1. The Court is called upon to determine the questions:
(i) Whether Arichem Ltd (the Respondent) unfairly terminated the employment of Nicholas Mwenda Mutuaruchiu (the Claimant)?
(ii) Whether the Respondent was in breach of contract?
(iii) Appropriate remedies.
2. The Cause was heard on 10 March 2025. The Claimant and the Respondent’s Managing Director testified.
3. The Claimant filed his submissions on 18 March 2025, and the Respondent filed his submissions on 16 April 2025.
4. The Court has considered the pleadings, evidence and submissions.
Unfair termination of employment
Procedural fairness
5. Sections 35(1) and 41 of the Employment Act, 2007 set out the steps an employer desirous of terminating an employment contract should follow.
6. The Respondent notified the Claimant of the termination of his employment without notice through a letter dated 9 September 2020. The letter referred to a meeting held the previous day.
7. The import of section 35(1) of the Employment Act, 2007 is that an employer should give an employee at least 28 days written notice of intention to terminate an employment contract. The notice is generally called a show cause notice.
8. Contextualised against section 41 of the Employment Act, 2007, the Respondent ought to have informed the Claimant of the reasons for the contemplated decision and called upon him to make representations.
9. The Respondent did not demonstrate that it gave the notice with reasons, seeking explanations from the Claimant.
10. However, the Employment Act contemplates termination of employment without the requisite notice.
11. In such cases, section 41(2) of the Act requires an employer to hold an oral or physical hearing. During such a hearing, an employee is entitled to be accompanied by a colleague of choice.
12. The Respondent did not demonstrate that it offered the Claimant such a hearing.
Substantive fairness
13. Sections 43 and 45 of the Employment Act require the employer to prove valid and fair reasons for terminating an employment contract.
14. The reasons given by the Respondent for terminating the Claimant’s employment were conspiracy to defraud and steal castor oil from the Respondent.
15. The Respondent’s Managing Director testified that the Claimant’s colleague had alerted him that the Claimant had requested him to carry away drums with remnants of castor oil from the weighing room, which the Claimant would later borrow.
16. However, the drums were taken by another employee who confirmed that the drums had remnants of castor oil after the Respondent found a discrepancy in the amount of castor oil in the stores.
17. The Claimant’s two colleagues who were participants in the events were not called to testify. The failure to call them to testify was not explained.
18. The Respondent’s witness testified that the Claimant admitted to the allegations. No record of such admission was placed before the Court.
19. Regrettably, the Court finds that the Respondent did not discharge the burden placed on it by sections 43 and 45 of the Employment Act, 2007.
Compensation and pay in lieu of notice
20. The record indicates that the Claimant had a bad disciplinary record. He was paid terminal dues by the Respondent. The Claimant served the Respondent for about 6 years.
21. Considering these factors, the Court is of the view that the equivalent of 1 month's gross wages as compensation would be appropriate (gross wage was Kshs 85,000/-).
22. The Court will also allow the equivalent of 1 month's basic salary as pay in lieu of notice (basic salary was Kshs 64,000/-).
Breach of contract
Service gratuity
23. The Claimant sought Kshs 297,500/- as service gratuity.
24. The Claimant’s contract did not provide for payment of service gratuity.
25. If by service gratuity the Claimant meant service pay as envisaged under section 35(5) of the Employment Act, 2007, he is not entitled to the same by dint of section 35(6)(d) of the Act because he was contributing to the National Social Security Fund.
Wages for September 2020
26. The Claimant’s employment was terminated with effect from 9 September 2020. The Claimant was entitled as of right to the earned wages.
27. The schedule of final dues paid to the Claimant and produced in Court by the Respondent did not include the earned wages, and the Court will allow this head of the claim in the sum of Kshs 25,500/-.
Conclusion and Orders
28. The Court finds and declares that the termination of the Claimant’s employment was unfair, and that the Respondent was in breach of contract.
29. The Claimant is awarded:
(i) Compensation Kshs 85,000/-
(ii) Pay in lieu of notice Kshs 64,000/-
(iii) September 2020 wages Kshs 25,500/-
TOTAL Kshs 174,500/-
30. The Respondent conducted a hearing, but it failed the legal standard. The Claimant acted in person during the hearing. Each party to bear its own costs.
