1. By an amended statement of claim dated 10th February, 2020, the claimant pleaded inter alia:-
i) The Claimant was an employee of AFYA SACCO SOCIETY LTD on a permanent and pensionable basis in the designation of General Manager Human Resources and Administration and earning a gross salary of Ksh 630,008.
ii) The Claimant avers that without any proper reason or any reason at all thereof, the Respondent unlawfully, unfairly, wrongfully and prematurely summarily dismissed the Claimant in a letter dated 25th June 2019.
iii) The Claimant further avers that the Respondent has by effecting unexplained summary dismissal on the Claimant flouted the guidelines in cases of termination to wit;
For any person who is determining whether a summary dismissal is fair should consider:
a) Whether or not an employee contravened a rule or standard regulating conduct in, or of relevance to, the workplace: and if a rule or standard was contravened, whether or not;
i) The rule was valid or reasonable rule or standard
ii) The employee was aware or could reasonably be
expected to have
been aware of the rule or standard.
iii) The rule or standard has been consistently applied by
the employer
and;
iv) Summary dismissal was an appropriate sanction for
the contravention of the rule or standard.
b) That our client was not accorded the cardinal and mandatory
requirement of the Principle of Audi Alteram Partem.
c) That the reasons of termination were not made known to our
client.
iv) That the Respondent flagrantly violated the Claimant’s fundamental right to fair labour practice by discriminatively dismissing the Claimant.
v) The Respondent violated neglected and failed to observe its own discipline policy in respect to the Claimant’s dismissal.
vi) That it is further pertinent to note that the Claimant was never issued with the cautionary and/or any warning by the Respondent and that the Claimant had an exemplary record as General Manager, Human Resources & Administration and Deputy Chief Executive Officer of the Respondent.
vii) The Claimant avers that while in employment he secured a staff loan as a benefit of employment and as per the provisions of the Management Staff terms and Conditions of Service 01/01/2019-31/12/2020.
viii) The Claimant states that he used the said amount of Twelve Million Five Hundred Thousand repayable in 15 years to develop his matrimonial home.
ix) The Claimant further avers that the said staff house loan is repayable in 15 years at an interest rate of 12% p.a.
x) The Claimant states that the staff house loan was borne out of his employment relationship with the Respondent and that had he not been in employment, he would have not be able to purchase land and construct his matrimonial home.
xi) The Claimant avers that the house/matrimonial home situated L.R NGONG/NGONG/38885 situate at KAJIADO COUNTY against which the staff loan was granted was charged in its favour.
xii) The Claimant states that he had been paying off the staff house loan from his salary payable through Afya Sacco’s FOSA savings Account until when he got summarily dismissed from employment.
xiii) The Claimant avers that the Respondent Sacco unless restrained by this Honourable Court now intends to unlawfully sell by auction, pursuant to default notice issued on 4th November 2019 the Claimant’s Property known as L.R NGONG/NGONG/38885 situate at KAJIADO COUNTY which is his matrimonial home.
2. The Claimant therefore prayed for orders among others that:
i) Payment of pecuniary loss suffered as a result of wrongful termination from the date of termination to the date of determination
ii) Declaration that the claimant is entitled to compensation for violation of constitutional rights.
iii) Permanent injunction restraining the respondent from selling or dealing with property known as NGONG/NGONG/38885 situated in Kajiado County.
iv) An order allowing the claimant to service his loan facility at the rate he was servicing during employment.
v) An order for reinstatement to employment.
3. The Respondent filed its Statement of Response dated 11th of March, 2021 and averred inter alia:
a) The Claimant is a former employee of the Respondent since 1st August 2002 up to June 2019 when he separated with the Respondent and by this time, he was the Deputy Chief Executive Officer and General manager in charge of Human Resources and Administration.
See appendix 1 a copy of the contract of employment
FACTS LEADING TO TERMINATION OF EMPLOYMENT
b) Sometime in the year 2017and in his capacity as an employee of the Respondent the Claimant at his own request was advanced a loan amounting to Kshs. 2,800,000.00 which loan was to be repaid within a period of 72 months and by the year 2019 the Claimant had only made repayment towards the loan advanced 6 times contrary to the original agreement.
c) On 22nd March 2017 the Claimant was advanced another FOSA loan amounting to Kshs. 8,000,000.00 payable in 72 months. The loan was initially under recovered and by the year 2019 the loan balance was standing at Kshs. 6,813,781.00 against an expected balance of Kshs. 6,032,461.00 resulting in underpayment of Kshs. 790,435.00.
d) The Claimant being a senior management staff was suspended from employment on 3rd May 2019 on the allegations that he had borrowed through FOSA loan an amount which was not being repaid resulting into underpayments of the loan principal amount by Kshs. 499,596.00 and interest underpayment of Kshs. 664,665.00
e) An investigation was conducted surrounding the underpayment of the loans and the same was presented before the Board which after going through the report was satisfied that very senior members of staff were concealing their loans hence denying the organization payments.
f) It was unanimously agreed that the staff being of high ranking could not be trusted to transact business on behalf of the organization and a recommendation was made to have the employee dismissed from employment on grounds of dishonesty and untrustworthy, gross misconduct leading to loss of funds.
See appendix 3 a copy of the investigation report and the dismissal letter.
4. In upshot the respondent prayed for the claimant’s suit to be dismissed with costs.
5. The claimant filed a reply to the respondent’s response alleging inter alia:
i) The Claimant reiterates his entire Memorandum of Claim as filed in response to the Respondent’s Statement of Claim and thereby denies each and every allegation of fact or law in the Response to Statement of Claim as though the same were set forth seriatim and traversed save for such admissions made hereunder.
j) The Claimant further submits that he was summarily dismissed contrary to the provisions of sections 41, 45 and 48 of the Employment Act.
k) The Respondent did not provide the Claimant with any fair and justifiable reason for termination of his employment contrary to the averments under paragraph 11 of the Respondent’s Statement of Response.
l) Further, the Respondent did not conduct any disciplinary hearing contrary to section 41 of the Employment Act, which makes it mandatory for the Claimant to be notified and heard before being terminated on grounds of misconduct.
m) The Reason of termination was based on non-payment of loans which is not a ground for termination of an employee as there are numerous ways a financier can exercise the right to recover the unpaid amount.
n) The Claimant further avers that he had been paying off the staff house loan from his salary payable through Afya Sacco’s FOSA savings Account until when he got summarily dismissed from employment. As such, the Respondent averments under paragraph 4 and 5 of the Statement of Response are without any basis.
o) Contrary to the averments under paragraph 7 of the Statement of Response, the Claimant states that the Termination letter bore no reason for termination as required by the law.
