Skip to content
JudgmentChina Wu Yu Co. Limited Limited VS Benson Kimathi Mugao17 min read

China Wu Yu Co. Limited Limited VS Benson Kimathi Mugao

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

Summary

The court reviewed the appellant's appeal against the trial court's judgment in a labor dispute. The appellant challenged the trial court's findings that the respondent earned a monthly salary of Kshs 47,637.60, the award of 12 months' salary for wrongful termination, the shifting of burden of proof, and the failure to consider fair reasons for termination. The court upheld the appellant's submissions that the respondent deserted work after refusing to sign a warning letter and took the keys of the appellant's lorry, which constituted gross misconduct under section 44 of the Employment Act. The court found the respondent failed to prove unfair termination and the trial court erred in law by not considering the appellant's evidence on desertion.


  1. Through the Memorandum of Appeal dated 11th September, 2023, the Appellant appeals against the whole of the Judgment of Honourable C. M Njagi (PM) delivered on 8th September, 2023.
  2. The Appeal was based on the grounds that:
    1. The Learned Magistrate erred in law and fact by holding that the Respondent was earning a monthly salary of Kshs 47,637.60 based on the final dues paid by the Appellant to the Respondent in his final pay slip, which pay slip that included remuneration for overtime worked, notice pay, pay for leave days not taken in addition to the Respondent’s basic pay.
    2. The Learned Magistrate erred in law and fact by failing to find that the Respondent was earning a monthly gross salary of Kshs 17,500/=
    3. The Learned Magistrate erred in law and fact by holding that the Respondent was earning a monthly salary of Kshs 47,637.60 yet this was not specifically pleaded or proved by the Respondent.
    4. The Learned Magistrate erred in law and fact in making an award for general damages equivalent to 12 months’ salary for wrongful termination of employment- the maximum general damages payable-Inordinately high award in view of the period of time the Respondent had worked for the Appellant.
    5. The Learned Magistrate erred in law and fact in shifting the burden of proof from the Claimant to the Respondent.
    6. The Learned Magistrate erred in law and fact in failing to hold that there were fair and valid reasons to terminate the Respondent’s employment noting that:
      1. The Respondent fled the offices of the Appellant with the car keys for one of its Tipper Lorries, and only returned the keys when the matter was reported to the police at Kikuyu Police Station and he was summoned to the Police station.
      2. The Respondent declined to sign the warning letter issued by the Appellant dated 16th July,2021 following the above actions and act of insubordination and he thereafter absconded work.
    7. The Learned Magistrate erred in law and fact by failing to consider the Appellant’s submissions which were duly filed.
    8. The Learned Magistrate erred in law and fact in disregarding the evidence tendered by the Appellant and/or failing to consider the said evidence in its totality.
    9. The Learned Magistrate erred in law and fact in making outright prejudicial substantive conclusions, applying selective justice and disregarding the evidence tendered by the Appellant.
  3. The Appellant prayed that the Appeal be allowed with costs and the Judgment delivered on 8/9/2023 in Milimani Chief Magistrate ELRC Case No. E2058/2021 be set aside and/or varied.
  4. The Appeal was disposed of by written submissions.

