The appeal herein arises from the judgment delivered on 21 September 2023 in Mombasa MCELRC No.426 of 2019. The appellant is seeking that the judgment be set aside and the claim be dismissed with costs.
The background of the appeal is a claim filed by the respondent on the basis that he was employed by the appellants on 6 December 2007 as the receptionist/cashier through a verbal contract. The wage paid was Ksh.7, 000 which was later increased to Ksh.8, 900 per month. The claim was that there were no house allowances paid and for 10 years, there were underpayments. On 24 January 2018, the appellants directed the respondent to explain what had happened in rooms 103, 104 and 28 which according to them had been sold but the sales were not captured. She explained that the rooms had been booked earlier by colleagues, but for rooms 103 and 28, she was asked to transfer the money for morning arrival since the guest had been delayed. This was followed by summary dismissal on 6 February 2018 which matter was reported to the union. There was no agreement and the respondent filed suit and claimed the following;
- Notice pay Ksh.22,892.90;
- Underpayment for 2011 Ksh.77,293.20;
- Underpayment for 2012 Ksh.98,361.20;
- Underpayments for 2013 Ksh.247,784.30;
- Underpayments for 2015 Ksh.297,667.20;
- Underpayments 2016 Ksh.95,375.20;
- Underpayments 2017 Ksh.27,990;
- Arrears for days worked from 1st to 24 January 2018;
- 12 months compensation for unfair termination of employment Ksh.247,740;
- Certificate of services;
- Costs of the suit.
In response, the appellants admitted that they employed the respondent on 6 December 2007. The house allowance was included in the salary paid and paid a wage accepted by him. There were no underpayments as alleged. Following CCTV camera records, they asked the respondent to explain that the rooms were occupied twice in one night by different customers but the sales were only captured on booking. The respondent admitted in the presence of the hotel manager that he had failed to capture the bookings. This revealed that it was not the first time this had been done leading to summary dismissal. Meetings were held with the Union over the matter with a conclusion that there was no case of unfair termination of employment.
The trial court delivered judgment and held that there was an unfair termination of employment and made the following awards;
- Notice pay ksh.22,895;
- Arrears of days worked Ksh.13,995;
- Underpayments Ksh.308,236;
- Certificate of service;
- Costs and interests.
Aggrieved, the appellants filed this appeal. Grounds of appeal are that the learned magistrate erred in law and fact by failing to consider that the respondent admitted to stealing from the appellants and the recommendation from the trade union. The award of 10 months’ salary in compensation was excessive and without justification and the award of underpayment and house allowance were not supported by any evidence. There was no consideration of the entire evidence or the written submissions filed.
Both parties attended and agreed to address the appeal by way of written submissions.
The appellant submitted that the respondent allocated rooms 103, 104 and 28 twice and failed to disclose the funds. The incidents were captured on CCTV camera. He was invited to a disciplinary hearing on 24 January 2018 where he tendered an apology. The matter was reported to the union which agreed there was misconduct. The trial court erred in finding that there was unfair termination of employment whereas the appellants had demonstrated that there were justified grounds leading to summary dismissal. The award of notice pay and 10 months compensation were not justified.
The appellants submitted that the alleged underpayments were without proof. The wage paid was through mutual agreement. The respondent was not compelled to accept the wage. In the case of Peter Ngunjiri Kariuki v Board of Management Magomano Secondary School [2022] eKLR, the court held that the wage paid to the employee was agreed upon and hence, in this case, the respondent cannot justify a claim of alleged underpayments. The appeal should be allowed with costs.
The respondent submitted that there was termination of employment without due process as required under Section 41 of the Employment Act. In the case of Wanyera v Central Isiolo Investment Ltd Appeal No. E002 of 2023 the court held that there must be valid reasons leading to termination of employment and also, there must be due process. The respondent’s employment was terminated on 24 January 2018 without any due process. Despite the union seeking to have a meeting to address the matter, the appellants failed to comply. This resulted in unfair termination of employment contrary to Section 45 of the Employment Act. There were no records filed to prove fraud, any OB from the police for criminal conduct, or the alleged CCTV camera footage.
The respondent submitted that there was underpayment of wages contrary to the Wage Orders. The payment of Ksh.7, 000 is below the minimum threshold and these should be re-assessed and awarded as claimed.
The respondent further submitted that there can be no mutual agreement for an underpayment of an employee. Such is contrary to the Wage Guidelines and Wage Orders published by the Minister.
Determination
As this is a first appeal, the mandate of the court is a broad one and involves a fresh and exhaustive examination, re-evaluation and re-analysis of the entire record to draw inferences and make an independent conclusion based on the record. However, regard must be that the trial court had the opportunity of taking viva voce evidence in which case, there was the added advantage of hearing and seeing the witnesses and so would have been better placed to judge their credibility and make a more informed judgment on the veracity of the opposing cases.
What can be discerned from the Memorandum of Appeal are two main issues, whether the findings that there was unfair termination of employment proper;
Whether the awards made were justified.
Through notice dated 24 January 2018, the appellants dismissed the respondent from his employment on the grounds of gross misconduct. The case was that there were discrepancies in the room bookings without the respondent giving full accounts for the same.
The respondent denied the accusations made against him and that the bookings had been made by a colleague. There were no double bookings as alleged.
An employer is allowed to dismiss the employee summarily under the provisions of Section 44(4) of the Employment Act. Summary dismissal is allowed with less notice under Section 44(4) (1) of the Act;
(1) Summary dismissal shall take place when an employer terminates the employment of an employee without notice or with less notice than that to which the employee is entitled by any statutory provision or contractual term.