EVIDENCE
6. At the hearing the claimant stated that he recorded a witness statement on 10th February, 2020 which he relied on as his evidence in chief. He also relied on the documents filed with the claim. The respondent was his former employer and that he was employed on 1st August, 2002 and was dismissed on 25th June, 2019. The claimant further stated that he was working as the General Manager Human Resource & Administration and that his monthly salary was Kshs. 630,008/-.
7. It was his evidence that he never received any warning letter during his employment and that there were rules governing loans to staff. They were contained in the Management Terms and Conditions of Service. He further stated that he took staff loan to buy a house and furniture. He further took capital loan. The house loan was payable in 15 years at the interest rate of 12% per annum. After termination the interest was revised to 17%. He contended that the variation was not provided for in the terms and conditions of service. The loan was secured by the house as a collateral. It was further his evidence that he was serving all his loans through his salary before he was dismissed.
8. Mr. Sakwa testified that he was suspended on 3rd May, 2019 on allegations that he was not repaying his loans. He was not issued with a show cause letter and was not given a report of the investigations. It was his evidence that he was not invited to any disciplinary hearing prior to dismissal. He never attended the Board Meeting referred to in the dismissal letter. According to him, failure to repay a loan was not a reason for summary dismissal because loans have collateral or guarantors.
9. Concerning leave, it was his evidence that he had 38 pending leave days and was not paid the same when he was dismissed. He further stated that he was not issued with notice prior to dismissal. Regarding gratuity he stated that this was provided for in the terms and conditions of service and that the respondent never issued him with a certificate of service.
10. In cross examination he stated that he took the loans while in employment and used to service them prior to dismissal. The record was before the Court. It was his evidence that he was still servicing his loans and that he had the evidence of that.
11. Concerning suspension, he stated that he was notified of the reasons for suspension and that he never responded to the allegations because he was not given an opportunity to respond. He further stated that he never appealed the dismissal because he was not aware of his right of appeal. He filed the suit instead
12. The respondent called one witness, one Peter Kimotho Maina who testified that he worked for the respondent as a manager in charge of risk and compliance. He had worked for the respondent for approximately fourteen years. He recorded his witness statement on 7th November, 2024 which he adopted as his evidence in chief he also relied on the documents filed by the respondent in support of their defence to the claim.
13. In cross-examination he stated that there were rules governing taking loans. There were agreements on loan application and that he had not produced the agreements. According to him the records were kept in the HR Office of the respondent. The loan agreements had a default clause. The respondent invoked the clause. According to him the respondent sent default notices which were unanswered. The notices have not been produced before the court .
14. It was further his evidence that an employee is supposed to provide arrangements for repayment of loans upon termination. He stated that he was not aware if the claimant had punctuality issues at work and that he was not aware if the claimant was issued with a show cause letter on punctuality. He confirmed the claimant was suspended but was not aware if the claimant was issued with a notice to show cause over the investigations. It was his evidence that the claimant was not invited for a disciplinary hearing and that he was not invited to the Board meeting where his issue was discussed. He further stated that he did not have any evidence to rebut the claimant’s claim for unpaid leave. According to him, the claimant’s loans were being under-recovered.
CLAIMANT’S SUBMISSIONS
15. The claimants counsel Mr. Onyonyi submitted among others that the claimant was served with a suspension letter which referred to a Board meeting where the claimant was not present and where the claimant was accused of underpaying his FOSA Mwongozo loan issued on 3rd March, 2017. According to counsel, his client was before suspension, never accorded an opportunity to explain the alleged omission or failure to honour his obligations. Further, for the 17 years, not even once had the claimant been issued with any warning letter concerning punctuality to work or any other offence at workplace.
16. Counsel submitted that on 25th June, 2019, the claimant was issued with a summary dismissal letter which referred to a Board meeting held on 19th June, 2019 where an alleged report touching on the claimant’s suspension circumstances was discussed. The claimant never attended this meeting and the alleged report was never availed to him prior to dismissal. The same was never produced in court.
17. Regarding the summary dismissal letter, counsel submitted that the same was ambiguous and disclosed no precise reason that would warrant summary dismissal. The claimant ought to have been explained to the precise nature of the offences against him and given a chance to respond to the same before any action was taken. According to counsel, the claimant ought have been informed of the alleged defaulted SACCO loans, their relationship with his employment and given a chance to explain himself before drastic action such as summary dismissal was taken against him. In this regard, counsel relied on the case of Cooperative Bank of Kenya Limited v. Yator [2021]KECA 95 (KLR).
18. According to counsel, the claimant was never accorded a chance to defend himself against the allegations raised in both the suspension letter dated 3rd May, 2019 and the summary dismissal letter dated 25th June, 2019. No show cause letter was issued to the claimant. In this respect, counsel relied on the case of CMC Aviation Ltd v. Mohammed Noor [2015] KECA 775 (KLR).
19. Mr. Onyonyi further submitted that rules of natural justice and Employment Act dictated that the claimant must be accorded a chance to heard before being dismissed from employment and that the burden of proof in cases of summary dismissal was on the employer as was held by the Court of Appeal in the case of Pius Machafu Isindu vs. Lavington Security Guards Limited [2017] eKLR.
20. On the issue of violation and breach of claimant’s constitutional and fundamental rights and fair labour relations, counsel submitted that the respondent failed to comply with the mandatory provisions of section 41(2) of the Employment Act. The respondent therefore acted in breach of article 47 of the constitution by failing to accord the claimant a chance to be heard before summary dismissal and that reasons for summary dismissal were not related to the claimant’s employment hence the claimant was dismissed without a just cause.
21. Counsel therefore submitted that the claimant was entitled to the reliefs sought together with the costs of the suit.