APPELLANT’S SUBMISSIONS

  1. The Appellant’s advocates Muthoga & Omari Advocates filed written submissions dated 11th March, 2024. On the issue of whether the Respondent was unfairly dismissed by the Appellant as held by the trial court counsel submitted the Appellant tendered evidence before the trial court that the Respondent deserted work on 16th July,2021 and took away the keys for the Appellant’s Lorry Motor Vehicle Registration No KCM 367Y. That the Appellant was constrained to report the matter at Kikuyu Police station and it was only after the Respondent was summoned by the police that he returned the Appellant’s lorry keys.
  2. Counsel further submitted that after the Respondent submitting the keys to Kikuyu Police station he did not report back to work and efforts to reach him were futile an act which prompted him to report to the County Labour Office. That at the hearing the Respondent admitted that he never returned to the Appellants place of work after 16th July,2021 when he was issued with a warning letter.
  3. Counsel submitted that the Appellant in the trial court demonstrated that prior to the Respondent deserting work he was issued with various warning letters and he did not deny receiving the warning letters save for the last warning letter he declined to acknowledge. That the act of Respondent’s desertion amounted to gross misconduct under section 44 and his termination was justified.
  4. Counsel relied on the case of Ramogi v Great Lakes University of Kisumu (cause 2 of 2022) (2022) KEELRC 13032(KLR)(2 November,2022) on  what amounts to desertion when an employee has no intention of turning up for work. That the Respondent when he absconded duty he did not have the intention of returning as the car keys he went with he only handed them over to police when summoned.
  5. Counsel submitted that desertion was grave administrative offence which would render the employee liable for summary dismissal. That the defence of desertion was not countered by the Respondent. Counsel relied on the case of Ann Njoroge v Topez Petroleum Ltd(2013) eKLR  on absconding duties amounting to gross misconduct which leads to summary dismissal.
  6. On the issue of according the Respondent a fair hearing counsel submitted that the Appellant demonstrated that despite not reaching the Respondent it reported the matter to Kikuyu Police station and further the Respondent did not show up at work an action that led the Appellant to reporting the matter to the county Labor Office. That the Appellant had also issued three warning letters to the Respondent. Counsel relied on the case of Kenya Revenue Authority vs Maginya Salim Murgani(2010) eKLR that hearing may be conducted through exchange of letters to buttress his position that the Claimant was given several warnings to remedy her conduct.
  7. Counsel submitted that it was upon the Respondent to establish that unfair termination occurred as per section 47(5) of the act. That that Appellant discharged its burden of proof by proving the reason for termination as per section 43 of the act and the trial court erred on this limb.
  8. On the issue of the correct salary earned by the Respondent counsel submitted that the trial court found that the Respondent was earning a monthly salary of Kshs 47,637.60/= That the said sum was never specifically pleaded by the Respondent in his pleadings or any oral or documentary evidence. That the Respondent introduced the figure in his submissions. Counsel submitted that a party cannot introduce new evidence at the submissions stage.
  9. Counsel further submitted that the purpose of pleadings is to define issues between parties, to confine evidence of trial in relation to those issues and to ensure trial proceeds to judgment without either party being taken at a disadvantage by matters not fairly pleaded. That the exact amount the Respondent earned ought to have been brought out in his pleadings.
  10. Counsel submitted that the Respondent was earning a basic monthly salary of Kshs 18,000/= That the Appellant being a registered construction company the official working hours of work were eight hours Monday to Friday and five hours on Saturday. That if the Respondent worked above these hours he would be paid overtime as per Regulation 5 of the Regulation of Wages (Building and Construction Industry), Labour Institutions Act(No. 2 of 2007). That the Respondent was working on a piece rate basis. That the Respondent worked 180 hours per month by Kshs 100 hence 18,000/= salary.
  11. On the issue of the trial court awarding the maximum compensation counsel relied on section 49 of the Act while submitting that the trial court ought to have exercised its discretion on what was fair under the circumstances and guided by the rules and principles of law. That 12 months compensation could be granted when an employee had worked for many years. Counsel relied on the case of Alfred Muthoni& 2 Others v National Bank of Kenya Limited (2018) eKLR on the same.
  12. Counsel submitted that the Respondent had only worked for 2 years and 2 months which was not a long period of time to warrant the maximum compensation. That trial court ought to have justified the award by providing the reasons for the award while relying on the case of Kenya Broadcasting Corporation v Geofrey Wakio(2019) eKLR. Counsel submitted that the award of 12 months’ pay was inordinately high and excessive in the circumstances and should be set aside.