However, the employee must be protected under the provisions of Section 41(2) of the Employment Act. The employee must be allowed to attend and make his representations in the presence of another employee however short the notice. In the case of Gituamba Stones Limited v Omondi (Employment and Labour Relations Appeal E150 of 2021) [2023] KEELRC the court held that before termination of employment, the employer must secure the rights of the employee through hearing and allowing the employee to defend himself.
In the case of Mwangea & 3 others v Kenya Ports Authority (Cause E073 of 2022) [2023] KEELRC, the court held that;
The bottom line is the mandatory requirements of Section 41 of the Act. Even in a case of gross misconduct which justified summary dismissal, under Section 41(2) of the Act, the claimants were entitled to notice after their suspension to allow them to make their representations. Following investigations from 15 November 2021 to 6 and 7 July 2022, the outcome of such process ought to have coalesced through a notice to show cause requiring the claimants to respond to given matters.
In this case, the appellants issued the respondent notice to attend and address the noted misconduct. The explanations given were found unsatisfactory. The respondent was allowed to file an appeal and in response, the appellants noted that;
In your letter, you have not explained anything forgetting that on 24th January 2018 in Metric Inn hall at about 6:00 pm in the presence of Mr Steve Rachuonyo the manager, myself Ms. Suzanne Ndung’u you openly accepted your mistake and asked for an apology.
Your change of language and attitude has driven away all the trust that had been based on you as an employee.
Analysis has been done on your file and it has been gathered that this is not the first incident of the same nature….
The respondent has not protested these responses. The record is that he was invited for a hearing which was found unsatisfactory. His conduct was noted to have had a history. This was not the first incident.
Fundamentally, the respondent was employed as a receptionist/cashier. Certain positions attract a higher level of integrity particularly in finance. Once trust is lost, it I difficult to reclaim.
This being summary dismissal, the due process under Section 44 of the Employment Act was addressed.
The award of notice pay and compensation was in error.
On the claims for underpayment, the appellant’s case is that the wage paid was by mutual agreement. The respondent accepted the wages paid and did not protect them over the years. However, an employee cannot consent to an illegality. The Wage Orders issued by the Minister form the minimum threshold. Any payment of wages below the minimum, such accrues in underpayment as held in Charles Nyaringo Rianga v Hatari Security Guards Ltd [2019] KEELRC 427 (KLR).
In this case, the respondent tabulated the underpayments from the year 2011.
A receptionist/cashier working in Mombasa in the year 2011 had a minimum wage of Ksh.11, 684 with the benefit of a 15% house allowance of Ksh.1, 752.60. The total gross wage of Ksh.13, 436.60 per month less Ksh.7, 000 total underpayment is Ksh.77, 239.20.
This is properly tabulated in the Memorandum of claim for 12 months at Ksh.77, 239.20
The learned magistrate in analyzing the underpayments held that these can only go back by 3 years under the provisions of Section 90 of the Employment Act.
Previously, I have taken the view that where employment is continuous with employment benefits accruing to the employee, the employer is obliged to pay. At the end of employment, such accrued benefits and the right to an underpayment should form a good basis for a claim. However, I am bound by the Court of Appeal findings in the matter in the case of The German School Society & another v Ohany & another (Civil Appeal 325 & 342 of 2018 (Consolidated)) [2023] KECA, on the issue of underpayment of wages where the court held that employment claims crystallized upon the termination of employment since the employee would not have moved the court from time to time during the pendency of her employment because she hoped that the appellant would make good what she was entitled to upon the contract coming to an end. However, underpayments are in their nature continuing injuries which under the provisions of Section 90 of the Employment Act should be addressed within 12 months. The court held that;
Normally, a belated service-related claim will be rejected on the grounds of delay and laches or limitation. One of the exceptions to the said rule is cases relating to a continuing wrong. Where a service-related claim is based on a continuing wrong, relief can be granted even if there is a long delay in seeking remedy, with reference to the date on which the continuing wrong commenced, if such continuing wrong creates a continuing source of injury. Borrowing from the excerpts reproduced above and considering that the respondent continued to work under the same circumstances, we find and hold that the breach complained of was continuing, capable of giving rise to a legal injury which assumes the nature of a continuing wrong. It follows that the appellant’s argument that the claims were time-barred fails. On the contrary, the said claims fall within the ambit of a continuing wrongs contemplated under section 90.
In this case, the learned magistrate addressed these claims for underpayments with an award of Ksh.308, 236 for 3 years. In the context of Section 90, the underpayments awarded should only apply 12 months as a continuing injury. In the last year of service, 2017 the underpayments are Ksh.27,990;
For days worked, this is a right under Sections 17, 18 and 19 of the Employment Act. For time served, the respondent should have received the due wages. The reasons leading to termination of employment addressed, for work done, the wage is due. Section 18(4) of the Employment Act requires that;
(4) Where an employee is summarily dismissed for a lawful cause, the employee shall, on dismissal be paid all moneys, allowances and benefits due to him up to the date of his dismissal.
There is no evidence of payment for days worked in January 2018. Where such a record existed, the appellants should have filed it under Section 10(6) and (7) of the Employment Act. This record would have confirmed the correct status.
In January 2018, the wage due was a gross of Ksh.22, 895.86 and for 24 days, the due wage unpaid is Ksh.18, 317.
A certificate of service should be issued at the end of employment under Section 51 of the Employment Act.
On costs, the appeal partially succeed. The lower court judgment should be reviewed. In this case, each party should meet its costs for the appeal and lower court.
Accordingly, the judgment in Mombasa MCELRC No.426 of 2019 is set aside and the following orders are issued;
- Underpayments 2017 Ksh.27,990;
- Unpaid wages Ksh.22,895.86;
- Certificate of service be issued;
- Each party is to pay its costs.
Delivered in open court at Mombasa on this 17 day of October 2024.
M. MBARŨ
JUDGE