22. Ms. Kagoya for the respondent on the other hand submitted on whether the claimant was entitled to the reliefs sought that the compensation for gratuity was not provided for in the Employment Act and was not mandatory. It was at the discretion of the employer. In this respect, counsel relied on the case of Bamburi Cement Limited vs. William Kilonzi [2016] eKLR. The claimant’s employment letter dated 22nd July, 2002 did not make any provision for payment of gratuity. No CBA was produced by the claimant indicating entitlement to gratuity.
23. Concerning 12 months’ salary as compensation for unfair termination, counsel submitted that the claimant in his employment as a senior member of staff obtained multiple loans from the respondent totaling to Kshs. 16,599,159/- and failed to repay the same as required. The respondent therefore suffered loss of funds. According to counsel, the claimant was issued with a suspension letter and requested to respond to the allegations contained in the letter however the claimant failed to submit any response. In absence of any explanation, the respondent had no option but to dismiss the claimant. In the circumstances, counsel submitted that if an award for compensation was to be made it be three months’ salary.
24. Concerning salary in lieu of notice, counsel submitted that the claimant’s letter of employment did not specify the notice period for termination. The claim for salary in lieu of notice therefore ought to be dismissed. On the issue of reinstatement, counsel submitted that the claimant is not entitled to the same and relied on the judgment of Dr. Gakeri J in the case of Joseph Kioko Musyoki vs. Afya Cooperative SACCO.
25. Concerning permanent injunction, counsel submitted that the claimant came to court with unclean hands and is therefore not entitled to injunction. The claimant’s action of taking multiple loans and failing to repay the same occasioned the respondent injustice and was entitled to recover the same. Concerning general damages, counsel submitted that the claimant did not adduce any evidence to demonstrate that the respondent had ulterior motives in terminating his employment. The respondent therefore prayed that the claimant’s case be dismissed with costs.
26. The Court notes that Counsel for the respondent did not address the issue of the reason for the termination of the claimant’s service and whether in carrying out the termination, the respondent took the claimant through the processes provided for in the Employment Act.
DETERMINATION
27. I have reviewed and considered the pleadings and submissions by the Claimant’s and Respondent’s counsel in support of the case as well as authorities relied on and became of the view that the gist of the claim before me is over the validity or justification for the termination of the claimant’s service; second whether in carrying out the termination, the respondent followed a fair procedure in accordance with the Employment Act. If the court were to reach a finding that the respondent had no valid or justifiable reason for terminating the claimant’s service and that the termination was not carried out through a fair procedure, what would be the appropriate remedies to the claimant.
28. The facts leading to the dismissal of the claimant have been set by the parties herein in their evidence in chief and subsequent cross-examination. The claimant herein was on 3rd May, 2019 suspended from duty on allegation that he took a Fosa Mwongozo loan which was initially not being repaid and that the repayment only started when the matter was raised by the Board members. The letter gave the details of the loan. The letter went further and accused the claimant thus:
“Owing to your position, the Board considered this omission and failure to honour your loan obligation as a serious act of misconduct and suspended you from duty from the date of this letter as provided in the Terms and Conditions of Service Discipline Part I B (i) (ii) & (iv).”
29. The suspension letter prohibited the claimant from attending duty but allowed him his salary until the investigations were completed and further that the outcome of the investigations would be communicated to him in due course. The Court notes that the suspension letter did not call upon the claimant to respond to the allegations against him and give his side of the story.
30. By a letter dated 25th June, 2019, the respondent summarily dismissed the claimant pursuant to a Board meeting held on 19th June, 2019 touching on the circumstances under which the claimant was suspended from duty vide a letter dated 3/5/2019. The letter made reference to a report which showed the claimant was underpaying his loans as detailed in the letter. The letter concluded by informing the claimant that his inability to service the loans as expected was attributed to pecuniary embarrassment and or concealment. The claimant was therefore dismissed on account of dishonesty, untrustworthiness, infamous and gross misconduct leading to loss of funds.
31. At the hearing, it was common ground and it was conceded by the respondent witness that the claimant was never issued with a show cause letter and that no disciplinary hearing was conducted and further that the claimant never attended the Board meetings where the decision to suspend and eventually summarily dismiss him was discussed.
32. Going by the several decisions of this Court and the Court of Appeal, it is now almost settled that for a termination to pass fairness test there must be both substantive and procedural fairness. For example see the case Janet Nyandiko vs Kenya Commercial Bank Limited (2017) eKLR among others. The Court of Appeal in the case of Pius Machafu Isindu v Lavington Security Guards Limited [2017] eKLR 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. A mandatory and elaborate process is then set up under section 41 requiring notification and hearing before termination.”
33. Under section 41 of the Employment Act, it is a requirement that before an employer dismisses or terminates an employee’s contract, the employee must be accorded an opportunity to respond to the accusations, the basis upon which the dismissal or termination was being considered. This was clearly set out in the case of Janet Nyandiko vs. Kenya Commercial Bank Limited [2017] eKLR where the court stated:
“Section 41 of the Act, enjoins the employer in mandatory terms, before terminating the employment of an employee on grounds of misconduct, poor performance or physical incapacity to explain to the employee in a language that the employee understands the reasons for which the employer is considering to terminate the employee’s employment with them. The employer is also enjoined to ensure that the employee receives the said reasons in the presence of a fellow employee or a shop floor union representative of own choice; and to hear and consider any representations which the employee may advance in response to allegations leveled against him by the employer.”
34. The respondent admitted that it never took the claimant through any disciplinary hearing to hear any representation the claimant may have had in response to the accusations against him. The substance of the accusation was that the claimant took some loans that he was not servicing. The respondent did not allege that the loans were obtained irregularly. It only had issue with their servicing of the loans. May be the claimant had a reasonable explanation. May be not. But now that he was never given an opportunity to give his side of the story, the Court is unable to appreciate the validity and justification for the reasons for termination.
35. It is noteworthy that during the hearing, the claimant stated in his defence to the accusations that the loans were guaranteed and that one of them was secured by his matrimonial home being NGONG/NGONG/38885. In the worst case scenario therefore the property could be sold by the respondent to recover part or all of the outstanding loan.
