1. The Claimant filed this claim seeking judgment against the Respondent for:
a) A declaration that the Claimant’s services were wrongfully, unlawfully and/or unfairly terminated;
b) Compensation for wrongful, unfair termination;
c) Severance pay;
d) General damages for wrongful, unfair termination
e) Overtime worked
f) Certificate of Service
g) Costs of this cause and interest.
2. The Claimant avers that on the 1st December, 2009 he was offered employment by the Respondent as a Branch Manager of Phoenix of East Africa Assurance Company Limited currently known as “Mua Insurance (Kenya) Limited” to begin as at 21st December, 2009 at a gross salary of Kshs. 55,000/=.
3. The Claimant further avers that he conducted his duties with loyalty, diligence, dedication and commitment without misdemeanor up until the 7th October, 2017 when the Respondent was unfairly and unprocedurally terminated from employment without payment of his terminal dues.
4. The Claimant claims that his salary was increased yearly at and at the time of termination of his services with the Respondent, the Claimant was earning a monthly salary of Kshs. 88,539/=.
5. The Claimant further claims that he was wrongfully, unprocedurally terminated by the Respondent on the grounds that the operations at the Branch were mismanaged leading to loss of money and certificates which grounds he claims were false.
6. The Claimant further avers that the Respondent did not substantiate the said allegation of mismanagement or that the said money and/or certificates got lost in the hands of the Claimant or under his watch, without reporting or taking any action.
7. The Claimant alleges that the Respondent failed to pay his full terminal dues to wit:
a) Compensation for wrongful termination
b) Severance pay
c) General damages for wrongful, unfair termination
d) Overtime worked
e) Certificate of Service
8. Further the Claimant avers that the Respondent unprocedurally terminated his employment without following laid down procedure as he alleged the termination was not clear whether he was terminated under Section 35 or summarily dismissed under Section 44 of the Employment Act, 2007.
9. In addition, the Claimant avers that the Respondent violated Sections 41(1) of the Employment Act, 2007 as it never explained to him the reason for the intended dismissal and did not give him a chance to dispute the correctness of the accusation before the dismissal.
10. The Claimant further claimed that the Respondent did not act in accordance with justice and it failed to prove that reason for termination was valid contrary to Section 45 (2)(a) and 45(b) of the Employment Act No. 11 of 2007.
11. The Claimant in summary contends that the termination was wrongful, unfair, unlawful and and/or unprocedural adducing the following grounds:
a) The Respondent did not give the Claimant termination Notice as required under Section 35 1(b) of the Employment Act;
b) The Respondent terminated the Claimant’s employment without due procedure against Section 41 & 45 of the Employment Act;
c) The Claimant’s termination was without proof that the reason for the termination was valid provided under Section 43 of the Employment Act;
d) The Respondent did not act in accordance with justice and equity as provided under Section 45(4)(b) of the Employment Act;
e) The Respondent failed to pay the Claimant his 12 months wages as compensation for unfair termination a provided under Section 49(1)(c) of the Employment Act.
f) The Respondent failed to pay the Claimant his severance pay for the years worked.
g) The Respondent breached the contract of employment and failed to pay the Claimant General damages for loss of employment;
h) The Respondent failed to give the Claimant a Certificate of Service contrary to Section 51 of the Employment Act.
Respondent’s Case
12. On the other hand, the Respondent avers that the Claimant was employed as the Branch Manager for the Respondent in Eldoret earning a salary of Kshs. 55,000/= whose duties included carrying out management functions such as ensuring proper administration of the branch and reporting of the branch performance to the Head office in Nairobi.
13. The Respondent stated that the claimant’s employment contained certain benefits namely leave days up to 26 days with annual leave allowance of Kshs. 16,264/=, employer pension scheme, staff personal accident scheme, staff medical scheme, group life cover and sick leave of 60 days with full pay.
14. The Respondent further claims that the Claimant’s employment was terminated on account of mismanagement of the branch and poor performance particularly on the mismanaging operations of the branch leading to loss of money and certificates, failure to implement underwriting guidelines which required the claimant to support branch transactions to the head office within 3 days, failure to conclude the exercise of accounting for certificates despite being given additional time by the Respondent and failure to properly manage the operations of the branch despite being given additional time by the Respondent.
15. The Respondent further claims that the Claimant was given an opportunity to account for the lost certificates on the 25th May, 2017 to 8th June, 2017 but failed which forced the Respondent to issue numerous reminders to the claimant to account for the same and further the respondent issued the claimant an action letter dated 21st June 2017, informing him of an oncoming audit being carried out on 4th and 5th July 2017 at the expense of the Respondent.
16. Further, it was averred that the Branch collected premiums of Kshs.60,000/= and issued receipts in respect of the premiums however failed to remit to the Respondent’s account.
17. The Respondent further stated that the Claimant’s basic salary was increased to Kshs. 86,539/= exclusive of transport allowance which was to be issued on occasions when necessary.
18. The Respondent further averred that that the Claimant was fully paid his terminal benefits after termination of his employment with the Respondent.
