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Court of AppealPartially AllowedCivil Appeal No. 72 of 2014· [2015] KECA 190 (KLR)

Hema Hospital v Dr. Wilson Makongo Marwa

Court of Appeal of Kenya
25 November 2015
6,459 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~26 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal confirmed a doctor was unfairly fired, but slashed his payout from over KSh 4 million to KSh 465,000 because awards must be justified with reasons.

What this practically means

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Executive summary

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The Court of Appeal at Kisumu (Maraga, Musinga & Gatembu Kairu, JJ.A) disposed of Hema Hospital's appeal against an Industrial Court judgment awarding Dr. Wilson Makongo Marwa Kshs. 3,136,167.00 for unlawful and unfair termination of employment. The Court framed two issues: whether the finding of verbal, unlawful dismissal was supported by evidence, and whether the reliefs awarded were properly granted. On the first, the Court affirmed the trial judge, noting the hospital's failure to call Dr. Manduku, the Managing Director who had firsthand knowledge of the dismissal, and observing that the termination without notice or hearing breached section 41 of the Employment Act and was procedurally unfair. On the second, the Court found the trial judge had failed to give reasons for her awards and had adopted counsel's submissions wholesale. It held there is a distinction between service pay under section 35(5) and severance pay under section 40(g) of the Employment Act, the latter being payable only on redundancy, and set aside the Kshs. 1,085,000.00 award. It also reduced the 12 months' salary compensation to three months' gross salary, emphasizing proportionality, mitigation and the doctor's continued professional practice, and set aside the award of Kshs. 36,167.00 conceded to be made in error. The Court substituted an award of Kshs. 465,000.00 and, because the finding of unfair dismissal stood, awarded the doctor costs of both the lower court and the appeal. The appeal therefore partially succeeded: the liability finding was affirmed but the quantum was substantially reduced.

Key legal issues

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01

Whether the finding of verbal, unfair dismissal was supported by evidence

Holding

Yes. The trial judge was entitled to prefer the doctor's evidence, particularly as the hospital did not call Dr. Manduku who had firsthand knowledge of the dismissal.

Reasoning

The court, reviewing evidence as a first appellate court, found the hospital's account unconvincing. Simiyu's written statement omitted the critical events of 6 May 2013, Dr. Manduku was not called despite being the key witness, no salary was paid after 7 May 2013, and no notice or hearing preceded the termination. The failure to follow section 41 procedural requirements rendered the dismissal procedurally unfair.

p. 5
02

Whether the award of service/severance pay of Kshs. 1,085,000.00 was justified

Holding

No. The award was set aside; no basis for either severance or service pay was established.

Reasoning

The judge mislabeled a claim for severance pay as service pay. Severance pay under section 40(g) arises only on redundancy, which was never the doctor's case. Service pay under section 35(5) requires proof of entitlement, and section 35(6) excludes it for members of pension, gratuity or NSSF schemes, on which no evidence was led.

p. 9
03

Whether compensation of 12 months' salary for unfair termination was properly awarded

Holding

No. Reduced to three months' gross salary in the peculiar circumstances of the case.

Reasoning

Section 49(4) requires the court to consider factors such as length of service, mitigation, and the employee's prospects of comparable employment. The doctor was a qualified, practising professional, had served just over six years, and there was no evidence of mistreatment. Remedies must be proportionate to economic injury and not punitive or enriching.

p. 11
04

Whether the trial judge exercised her discretion judiciously in granting the reliefs

Holding

No. She failed to give reasons for the awards and adopted counsel's submissions wholesale.

Reasoning

The discretion under section 49 must be exercised judiciously with regard to section 49(4) factors. The judge gave no reasons for awarding service pay, its rate, or pegging compensation at 12 months. Absent explanation, the court concluded she simply adopted the doctor's submissions without question, warranting appellate interference.

p. 8

Legal principles established

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  • A court awarding reliefs under section 49 of the Employment Act must give reasons or state the factors it has taken into consideration for the awards it makes
  • There is a distinction between 'service pay' under section 35(5) of the Employment Act and 'severance pay' under section 40(g), which is payable only in the event of redundancy
  • An appellate court will interfere with the exercise of judicial discretion under section 49 only where the lower court's decision is clearly wrong, as stated in Mbogo v Shah
  • An employer must notify and hear an employee before termination on grounds of misconduct, poor performance or physical incapacity, as required by section 41 of the Employment Act

Court orders

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  1. 1.Set aside the award of Kshs. 1,085,000.00 for service pay
  2. 2.Set aside the award of Kshs. 3,136,167.00 in its entirety and substitute therefor an award of Kshs. 465,000.00 being the equivalent of three months' gross salary
  3. 3.The doctor to have costs of the lower court case and of this appeal
On appeal from
Industrial Court of Kenya at Kisumu
Cause No. 256 of 2013
Jurisdiction invoked
First appellate jurisdiction over appeals from the Industrial Court (Employment and Labour Relations Court)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Hema Hospital v Dr. Wilson Makongo Marwa", Case Analysis (2015). Civil Appeal No. 72 of 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2015/190/eng@2015-11-25

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.