36. The Court therefore is not satisfied that the respondent acted unreasonably in dismissing the claimant on account of his outstanding loans and without giving him a hearing on whether he had an offer or not how the loans can be regularised. In the case of British Leyland UK Ltd v. Swift [1981]IRLR 91, Lord Denning MR observed thus:
The correct test is: Was it reasonable for the employers to dismiss him? If no reasonable employer would have dismissed him, then the dismissal was unfair, but if a reasonable employer might reasonably have dismissed him, the dismissal was fair. It must be remembered that in all these cases there is a band of reasonableness, within which an employer might reasonably take one view: another quite reasonably take a different view. One would quite reasonably dismiss the man. The other quite reasonably keep him on. Both views may be quite reasonable. If it was quite reasonable to dismiss him, then the dismissal must be upheld as fair even though some other employers may not have dismissed him”
37. It is the Court’s view that the decision to summarily dismiss the claimant was not justifiable and was disproportionate to the allegations against him. Concerning the principle of proportionality, this court in the case of Leon Yang Wang vs. Equity Bank [2023] eKLR observed that:
Reason for termination of employment need not be strictly proved but must however be reasonable and proportional in the circumstances. Termination of employment more often than not impacts on the life of an employee hence the decision to bring a contract of employment to an end ought to be governed by reasonableness and proportionality….In the English case of R v Home Secretary; Ex parte Daly [2001] 2 AC 532. It was stated as follows concerning the proportionality test: "leads to a “greater intensity of review” than the traditional grounds. What this means in practice is that consideration of the substantive merits of a decision play a much greater role. Proportionality invites the court to evaluate the merits of the decision; first, proportionality may require the reviewing court to assess the balance which the decision maker has struck, not merely whether it is within the range of rational or reasonable decisions; secondly, the proportionality test may go further than the traditional grounds of review inasmuch as it may require attention to be directed to the relative weight accorded to interests and considerations…”
38. To conclude this question, the Court finds and holds that the respondent acted unreasonably and that the reason for termination of the claimant’s employment did not meet the threshold set under section 43 of the Employment Act hence unfair within the meaning of section 45.
39. The next issue for consideration by the Court is the remedy the claimant is entitled to as a result of the unfair termination. The claimant prayed for among others declaration and an order for compensation for violation of his constitutional rights.
40. It has been held in several cases that a claim based on violation of constitutional rights ought to clearly show which rights have been or are threatened with violation, the article of the constitution violated or threatened with violation and the manner in which it is violated. The Courts have further stated that not all violations meet the constitutional threshold and that if the breach complained of is adequately addressed by a statute then the constitution should not be invoked. In the case of Anarita Karimi Njeri v AG [1979] KLR 154 the Court stated thus:
“…we would, however, again stress that if a person is seeking redress from the High Court on a matter which involves a reference to the Constitution, it is important (if only to ensure that justice is done to his case) that he should set out with a reasonable degree of precision that of which he complains, the provisions said to be infringed, and the manner in which they are alleged to be infringed
41. Further in the case of Sports and Recreation Commission v Sagittarius Wrestling Club and Anor [2022] KEHC 13633 (KLR) per Ibrahim JA (as he then was) stated
“…Courts will not normally consider as a constitutional question unless the existence of a remedy depends upon it; if a remedy is available to an applicant under some other legislative provision or on some other basis, whether legal or factual, a court will usually decline to determine whether there has been, in addition, a breach of the Declaration of Rights..”
42. I have considered the claim herein and the issues involved and became of the view that they are ordinary employment issues which are adequately addressed by the Employment Act. The claim for violation of constitutional rights is therefore found without merit and is hereby rejected.
43. The Court reached a finding that the termination of the claimant’s service was unfair. The quantum of compensation allowed by the Act is capped at 12 months’ salary. The claimant was employed by the responded in 2002 and left in June, 2019 when he was summarily dismissed. The claimant therefore worked for the respondent for approximately sixteen years. Apart from the issue of his loans, there was no allegation concerning the claimants performance and discipline as a worker.
44. Further although not formally denied, the claimant did not dispute that he took loans from the respondent and that they have fallen in arrears. It was further his evidence that his guarantors to the loan were being deducted the outstanding loan. Considering these factors an award of eight months’ salary would be reasonable in the circumstances. The claimant is further entitled to one month’s salary in lieu of notice in accordance with his contract of service and section 35 of the Employment Act.
45. The claimant made a claim for accrued leave not taken at the time of dismissal. The respondent did not rebut this claim by providing the claimant’s employment records showing leave taken and going by the requirements of section 74 of the Employment Act concerning the keeping of employment records, the court will allow this claim as prayed.
46. Concerning the claim for injunctive orders over NGONG/NGONG/38885, the court will decline to make such order in the interest of equity. The claimant does not deny borrowing money from the respondent to buy the subject property. He has further indicated his willingness to continue servicing the loan. It would therefore be inequitable to bar the respondent from invoking loan recovery mechanisms including selling the property if necessary to recover what is owed to it.
47. Concerning repayment of the loan at prevailing staff rate, this the Court will grant the order since no loss would be incurred by the responded if the order is made. The claimant as an employee could have repaid the loan at staff rate for as long as he remained in employment. His termination has been impugned by the Court hence he ought to continue repaying the loan at prevailing staff rate.
48. The order for reinstatement will not be made in view of the time that has lapsed since the termination of the claimant.