19. That the Claimant’s termination was lawful, fair and in accordance with laid down procedures under Employment Act, 2007 and the Constitution of Kenya 2010 on the account that:
• On the 6th October, 2017 a Disciplinary Hearing was held at the Respondent head offices in Nairobi.
• The Claimant was accorded an opportunity to present his case at the Disciplinary Committee Hearing.
• The Claimant had prior notice of the reasons for his termination based on the audit report conducted on 4th and 5th July, 2017.
• The Claimant chose to represent himself during the Disciplinary Committee Hearing.
Claimant’s Submissions
20. On the issue of whether the Claimant’s termination was wrongful, unlawful, unfair and/or unprocedural, the Claimant submitted that Sections 35, 41 and 45 of the Employment Act, 2007 provide to wit:
• The notice and letter of dismissal or termination must clearly state the reason for termination in the language that the employee understands;
• The employee must be served with a notice to show cause letter to enable him respond to the allegation levelled against him.
• The reasons for termination must be explained to the employee in the language he understands in the presence of another employee, unionist or a shop steward.
• The employee must be invited for disciplinary hearing and given an opportunity to attend with another employee, unionist and/or lawyer of his choice.
21. The Claimant submitted on the issue of validity of the reason for termination, that the Respondent’s reason for poor performance and mismanagement of the Branch was contradictory and invalid as the Claimant had worked for eight (8) years without any complaint and/or warning from the Respondent. Further on the reason of loss of Certificates, the Claimant submitted that the loss of the certificates was attributed to another Employee by the name Edward Mui, an underwriter, which issue was even brought to the Respondent’s attention by the Claimant.
22. In a nutshell, the Claimant submits that the Respondent failed to prove its reason for termination and relied on the cases of Jon Mukaya Maiko v Security (Mombasa) Limited (2018) eKLR; Issac W. Wekesa v Kenya Forest Services (2019) eKLR; and Ambani Ronald v Uma Nuthwani Kishur Mandaliya Manoj Shah (The Trustees of Tumaini Home) & Another (2016) eKLR where the Court held that for an employer to terminate an employee’s services on account of poor performance there should be proper performance measurements in place such as performance appraisal.
23. On the test for reasons for termination, the Claimant submitted that the reasons for termination must be one that any reasonable employer would have considered to terminate the services of that employee and in this case, no reasonable employer can validly terminate the services of its Branch manager simply because of fraud occasioned by another employee where no collusion was proved.
24. The Claimant relied on the case of Evans Kamadi Misango v Barclays Bank of Kenya Limited (2015) eKLR where the Court held inter alia that in determining whether the reason for the termination was valid, the Court must make an enquiry on whether a reasonable employer could have decided to dismiss on the same facts.
25. On the issue of whether the Respondent followed due procedure during termination, the Claimant submitted that the respondent never served the Claimant with a Notice of termination or a Notice to Show Cause letter as lawfully required and therefore the Claimant was not given an opportunity to defend himself on the charges. The Claimant relied on the case of Kenya Revenue authority v Reuwel Waithaka & 2 others (2019) eKLR to support his supposition.
26. Further, the Claimant states that he was not subjected to a full disciplinary hearing and was only summoned to the Human resource Manager’s office and was only served with a questionnaire in the form of a disciplinary hearing which he filled in response. The claimant signed and requested the said Human resource manager to counter-sign and stamp on it which he did. The Claimant further submits that the said questionnaire could only form part of the show cause letter and not a disciplinary hearing as a Hearing requires a panel to hear and make an informed decision. On this position, the Claimant relied on the case of Mary Chemweno Kiptanui v Kenya Pipeline Company Limited (2014) eKLR where the court held inter alia: “if an employer fails to follow the mandatory provisions of Section 41 of the Employment Act, then outcome of the process is bound to be unfair.”
27. On the issue of whether the Claimant is entitled to compensation for unfair termination, the Claimant quoted Section 49(1), 45(3) of the Employment Act and submitted that it provided that any employee who has worked for an employee for a period of thirteen (13) months is entitled to compensation on account of unfair termination. He further submits that the Claimant having worked for the Respondent for a period of Eight (8) years is therefore entitled to a maximum compensation in terms of twelve (12) months’ salary to a tune of Kshs. 1,062,475.40/=.
28. On issue of whether the Claimant is entitled to general damages for unfair termination, the Claimant submitted that he was expected to retire at 60 years. Thus, the unfair dismissal diminished his reputation and employability that he could not be employed at that advanced age and he was therefore entitled to be awarded general damages. He relied on the case of Naqvi Syed Omar v Paramount Bank Limited & the Attorney General (2015) eKLR to emphasize this point.
29. Further the Claimant Counsel submitted that the Claimant was a permanent and pensionable employee and was expected to work until retirement age of 60 years, that the unfair termination inconvenienced the Claimant and therefore urged the Court to award the Claimant his exit basic salary for the remaining period of his employment of seven (7) years amounting to a total of Kshs. 6,374,840/=.
30. On the issue of whether the Claimant was issued with a certificate f service the claimant submits that the Claimant was never issued with the certificate of service and urged the Court to direct the issuance of the same as provided under section 51 of the Employment Act.