RESPONDENT’S SUBMISSIONS

  1. The Respondent’s Advocates P Kiiru Kamau & Company Advocates filed written submissions dated 17th April 2024. Counsel submitted that the Appellant argues that the Respondent abandoned their job; however, the dismissal notices presented by the Appellant do not mention desertion as a reason for termination. That these allegations were not proved by the Appellant at the lower court.  That the Appellant produced fabricated warning letters and other exhibits that were crafted in the afterthought to sanitize the unlawful dismissal of the Respondent.
  2. Counsel submitted that the Appellant claims the Respondent's salary was fixed at Kenya Shillings 18,000 per month, but evidence from the Respondent's bank statements and the Appellant's payroll records demonstrate that the salary was variable based on daily work with the last full salary paid to the Respondent being Kshs 47,637.60 on June 26, 2021. The Lower Court was right to use this last salary to determine damages.
  3. Counsel submitted that the Respondent was the sole eyewitness to the events of July 16, 2021. That the Appellant's witness testified that she relied on the accounts of her colleague to prepare her statement. That the Appellant had the opportunity to call eye witnesses to testify for it as these persons were still working for the Appellant as at the time of the hearing of the lower court yet the Appellant chose to adduce hearsay evidence.
  4. Counsel submitted that the discrepant and varied signatures allegedly executed by the Respondent on the payrolls and warning letters, which signatures have been denied by the Respondent, it is plainly evident that these exhibits were an afterthought craftily manufactured to defeat the ends of justice.
  5. Counsel submitted that the Appellant's witness acknowledged during cross-examination that the differences in the Respondent's signatures on the warning letters suggest that he may or may not have signed them. That the upshot of the foregoing is that the Respondent did not receive the said warnings.
  6. Counsel relied on Section 41 of the Employment Act on notification and hearing before termination on grounds of misconduct, section 43 on proof of reason for termination and section 45 on what amounts to unfair termination. Counsel also relied on section 49 and 50 on the remedies he was entitled to upon the court finding his termination unfair and section 51 on his entitlement to certificate of service.
  7. Counsel submitted that the Respondent was neither given any reason for his unlawful termination nor a fair hearing to respond to any accusations levelled by the Appellant. That the Appellant refused and/or failed to consider the Respondent's representations before unlawfully terminating the Respondent's contract.
  8. Counsel submitted that the Appellant is unable to validate any of the alleged spurious, eclectic, contradictory and manufactured dismissal grounds. That the manner in which the termination was communicated to the Respondent by the Appellant was unprocedural and capricious and the Appellant did not accord the Respondent any opportunity to appeal the termination.
  9. Counsel submitted that the Appellant did not pay the Respondent his salary for the month of July 2021 as admitted in the Reply to the Memorandum of Claim and it did not pay the Respondent 1 month's salary in lieu of notice. That the Honourable Lower Court did not go against the provisions of sections 49 and 50 of the Employment Act in awarding the Respondent the equivalent of his accumulative wages for 12 months in general damages.

DETERMINATION

  1. The court has considered the pleadings and submissions filed by the both parties herein and proceeds to analyse them as follows. The principles which guide this court in an appeal from a trial court are now well settled. In Abok James Odera t/a A.J Odera & Associates v John Patrick Machira t/a Machira & Co. Advocates [2013] eKLR, the same stated with regard to the duty of the first appellate court;

“This being a first appeal, we are reminded of our primary role as a first appellate court namely, to re-evaluate, re-assess and reanalyze the extracts on the record and then determine whether the conclusions reached by the learned trial Judge are to stand or not and give reasons either way”

  1. In this case, the Judgment of the trial court was that judgment was entered in favour of the Claimant against the Respondent while finding that the termination was unfair in terms of one month’s salary in lieu of notice 47,637.60/=, July 2021 salary Kshs 20,150/= and 12 months’ compensation for unfair termination Kshs 571,651.20/=
  2. The issues placed by the parties for determination in the appeal are with regard to whether the trial court was right when it held that the Respondent was unfairly terminated and if he was entitled to reliefs sought.
  3. This court has therefore come up with two main issues;
      1. Whether the trial court erred by finding that Respondent’s termination of employment was unfair and unlawful
      2. WHEHWWwWhetherWhetherWhe Whether the trial learned Magistrate erred in awarding the Respondent maximum compensation of 12 months’ salary and the other awards.