49. In Conclusion the Court finds and holds as follows:
i. The respondent did not have valid and justifiable reasons for terminating the claimant’s employment and further the termination was not carried out through a fair procedure hence unfair within the meaning of section 45 of the Employment Act.
ii. The claimant is hereby awarded as against the respondent the following:
a) One month’s salary in lieu of notice …..Kshs. 630,030/-
b) 8 months’ salary compensation…..Kshs. 5,040,240
c) Accrued leave not taken (38 days)……Kshs. 553,128/-
Total Kshs. 6,223,398.
d) Costs of the suit.
e) Items (a), (b) and (c) shall attract taxes and statutory deductions
50. It is so ordered.
Dated at Nairobi this ……… day of…………. 2025
Delivered virtually this……… day of ………….2025
Abuodha Nelson Jorum
Presiding Judge-Appeals Division
i) The Claimant was an employee of AFYA SACCO SOCIETY LTD on a permanent and pensionable basis in the designation of General Manager Human Resources and Administration and earning a gross salary of Ksh 630,008.
ii) The Claimant avers that without any proper reason or any reason at all thereof, the Respondent unlawfully, unfairly, wrongfully and prematurely summarily dismissed the Claimant in a letter dated 25th June 2019.
iii) The Claimant further avers that the Respondent has by effecting unexplained summary dismissal on the Claimant flouted the guidelines in cases of termination to wit;
For any person who is determining whether a summary dismissal is fair should consider:
a) Whether or not an employee contravened a rule or standard regulating conduct in, or of relevance to, the workplace: and if a rule or standard was contravened, whether or not;
i) The rule was valid or reasonable rule or standard
ii) The employee was aware or could reasonably be
expected to have
been aware of the rule or standard.
iii) The rule or standard has been consistently applied by
the employer
and;
iv) Summary dismissal was an appropriate sanction for
the contravention of the rule or standard.
b) That our client was not accorded the cardinal and mandatory
requirement of the Principle of Audi Alteram Partem.
c) That the reasons of termination were not made known to our
client.
iv) That the Respondent flagrantly violated the Claimant’s fundamental right to fair labour practice by discriminatively dismissing the Claimant.
v) The Respondent violated neglected and failed to observe its own discipline policy in respect to the Claimant’s dismissal.
vi) That it is further pertinent to note that the Claimant was never issued with the cautionary and/or any warning by the Respondent and that the Claimant had an exemplary record as General Manager, Human Resources & Administration and Deputy Chief Executive Officer of the Respondent.
vii) The Claimant avers that while in employment he secured a staff loan as a benefit of employment and as per the provisions of the Management Staff terms and Conditions of Service 01/01/2019-31/12/2020.
viii) The Claimant states that he used the said amount of Twelve Million Five Hundred Thousand repayable in 15 years to develop his matrimonial home.
ix) The Claimant further avers that the said staff house loan is repayable in 15 years at an interest rate of 12% p.a.
x) The Claimant states that the staff house loan was borne out of his employment relationship with the Respondent and that had he not been in employment, he would have not be able to purchase land and construct his matrimonial home.
xi) The Claimant avers that the house/matrimonial home situated L.R NGONG/NGONG/38885 situate at KAJIADO COUNTY against which the staff loan was granted was charged in its favour.
xii) The Claimant states that he had been paying off the staff house loan from his salary payable through Afya Sacco’s FOSA savings Account until when he got summarily dismissed from employment.
xiii) The Claimant avers that the Respondent Sacco unless restrained by this Honourable Court now intends to unlawfully sell by auction, pursuant to default notice issued on 4th November 2019 the Claimant’s Property known as L.R NGONG/NGONG/38885 situate at KAJIADO COUNTY which is his matrimonial home.
2. The Claimant therefore prayed for orders among others that:
i) Payment of pecuniary loss suffered as a result of wrongful termination from the date of termination to the date of determination
ii) Declaration that the claimant is entitled to compensation for violation of constitutional rights.
iii) Permanent injunction restraining the respondent from selling or dealing with property known as NGONG/NGONG/38885 situated in Kajiado County.
iv) An order allowing the claimant to service his loan facility at the rate he was servicing during employment.
v) An order for reinstatement to employment.
3. The Respondent filed its Statement of Response dated 11th of March, 2021 and averred inter alia:
a) The Claimant is a former employee of the Respondent since 1st August 2002 up to June 2019 when he separated with the Respondent and by this time, he was the Deputy Chief Executive Officer and General manager in charge of Human Resources and Administration.
See appendix 1 a copy of the contract of employment
FACTS LEADING TO TERMINATION OF EMPLOYMENT
b) Sometime in the year 2017and in his capacity as an employee of the Respondent the Claimant at his own request was advanced a loan amounting to Kshs. 2,800,000.00 which loan was to be repaid within a period of 72 months and by the year 2019 the Claimant had only made repayment towards the loan advanced 6 times contrary to the original agreement.
c) On 22nd March 2017 the Claimant was advanced another FOSA loan amounting to Kshs. 8,000,000.00 payable in 72 months. The loan was initially under recovered and by the year 2019 the loan balance was standing at Kshs. 6,813,781.00 against an expected balance of Kshs. 6,032,461.00 resulting in underpayment of Kshs. 790,435.00.
d) The Claimant being a senior management staff was suspended from employment on 3rd May 2019 on the allegations that he had borrowed through FOSA loan an amount which was not being repaid resulting into underpayments of the loan principal amount by Kshs. 499,596.00 and interest underpayment of Kshs. 664,665.00
e) An investigation was conducted surrounding the underpayment of the loans and the same was presented before the Board which after going through the report was satisfied that very senior members of staff were concealing their loans hence denying the organization payments.
f) It was unanimously agreed that the staff being of high ranking could not be trusted to transact business on behalf of the organization and a recommendation was made to have the employee dismissed from employment on grounds of dishonesty and untrustworthy, gross misconduct leading to loss of funds.
See appendix 3 a copy of the investigation report and the dismissal letter.
4. In upshot the respondent prayed for the claimant’s suit to be dismissed with costs.
5. The claimant filed a reply to the respondent’s response alleging inter alia:
i) The Claimant reiterates his entire Memorandum of Claim as filed in response to the Respondent’s Statement of Claim and thereby denies each and every allegation of fact or law in the Response to Statement of Claim as though the same were set forth seriatim and traversed save for such admissions made hereunder.
j) The Claimant further submits that he was summarily dismissed contrary to the provisions of sections 41, 45 and 48 of the Employment Act.
k) The Respondent did not provide the Claimant with any fair and justifiable reason for termination of his employment contrary to the averments under paragraph 11 of the Respondent’s Statement of Response.
l) Further, the Respondent did not conduct any disciplinary hearing contrary to section 41 of the Employment Act, which makes it mandatory for the Claimant to be notified and heard before being terminated on grounds of misconduct.
m) The Reason of termination was based on non-payment of loans which is not a ground for termination of an employee as there are numerous ways a financier can exercise the right to recover the unpaid amount.
n) The Claimant further avers that he had been paying off the staff house loan from his salary payable through Afya Sacco’s FOSA savings Account until when he got summarily dismissed from employment. As such, the Respondent averments under paragraph 4 and 5 of the Statement of Response are without any basis.
o) Contrary to the averments under paragraph 7 of the Statement of Response, the Claimant states that the Termination letter bore no reason for termination as required by the law.
