Limited (2018) eKLR where the court held;

The court ought not to interfere with the exercise of discretion unless it is satisfied that the Judge misdirected himself in some matter and as a result arrived at a wrong decision, or that it be manifest from the case as a whole that the judge was clearly wrong in the exercise of discretion and occasioned injustice.

  1. I am guided by Section 49 of the Employment Act which provides for factors to be taken into account under sub section 4. In this case the trial court made errors on calculation which I have to correct. I disagree with the lower court’s calculations for the reason that the last salary for the Respondent was Kshs 22,000/= and even if he was awarded 12 months compensation it would be Ksh 264,000/= not Kshs 274,200/ as awarded. In addition, the Respondent had pleaded for Kshs 264,000/=.
  2. In this case the Respondent had worked with the Appellant for over 5 years and the courts have also discouraged the award of the maximum amounts of 12 months as compensation unless in exceptional circumstances no exceptional circumstances have been demonstrated hence the Court will revise the award downwards to 10 months’ salary as compensation for unfair termination.
  3. On the award of one Month salary in lieu of notice the Respondent is entitled to the same but as per his last salary Kshs 22,000/= since he was dismissed without notice.
  4. On the award for unutilized leave days I agree with the trial court that the Respondent was entitled to the same since the Appellant who had the custody of employment records did not produce evidence to the contrary that the Respondent took his leave. On the award of monies deducted from the Respondent’s salary for union membership when he was not a member I agree with trial court and award him the sam
  5. In conclusion the Court hereby allows the Appeal in part as shown below
      1. Compensation for unfair termination –Kshs 220,000/=
      2. One month salary in lieu of notice _Kshs 22,000/=
      3. Unpaid salary for 16 days worked - Kshs 11,735/=
      4. Overtime NIL
      5. Refund of deducted union dues -Kshs 10,800/=
      6. Annual Leave Kshs 88,846.15/=
      7. Service pay NIL
      8. Housing Allowance NIL

Total _Kshs 353,381/=

  1. The Appeal being partially successful, each party will bear their own costs of this appeal.
  2. It is so ordered

Dated at Nairobi this 14th day of February, 2024

Delivered Virtually this …….. day of……… 2024

Abuodha Nelson Jorum

Judge

    Auto Concepts Company Limited VS Robert Otieno Otieno Auto Concepts Company Limited VS Robert Otieno Otieno