(i) Whether Arichem Ltd (the Respondent) unfairly terminated the employment of Nicholas Mwenda Mutuaruchiu (the Claimant)?
(ii) Whether the Respondent was in breach of contract?
(iii) Appropriate remedies.
2. The Cause was heard on 10 March 2025. The Claimant and the Respondent’s Managing Director testified.
3. The Claimant filed his submissions on 18 March 2025, and the Respondent filed his submissions on 16 April 2025.
4. The Court has considered the pleadings, evidence and submissions.
Unfair termination of employment
Procedural fairness
5. Sections 35(1) and 41 of the Employment Act, 2007 set out the steps an employer desirous of terminating an employment contract should follow.
6. The Respondent notified the Claimant of the termination of his employment without notice through a letter dated 9 September 2020. The letter referred to a meeting held the previous day.
7. The import of section 35(1) of the Employment Act, 2007 is that an employer should give an employee at least 28 days written notice of intention to terminate an employment contract. The notice is generally called a show cause notice.
8. Contextualised against section 41 of the Employment Act, 2007, the Respondent ought to have informed the Claimant of the reasons for the contemplated decision and called upon him to make representations.
9. The Respondent did not demonstrate that it gave the notice with reasons, seeking explanations from the Claimant.
10. However, the Employment Act contemplates termination of employment without the requisite notice.
11. In such cases, section 41(2) of the Act requires an employer to hold an oral or physical hearing. During such a hearing, an employee is entitled to be accompanied by a colleague of choice.
12. The Respondent did not demonstrate that it offered the Claimant such a hearing.
Substantive fairness
13. Sections 43 and 45 of the Employment Act require the employer to prove valid and fair reasons for terminating an employment contract.
14. The reasons given by the Respondent for terminating the Claimant’s employment were conspiracy to defraud and steal castor oil from the Respondent.
15. The Respondent’s Managing Director testified that the Claimant’s colleague had alerted him that the Claimant had requested him to carry away drums with remnants of castor oil from the weighing room, which the Claimant would later borrow.
16. However, the drums were taken by another employee who confirmed that the drums had remnants of castor oil after the Respondent found a discrepancy in the amount of castor oil in the stores.
17. The Claimant’s two colleagues who were participants in the events were not called to testify. The failure to call them to testify was not explained.
18. The Respondent’s witness testified that the Claimant admitted to the allegations. No record of such admission was placed before the Court.
19. Regrettably, the Court finds that the Respondent did not discharge the burden placed on it by sections 43 and 45 of the Employment Act, 2007.
Compensation and pay in lieu of notice
20. The record indicates that the Claimant had a bad disciplinary record. He was paid terminal dues by the Respondent. The Claimant served the Respondent for about 6 years.
21. Considering these factors, the Court is of the view that the equivalent of 1 month's gross wages as compensation would be appropriate (gross wage was Kshs 85,000/-).
22. The Court will also allow the equivalent of 1 month's basic salary as pay in lieu of notice (basic salary was Kshs 64,000/-).
Breach of contract
Service gratuity
23. The Claimant sought Kshs 297,500/- as service gratuity.
24. The Claimant’s contract did not provide for payment of service gratuity.
25. If by service gratuity the Claimant meant service pay as envisaged under section 35(5) of the Employment Act, 2007, he is not entitled to the same by dint of section 35(6)(d) of the Act because he was contributing to the National Social Security Fund.
Wages for September 2020
26. The Claimant’s employment was terminated with effect from 9 September 2020. The Claimant was entitled as of right to the earned wages.
27. The schedule of final dues paid to the Claimant and produced in Court by the Respondent did not include the earned wages, and the Court will allow this head of the claim in the sum of Kshs 25,500/-.
Conclusion and Orders
28. The Court finds and declares that the termination of the Claimant’s employment was unfair, and that the Respondent was in breach of contract.
29. The Claimant is awarded:
(i) Compensation Kshs 85,000/-
(ii) Pay in lieu of notice Kshs 64,000/-
(iii) September 2020 wages Kshs 25,500/-
TOTAL Kshs 174,500/-
30. The Respondent conducted a hearing, but it failed the legal standard. The Claimant acted in person during the hearing. Each party to bear its own costs.