EVIDENCE
6. At the hearing the claimant stated that he recorded a witness statement on 10th February, 2020 which he relied on as his evidence in chief. He also relied on the documents filed with the claim. The respondent was his former employer and that he was employed on 1st August, 2002 and was dismissed on 25th June, 2019. The claimant further stated that he was working as the General Manager Human Resource & Administration and that his monthly salary was Kshs. 630,008/-.
7. It was his evidence that he never received any warning letter during his employment and that there were rules governing loans to staff. They were contained in the Management Terms and Conditions of Service. He further stated that he took staff loan to buy a house and furniture. He further took capital loan. The house loan was payable in 15 years at the interest rate of 12% per annum. After termination the interest was revised to 17%. He contended that the variation was not provided for in the terms and conditions of service. The loan was secured by the house as a collateral. It was further his evidence that he was serving all his loans through his salary before he was dismissed.
8. Mr. Sakwa testified that he was suspended on 3rd May, 2019 on allegations that he was not repaying his loans. He was not issued with a show cause letter and was not given a report of the investigations. It was his evidence that he was not invited to any disciplinary hearing prior to dismissal. He never attended the Board Meeting referred to in the dismissal letter. According to him, failure to repay a loan was not a reason for summary dismissal because loans have collateral or guarantors.
9. Concerning leave, it was his evidence that he had 38 pending leave days and was not paid the same when he was dismissed. He further stated that he was not issued with notice prior to dismissal. Regarding gratuity he stated that this was provided for in the terms and conditions of service and that the respondent never issued him with a certificate of service.
10. In cross examination he stated that he took the loans while in employment and used to service them prior to dismissal. The record was before the Court. It was his evidence that he was still servicing his loans and that he had the evidence of that.
11. Concerning suspension, he stated that he was notified of the reasons for suspension and that he never responded to the allegations because he was not given an opportunity to respond. He further stated that he never appealed the dismissal because he was not aware of his right of appeal. He filed the suit instead
12. The respondent called one witness, one Peter Kimotho Maina who testified that he worked for the respondent as a manager in charge of risk and compliance. He had worked for the respondent for approximately fourteen years. He recorded his witness statement on 7th November, 2024 which he adopted as his evidence in chief he also relied on the documents filed by the respondent in support of their defence to the claim.
13. In cross-examination he stated that there were rules governing taking loans. There were agreements on loan application and that he had not produced the agreements. According to him the records were kept in the HR Office of the respondent. The loan agreements had a default clause. The respondent invoked the clause. According to him the respondent sent default notices which were unanswered. The notices have not been produced before the court .
14. It was further his evidence that an employee is supposed to provide arrangements for repayment of loans upon termination. He stated that he was not aware if the claimant had punctuality issues at work and that he was not aware if the claimant was issued with a show cause letter on punctuality. He confirmed the claimant was suspended but was not aware if the claimant was issued with a notice to show cause over the investigations. It was his evidence that the claimant was not invited for a disciplinary hearing and that he was not invited to the Board meeting where his issue was discussed. He further stated that he did not have any evidence to rebut the claimant’s claim for unpaid leave. According to him, the claimant’s loans were being under-recovered.
CLAIMANT’S SUBMISSIONS
15. The claimants counsel Mr. Onyonyi submitted among others that the claimant was served with a suspension letter which referred to a Board meeting where the claimant was not present and where the claimant was accused of underpaying his FOSA Mwongozo loan issued on 3rd March, 2017. According to counsel, his client was before suspension, never accorded an opportunity to explain the alleged omission or failure to honour his obligations. Further, for the 17 years, not even once had the claimant been issued with any warning letter concerning punctuality to work or any other offence at workplace.
16. Counsel submitted that on 25th June, 2019, the claimant was issued with a summary dismissal letter which referred to a Board meeting held on 19th June, 2019 where an alleged report touching on the claimant’s suspension circumstances was discussed. The claimant never attended this meeting and the alleged report was never availed to him prior to dismissal. The same was never produced in court.
17. Regarding the summary dismissal letter, counsel submitted that the same was ambiguous and disclosed no precise reason that would warrant summary dismissal. The claimant ought to have been explained to the precise nature of the offences against him and given a chance to respond to the same before any action was taken. According to counsel, the claimant ought have been informed of the alleged defaulted SACCO loans, their relationship with his employment and given a chance to explain himself before drastic action such as summary dismissal was taken against him. In this regard, counsel relied on the case of Cooperative Bank of Kenya Limited v. Yator [2021]KECA 95 (KLR).
18. According to counsel, the claimant was never accorded a chance to defend himself against the allegations raised in both the suspension letter dated 3rd May, 2019 and the summary dismissal letter dated 25th June, 2019. No show cause letter was issued to the claimant. In this respect, counsel relied on the case of CMC Aviation Ltd v. Mohammed Noor [2015] KECA 775 (KLR).
19. Mr. Onyonyi further submitted that rules of natural justice and Employment Act dictated that the claimant must be accorded a chance to heard before being dismissed from employment and that the burden of proof in cases of summary dismissal was on the employer as was held by the Court of Appeal in the case of Pius Machafu Isindu vs. Lavington Security Guards Limited [2017] eKLR.
20. On the issue of violation and breach of claimant’s constitutional and fundamental rights and fair labour relations, counsel submitted that the respondent failed to comply with the mandatory provisions of section 41(2) of the Employment Act. The respondent therefore acted in breach of article 47 of the constitution by failing to accord the claimant a chance to be heard before summary dismissal and that reasons for summary dismissal were not related to the claimant’s employment hence the claimant was dismissed without a just cause.
21. Counsel therefore submitted that the claimant was entitled to the reliefs sought together with the costs of the suit.