Whether the trial court erred by finding that Respondent’s termination of employment was unfair and unlawful

  1. It is not in dispute that the Respondent was an employee of the Appellant. The Appellant averred that the Respondent deserted duties on 16th July,2021 with a Tipper Lorry keys and only surrendered them to Kikuyu police station when summoned and he still refused to resume his duties despite efforts to call him. The Respondent on the other hand alleges that he was terminated by the Appellant on 16th July,2021 when his tout was found asleep and told never to come back.
  2. The trial court on the other hand found that the Respondent’s termination was unfair since the warning letters had signature discrepancies to mean they were never served or received by the Respondent. The court also noted that due procedure was never followed in dismissing the Respondent hence unfair termination.
  3. The courts have always held that for termination to pass fairness test there should be both substantive and procedural fairness. This court refers to the holding in Janet Nyandiko versus Kenya Commercial Bank Limited (2017) eKLR among others.
  4. The Court notes that the Respondent had a duty under section 47(5) of the Employment Act to prove that termination occurred hence the trial court was right to find that the Respondent had illustrated that the termination had occurred and the burden shifted to the Appellant to show that the reasons for the termination were fair under the said provision.
  5. Under Section 44(4) (a) of the Employment Act 2007, absconding duty by an employee constitutes gross misconduct and renders an employee liable for summary dismissal. The Appellant has relied on the defence of desertion that the Respondent had no intention of returning to the place of work.
  6. In the case of Stanley Omwoyo Onchweri v Board of Management Nakuru YMCA Secondary School [2015] eKLR, the court held that:-

“ Desertion can only take place where an employee leaves employment with the intention of not returning or formulating such intention not to return after leaving. Such intention may be demonstrated by showing absence of communication from the employee, duration of absence, impact of the absence and nature of employee’s duties.

  1. The Appellant claims desertion/absconding of duty on 16th July,2021 yet the Respondent states that he was terminated on 16th July, 2021 and told never to report. The Appellant did not demonstrate that it commenced any disciplinary action against the Claimant under Section 41 of the Employment Act after he allegedly failed to report on duty. The Report to Police station is made the same day he is said to have absconded which is 16th July, 2021 and the dismissal letter also written on the same date. This leads to the conclusion that the Respondent was dismissed on the same day he is said to have deserted duties which this court finds very suspicious.
  2. It was held in the case of RICHARD KIPLIMO KOECH –VS- YUKO SUPERMARKET LTD [2015] eKLR that absconding duty is an act of misconduct on the part of the employee and section 41 of the Employment Act becomes applicable.
  3. In Joseph Nzioka v Smart Coatings Limited [2017] eKLR Nduma J. observed that

“Dismissal on account of absconding must be preceded by evidence showing that reasonable attempt was made to contact the employee concerned and that a show cause letter was issued to such employee calling upon such employee to show cause why his services should not be terminated on account of absconding duties.”

  1. In the present case, the Court is not satisfied that the Appellant has on a balance of probabilities discharged its onus of establishing that the Appellant absconded/deserted duty.  How would he be held to have deserted duties the same day he is dismissed without any efforts by the Appellants to reach him if he absconded duties? The Court agrees with the trial court’s finding that the Appellant did not have fair reasons to dismiss the Respondent.
  2. On the procedural fairness as provided for under section 41 of the Employment Act the court notes that the same was never adhered to as the Appellant did not issue any show cause letter to the Respondent on the issue of deserting/absconding of duties. The warning letters were never received by the Respondent, the Appellant was never invited for any disciplinary hearing hence the Respondent violated the clear provisions of section 41 of the Act. In this regard, the court is guided by the holding in the case of Kenya Union Of Commercial Food and Allied Workers v Meru North Farmers Sacco Limited [2014] eKLR that: -

Section 41 of the Employment Act is couched in mandatory terms. Where an employer fails to follow these mandatory provisions, whatever outcome of the process is bound to be unfair as the affected employee has not been accorded a hearing in the presence of their union representative.

  1. In conclusion the court agrees with the trial court decision that the Respondent’s termination was both substantively and procedurally illegal, unfair and unjustified.