31. On costs the Claimant submitted that the Claimant is entitled to costs which should be subjected to interest at Court’s rates with effect from the date of filing this cause.
Respondent’s Submissions
32. The Respondent submitted that the Claimant’s termination was lawful and fair and the Claimant was dismissed on account of mismanagement of the branch and poor performance.
33. Further, the Respondent submitted that it was uncontroverted evidence that there were missing certificates from the branch, the branch had collected premiums worth Kshs. 60,000 and issued receipts of the premiums however failed to remit to the Respondent’s account.
34. The Respondent submitted that the duties of the Branch Manager were to oversee the running of the Branch including all the employees working in that Branch. It was also a duty to ensure that premiums collected are remitted within three days and not the underwriting manager, it was uncontroverted testimony that the Claimant failed to adhere to his duties and the same led to the loss of money and certificates at the Eldoret Branch.
35. The Respondent further submitted that it produced evidence contained in its list of documents dated 2nd July, 2019 of the risks that the respondent was exposed to without its knowledge due to the mismanagement of the Eldoret Branch by the Claimant.
36. Further according to the Claimant’s letter of appointment, the Respondent and the Claimant could terminate the contract by giving three (3) months’ pay in lieu of notice. The Claimant confirmed that he was given Kshs. 259,618/= being his three (3) months’ pay in lieu of notice. Further, he was paid Kshs. 79,883/= being 24 days leave and that he was entitled to Kshs. 23,602/= being pay for the days worked in October.
37. Further, the Claimant was issued with a termination letter dated 9th October, 2017 in accordance with Section 43(1)(2) of the employment Act and the reasons for the termination were explained to him.
38. On the issue of the disciplinary hearing the respondent submitted that the Claimant was subjected to a disciplinary Hearing held in 6th October, 2017 which the Claimant confirmed attendance and signed off on the minutes of the said disciplinary hearing.
39. The respondent submitted that the reasons for the termination were valid and as such, the termination of the Claimant was fair and lawful.
40. On compensation, the Respondent submitted that upon termination, the Claimant was fully compensated for all his dues, to a tune of Kshs. 363,103/= being a three (3) months’ pay in lieu of notice, his leave days and his salary for the days worked in the days worked in the month of October 2017 and a certificate of service was issued upon him.
41. The claimant herein did not deny that he was offered employment by the Respondent as a Branch Manager and as at 21st December, 2009 was earning a gross salary of Kshs. 55,000/=. The claimant further did not deny that the Eldoret branch had collected premiums worth Kshs. 60,000 and issued receipts of the premiums however there was failure to remit to the Respondent’s account the premium so collected. All the claimant did was to shift responsibility to a Edward Mui, an underwriter who apparently was under him. The duties of the Branch Manager were undeniably to oversee the running of the Branch including all the employees working in that Branch. It was also a duty to ensure that premiums collected are remitted within three days and not the underwriting manager. From the evidence the failed to exonerate himself from this responsibility.
42. Section 44(4) of the Employment Act provides as follows:
“Any of the following matters may amount to gross misconduct so as to justify the summary dismissal of an employee for lawful cause, but the enumeration of such matters or the decision of an employer to dismiss an employee summarily under subsection (3) shall not preclude an employer or an employee from respectively alleging or disputing whether the facts giving rise to the same, or whether any other matters not mentioned in this section, constitute justifiable or lawful grounds for the dismissal if—
(a) without leave or other lawful cause, an employee absents himself from the place appointed for the performance of his work;
(b) during working hours, by becoming or being intoxicated, an employee renders himself unwilling or incapable to perform his work properly;
(c) an employee wilfully neglects to perform any work which it was his duty to perform, or if he carelessly and improperly performs any work which from its nature it was his duty, under his contract, to have performed carefully and properly; (Italics supplied)
(d) an employee uses abusive or insulting language, or behaves in a manner insulting, to his employer or to a person placed in authority over him by his employer;
As observed above, the claimant as Branch Manager for the respondent, did not satisfactorily exonerate himself from the allegations against him. His actions therefore amounted to negligence within the meaning of section 44(4)(e) of the Employment Act. There therefore existed justifiable reasons for his dismissal from employment. The claim for unfair termination of employment is therefore found without merit and is hereby rejected
43. On the issue of the disciplinary hearing, the Claimant was subjected to a disciplinary Hearing held in 6th October, 2017 which he confirmed attendance and signed off on the minutes of the said disciplinary hearing. To allege that he was not accorded procedural hearing is therefore not correct.
44. Concerning terminal dues, it was stated in the claimant’s letter of appointment that either party could terminate the contract by giving three (3) months’ pay in lieu of notice. The Claimant confirmed that he was given Kshs. 259,618/= being his three (3) months’ pay in lieu of notice. Further, he was paid Kshs. 79,883/= being 24 days leave and that he was entitled to Kshs. 23,602/= being pay for the days worked in October, 2017. The claim for terminal dues is therefore rejected to that extent.
45. In conclusion the claim herein is found without merit and is hereby dismissed with costs.
46. It is so ordered.
Dated at Nairobi this …… day of August, 2023
Abuodha Jorum Nelson
Judge ELRC