22. Ms. Kagoya for the respondent on the other hand submitted on whether the claimant was entitled to the reliefs sought that the compensation for gratuity was not provided for in the Employment Act and was not mandatory. It was at the discretion of the employer. In this respect, counsel relied on the case of Bamburi Cement Limited vs. William Kilonzi [2016] eKLR. The claimant’s employment letter dated 22nd July, 2002 did not make any provision for payment of gratuity. No CBA was produced by the claimant indicating entitlement to gratuity.
23. Concerning 12 months’ salary as compensation for unfair termination, counsel submitted that the claimant in his employment as a senior member of staff obtained multiple loans from the respondent totaling to Kshs. 16,599,159/- and failed to repay the same as required. The respondent therefore suffered loss of funds. According to counsel, the claimant was issued with a suspension letter and requested to respond to the allegations contained in the letter however the claimant failed to submit any response. In absence of any explanation, the respondent had no option but to dismiss the claimant. In the circumstances, counsel submitted that if an award for compensation was to be made it be three months’ salary.
24. Concerning salary in lieu of notice, counsel submitted that the claimant’s letter of employment did not specify the notice period for termination. The claim for salary in lieu of notice therefore ought to be dismissed. On the issue of reinstatement, counsel submitted that the claimant is not entitled to the same and relied on the judgment of Dr. Gakeri J in the case of Joseph Kioko Musyoki vs. Afya Cooperative SACCO.
25. Concerning permanent injunction, counsel submitted that the claimant came to court with unclean hands and is therefore not entitled to injunction. The claimant’s action of taking multiple loans and failing to repay the same occasioned the respondent injustice and was entitled to recover the same. Concerning general damages, counsel submitted that the claimant did not adduce any evidence to demonstrate that the respondent had ulterior motives in terminating his employment. The respondent therefore prayed that the claimant’s case be dismissed with costs.
26. The Court notes that Counsel for the respondent did not address the issue of the reason for the termination of the claimant’s service and whether in carrying out the termination, the respondent took the claimant through the processes provided for in the Employment Act.
DETERMINATION
27. I have reviewed and considered the pleadings and submissions by the Claimant’s and Respondent’s counsel in support of the case as well as authorities relied on and became of the view that the gist of the claim before me is over the validity or justification for the termination of the claimant’s service; second whether in carrying out the termination, the respondent followed a fair procedure in accordance with the Employment Act. If the court were to reach a finding that the respondent had no valid or justifiable reason for terminating the claimant’s service and that the termination was not carried out through a fair procedure, what would be the appropriate remedies to the claimant.
28. The facts leading to the dismissal of the claimant have been set by the parties herein in their evidence in chief and subsequent cross-examination. The claimant herein was on 3rd May, 2019 suspended from duty on allegation that he took a Fosa Mwongozo loan which was initially not being repaid and that the repayment only started when the matter was raised by the Board members. The letter gave the details of the loan. The letter went further and accused the claimant thus:
“Owing to your position, the Board considered this omission and failure to honour your loan obligation as a serious act of misconduct and suspended you from duty from the date of this letter as provided in the Terms and Conditions of Service Discipline Part I B (i) (ii) & (iv).”
29. The suspension letter prohibited the claimant from attending duty but allowed him his salary until the investigations were completed and further that the outcome of the investigations would be communicated to him in due course. The Court notes that the suspension letter did not call upon the claimant to respond to the allegations against him and give his side of the story.
30. By a letter dated 25th June, 2019, the respondent summarily dismissed the claimant pursuant to a Board meeting held on 19th June, 2019 touching on the circumstances under which the claimant was suspended from duty vide a letter dated 3/5/2019. The letter made reference to a report which showed the claimant was underpaying his loans as detailed in the letter. The letter concluded by informing the claimant that his inability to service the loans as expected was attributed to pecuniary embarrassment and or concealment. The claimant was therefore dismissed on account of dishonesty, untrustworthiness, infamous and gross misconduct leading to loss of funds.
31. At the hearing, it was common ground and it was conceded by the respondent witness that the claimant was never issued with a show cause letter and that no disciplinary hearing was conducted and further that the claimant never attended the Board meetings where the decision to suspend and eventually summarily dismiss him was discussed.
32. Going by the several decisions of this Court and the Court of Appeal, it is now almost settled that for a termination to pass fairness test there must be both substantive and procedural fairness. For example see the case Janet Nyandiko vs Kenya Commercial Bank Limited (2017) eKLR among others. The Court of Appeal in the case of Pius Machafu Isindu v Lavington Security Guards Limited [2017] eKLR 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. A mandatory and elaborate process is then set up under section 41 requiring notification and hearing before termination.”
33. Under section 41 of the Employment Act, it is a requirement that before an employer dismisses or terminates an employee’s contract, the employee must be accorded an opportunity to respond to the accusations, the basis upon which the dismissal or termination was being considered. This was clearly set out in the case of Janet Nyandiko vs. Kenya Commercial Bank Limited [2017] eKLR where the court stated:
“Section 41 of the Act, enjoins the employer in mandatory terms, before terminating the employment of an employee on grounds of misconduct, poor performance or physical incapacity to explain to the employee in a language that the employee understands the reasons for which the employer is considering to terminate the employee’s employment with them. The employer is also enjoined to ensure that the employee receives the said reasons in the presence of a fellow employee or a shop floor union representative of own choice; and to hear and consider any representations which the employee may advance in response to allegations leveled against him by the employer.”
34. The respondent admitted that it never took the claimant through any disciplinary hearing to hear any representation the claimant may have had in response to the accusations against him. The substance of the accusation was that the claimant took some loans that he was not servicing. The respondent did not allege that the loans were obtained irregularly. It only had issue with their servicing of the loans. May be the claimant had a reasonable explanation. May be not. But now that he was never given an opportunity to give his side of the story, the Court is unable to appreciate the validity and justification for the reasons for termination.
35. It is noteworthy that during the hearing, the claimant stated in his defence to the accusations that the loans were guaranteed and that one of them was secured by his matrimonial home being NGONG/NGONG/38885. In the worst case scenario therefore the property could be sold by the respondent to recover part or all of the outstanding loan.