Whether the trial learned Magistrate erred in awarding the Respondent maximum compensation of 12 months’ salary and the other awards.

  1. The Appellant has faulted the trial court on placing reliance on Kshs 47,637.60/= as the Respondent’s last salary stating that this salary contained other allowances and not the basic salary the Respondent was earning. That his salary was Kshs. 18,000/= which could vary as per work given. This court notes that the Respondent’s salary from the statements attached used to vary. The last salary the Respondent received in June 2021 was Kshs 47,638/= after deductions.
  2. Further the said amount contained annual leave of Kshs. 21,600/=. The trial court should not have based its calculations on the net salary after deductions besides the figure relied on included annual leave which was not a regular item of gross pay. The Appellant’s proposition that the Respondent’s salary should be Kshs 18,000/= is also unjustified since the same ought to be based on gross salary including other allowances like overtime and transport allowance. From the job cards overtime was always paid for as a matter of practice even though the Respondent was engaged on piece rate basis. In the interest of justice this court will take the last salary of Kshs 60,110/= and minus the Annual Leave of Kshs 21,600/= which was the only terminal pay to arrive at 38,510/= as the respondent’s last salary. There was no notice pay as alleged by the Appellant.
  3. The court notes that the Appellant appreciated and offered to pay the Respondent Kshs. 20,150/= for days worked in July, 2021 by 16th yet it offers only Kshs. 18,000/= for a whole month which cannot be reasonable or equitable for the work done. The trial court therefore failed to take in to account these considerations. This ground of appeal succeeds to this extent.
  4. On the issue of the trial court awarding the Respondent 12 months as compensation for unfair termination which the Appellant faults excessive because the trial court did not justify the reasons for the award. 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 on 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. This court will therefore disturb the award herein if it is sufficiently shown that the trial court misdirected itself in some matter hence arriving at a wrong decision. The court notes that the award of 12 months compensation is discretionary on the court but such discretion should be guided by considerations set out under Section 49(4) of the Employment Act in awarding the damages herein.
  2. In this case the trial court stated that the reason they were awarding the maximum compensation was because the Respondent was unfairly dismissed.  The court notes that the trial court failed to properly justify the reasons for the maximum compensation as was held by the Court of Appeal in Kenya Broad casting Corporation v Geofrey Wakio(2019) eKLR that;

[22] This Court has established the rule that an award of the maximum 12 months’ pay must be based on sound judicial principles. In Ol Pejeta Ranching Limited vs. David Wanjau Muhoro [2017] eKLR this Court categorically stated that the trial Judge must justify or explain why a claimant is entitled to the maximum award; that the exercise of discretion must not be capricious or whimsical.

  1. Section 49 and 50 of the Employment Act empowers the court to award compensation for unfair termination. Subsection (4) then sets out the factors to consider when exercising discretion to award relief to an unfairly dismissed employee.
  2. While taking note of the duration the Respondent worked with the Appellant which is 2 years 2 months which is short period and the nature of the Respondent’s termination of employment as outlined by the trial court this court is convinced that it should interfere with the discretion of the lower court on awarding maximum compensation. It is the court’s opinion therefore that 5 months’ salary is reasonable compensation for the unfair termination considering that the Respondent worked for about 2 years 2 months and was terminated unfairly by the Respondent.
  3. In the upshot the Appeal partially succeeds as follows;
      1. One month’s salary in lieu of notice

…………………………………………Kshs 38,510/=

      1. 5 months’ salary as compensation….. Kshs 192,550/=
      2. July 2021 salary……………..Kshs 20,150/=
      3. Costs of the suit

TOTAL ………………………..……KSHS 251,210/=

  1. Considering that the Appeal partially succeeds each party shall bear their own costs for this Appeal.
  2. It is so ordered.

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

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

Abuodha Nelson Jorum

Presiding Judge-Appeals Division

    China Wu Yu Co. Limited Limited VS Benson Kimathi Mugao China Wu Yu Co. Limited Limited VS Benson Kimathi Mugao