36. The Court therefore is not satisfied that the respondent acted unreasonably in dismissing the claimant on account of his outstanding loans and without giving him a hearing on whether he had an offer or not how the loans can be regularised. In the case of British Leyland UK Ltd v. Swift [1981]IRLR 91, Lord Denning MR observed thus:
The correct test is: Was it reasonable for the employers to dismiss him? If no reasonable employer would have dismissed him, then the dismissal was unfair, but if a reasonable employer might reasonably have dismissed him, the dismissal was fair. It must be remembered that in all these cases there is a band of reasonableness, within which an employer might reasonably take one view: another quite reasonably take a different view. One would quite reasonably dismiss the man. The other quite reasonably keep him on. Both views may be quite reasonable. If it was quite reasonable to dismiss him, then the dismissal must be upheld as fair even though some other employers may not have dismissed him”
37. It is the Court’s view that the decision to summarily dismiss the claimant was not justifiable and was disproportionate to the allegations against him. Concerning the principle of proportionality, this court in the case of Leon Yang Wang vs. Equity Bank [2023] eKLR observed that:
Reason for termination of employment need not be strictly proved but must however be reasonable and proportional in the circumstances. Termination of employment more often than not impacts on the life of an employee hence the decision to bring a contract of employment to an end ought to be governed by reasonableness and proportionality….In the English case of R v Home Secretary; Ex parte Daly [2001] 2 AC 532. It was stated as follows concerning the proportionality test: "leads to a “greater intensity of review” than the traditional grounds. What this means in practice is that consideration of the substantive merits of a decision play a much greater role. Proportionality invites the court to evaluate the merits of the decision; first, proportionality may require the reviewing court to assess the balance which the decision maker has struck, not merely whether it is within the range of rational or reasonable decisions; secondly, the proportionality test may go further than the traditional grounds of review inasmuch as it may require attention to be directed to the relative weight accorded to interests and considerations…”
38. To conclude this question, the Court finds and holds that the respondent acted unreasonably and that the reason for termination of the claimant’s employment did not meet the threshold set under section 43 of the Employment Act hence unfair within the meaning of section 45.
39. The next issue for consideration by the Court is the remedy the claimant is entitled to as a result of the unfair termination. The claimant prayed for among others declaration and an order for compensation for violation of his constitutional rights.
40. It has been held in several cases that a claim based on violation of constitutional rights ought to clearly show which rights have been or are threatened with violation, the article of the constitution violated or threatened with violation and the manner in which it is violated. The Courts have further stated that not all violations meet the constitutional threshold and that if the breach complained of is adequately addressed by a statute then the constitution should not be invoked. In the case of Anarita Karimi Njeri v AG [1979] KLR 154 the Court stated thus:
“…we would, however, again stress that if a person is seeking redress from the High Court on a matter which involves a reference to the Constitution, it is important (if only to ensure that justice is done to his case) that he should set out with a reasonable degree of precision that of which he complains, the provisions said to be infringed, and the manner in which they are alleged to be infringed
41. Further in the case of Sports and Recreation Commission v Sagittarius Wrestling Club and Anor [2022] KEHC 13633 (KLR) per Ibrahim JA (as he then was) stated
“…Courts will not normally consider as a constitutional question unless the existence of a remedy depends upon it; if a remedy is available to an applicant under some other legislative provision or on some other basis, whether legal or factual, a court will usually decline to determine whether there has been, in addition, a breach of the Declaration of Rights..”
42. I have considered the claim herein and the issues involved and became of the view that they are ordinary employment issues which are adequately addressed by the Employment Act. The claim for violation of constitutional rights is therefore found without merit and is hereby rejected.
43. The Court reached a finding that the termination of the claimant’s service was unfair. The quantum of compensation allowed by the Act is capped at 12 months’ salary. The claimant was employed by the responded in 2002 and left in June, 2019 when he was summarily dismissed. The claimant therefore worked for the respondent for approximately sixteen years. Apart from the issue of his loans, there was no allegation concerning the claimants performance and discipline as a worker.
44. Further although not formally denied, the claimant did not dispute that he took loans from the respondent and that they have fallen in arrears. It was further his evidence that his guarantors to the loan were being deducted the outstanding loan. Considering these factors an award of eight months’ salary would be reasonable in the circumstances. The claimant is further entitled to one month’s salary in lieu of notice in accordance with his contract of service and section 35 of the Employment Act.
45. The claimant made a claim for accrued leave not taken at the time of dismissal. The respondent did not rebut this claim by providing the claimant’s employment records showing leave taken and going by the requirements of section 74 of the Employment Act concerning the keeping of employment records, the court will allow this claim as prayed.
46. Concerning the claim for injunctive orders over NGONG/NGONG/38885, the court will decline to make such order in the interest of equity. The claimant does not deny borrowing money from the respondent to buy the subject property. He has further indicated his willingness to continue servicing the loan. It would therefore be inequitable to bar the respondent from invoking loan recovery mechanisms including selling the property if necessary to recover what is owed to it.
47. Concerning repayment of the loan at prevailing staff rate, this the Court will grant the order since no loss would be incurred by the responded if the order is made. The claimant as an employee could have repaid the loan at staff rate for as long as he remained in employment. His termination has been impugned by the Court hence he ought to continue repaying the loan at prevailing staff rate.
48. The order for reinstatement will not be made in view of the time that has lapsed since the termination of the claimant.
49. In Conclusion the Court finds and holds as follows:
i. The respondent did not have valid and justifiable reasons for terminating the claimant’s employment and further the termination was not carried out through a fair procedure hence unfair within the meaning of section 45 of the Employment Act.
ii. The claimant is hereby awarded as against the respondent the following:
a) One month’s salary in lieu of notice …..Kshs. 630,030/-
b) 8 months’ salary compensation…..Kshs. 5,040,240
c) Accrued leave not taken (38 days)……Kshs. 553,128/-
Total Kshs. 6,223,398.
d) Costs of the suit.
e) Items (a), (b) and (c) shall attract taxes and statutory deductions
50. It is so ordered.
Dated at Nairobi this ……… day of…………. 2025
Delivered virtually this……… day of ………….2025
Abuodha Nelson Jorum
Presiding Judge-Appeals Division