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Court of AppealPartially AllowedCivil Appeal No. 234 of 2013

Freight In Time Limited v Rosebell Wambui Munene [2018] KECA 148 (KLR)

Court of Appeal of Kenya
9 November 2018
Mohamed Abdulahi WarsameM. WarsameASAsike-MakhandiaJOJ. Otieno-Odek
4,773 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Court of Appeal cut a wrongful redundancy payout in half because the employer skipped a mandatory notice to the labour officer.

What this practically means

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Executive summary

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Freight In Time Limited appealed against an award of the Employment and Labour Relations Court (Rika, J.) in favour of Rosebell Wambui Munene, a Kenyan accountant employed on a Rwandese-franc salary under an offer letter signed by the Group Financial Controller. The appellant argued the trial court lacked jurisdiction because the respondent was employed by Freight In Time Rwanda Limited, a separate legal entity, and contested the findings of unfair termination and the quantum of compensation. The Court of Appeal (Warsame, Makhandia and Otieno-Odek, JJ.A) disposed of the jurisdictional objection by pointing to the appellant's own memorandum of appeal, which described closure of 'the appellant's Rwandan office,' and to the testimony of DW1; it held that Freight In Time Kenya Limited was the respondent's employer and was properly sued. On the merits, the court declined to make findings on the respondent's miscarriage for want of scientific evidence. It held the termination on account of redundancy unfair because the appellant led no evidence of restructuring, surplus staff or selection criteria, and failed to comply with the mandatory requirements of section 40(1) of the Employment Act, including a separate notice to the labour officer. While upholding the awards of one month's salary in lieu of notice and one month's salary for annual leave, the court found no justification for the maximum twelve months' compensation, citing CMC Aviation and Ol Pejeta Ranching, and substituted six months' compensation. The total award was fixed at Ksh.400,000/= with interest from 12 February 2013, and each party was ordered to bear its own costs in the High Court and this appeal.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the trial court had jurisdiction over the employment dispute given separate corporate personality of the Kenyan and Rwandan companies
  2. 2.Whether the trial court erred in attributing to the appellant the miscarriage of the respondent's pregnancy without credible evidence
  3. 3.Whether the trial court erred in finding that the respondent's termination was unfair
  4. 4.Whether the trial court erred in awarding twelve months' gross salary as compensation for unfair termination
  5. 5.Whether the awards of one month's salary in lieu of notice and one month's salary for annual leave were justified

Key legal issues

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01

Jurisdiction of the Kenyan employment court over a contract said to be with a foreign-incorporated company

Holding

Freight In Time Kenya Limited was the respondent's employer and the trial court had jurisdiction; the appellant's own pleading and evidence admitted the Rwandan company was its office

Reasoning

The court found that the appellant's memorandum of appeal implicitly admitted that Freight In Time Rwanda Limited was the appellant's Rwandan office, and DW1 testified the respondent worked for 'our company in Rwanda' which 'we closed.' The court therefore found the Kenyan company was the parent and the proper party sued, sustaining the trial court's jurisdiction despite the separate-incorporation argument.

p. 3
02

Unfairness of termination on account of redundancy

Holding

The termination was unfair because the appellant failed to prove the redundancy and did not comply with the mandatory procedural requirements of sections 40(1) and 45 of the Employment Act

Reasoning

The notice of termination was a redundancy statement, so the appellant bore the burden of proving restructuring, surplus staff, and selection criteria. It led no such evidence and gave no separate notice to the labour officer as section 40(1) mandates. Following Barclays Bank and Hesbon Ngaruiya Waigi, non-compliance rendered the redundancy unlawful and the termination unfair.

p. 5
03

Quantum of compensation for unfair termination

Holding

The maximum award of twelve months' gross salary under section 49(1)(c) requires explanation and justification by the trial court; in its absence the Court of Appeal substituted six months' salary (Ksh.300,000/=)

Reasoning

Following Ol Pejeta Ranching and CMC Aviation, the court held that a pleaded specific sum must be proved and the maximum award must be justified on sound judicial principles grounded in section 49(4). The trial court gave no reasons justifying the maximum award, so the appellate court intervened and substituted six months' compensation.

p. 6
04

Alleged miscarriage of pregnancy linked to termination

Holding

The court declined to make findings on the pregnancy and miscarriage for want of scientific evidence linking them to the termination

Reasoning

The court noted there was no scientific evidence proving the link between the miscarriage and the termination and regarded detailed inquiry as inviting conjecture and speculation. The point was therefore not pivotal to the disposition of the appeal.

p. 3
05

First appeal - duty to reassess evidence

Holding

On a first appeal the Court re-evaluates the evidence and draws its own conclusions while making allowance for not having seen or heard the witnesses

Reasoning

Citing Selle v Associated Motor Boat Co., the court restated the settled principles governing a first appeal: the appellate court must reconsider and evaluate the evidence itself, though it need not follow the trial judge's findings of fact where they fail to take account of material circumstances or probabilities.

p. 3

Legal principles established

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  • An employer relying on redundancy as the ground for termination bears the burden of proving the redundancy and strict compliance with the mandatory procedure in section 40(1) of the Employment Act, including issuing a separate notice to the labour officer; non-compliance renders the redundancy unfair
  • A trial court awarding the maximum twelve months' compensation under section 49(1)(c) of the Employment Act must explain and justify the maximum award; absent such justification an appellate court will interfere

Court orders

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  1. 1.The award/judgment of the trial court dated 12th February 2013 is varied to the extent that the twelve months' gross salary compensation for unfair dismissal is set aside and substituted with an award of six months' salary of Ksh.300,000/=
  2. 2.Interest on Ksh.300,000/= to run from 12th February 2013
  3. 3.The awards of Ksh.50,000/= for one-month salary in lieu of notice and Ksh.50,000/= as compensation for annual leave are upheld
  4. 4.Grand total award to the respondent set and determined at Ksh.400,000/= with interest from 12th February 2013
  5. 5.Each party to bear his/its own costs at the High Court and in this appeal

The bench

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One judgment of the whole court — no separate or dissenting opinions.

Mohamed Abdulahi Warsame
M. WarsameJA
Currently serving
majority
AS
majority
JO
majority
On appeal from
Employment and Labour Relations Court at Nairobi
Nairobi Industrial Cause No. 1199 of 2012
Jurisdiction invoked
First appeal to the Court of Appeal under the applicable appellate statute (not expressly stated in the judgment)

Relief refused

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Appellant's challenge to the awards of one month's salary in lieu of notice and one month's salary for annual leave

There was evidence on record supporting both awards; the contract stipulated two months' notice but only one month was given, and the appellant led no rebuttal evidence on the leave claim

p. 4

Respondent's entitlement to the maximum twelve months' gross salary compensation

No concrete evidence to justify the maximum award and the trial court gave no explanation or justification for it

p. 6

Costs

Each party is to bear his/its own costs at the High Court and in this appeal.

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

The final orders of this Court is that the award/judgment of the trial court dated 12 th February 2013 be and is hereby varied to the extent that the twelve (12) months' gross salary compensation for unfair dismissal is set aside and substituted with an award of six (6) months' salary of Ksh.300,000/=.
p. 6Final orders - variation of award
The grand total award to the respondent is hereby set and determined to be Ksh.400, 000/= with interest from 12 th February 2013. Each party is to bear his/its own costs at the High Court and in this appeal.
p. 6Final orders - total award and costs
The requirement to issue a separate notice to the Labour Officer, simultaneously with the termination notice, is mandatory. Failure to issue renders the redundancy unlawful.
p. 5Redundancy procedure
In the absence of explanation or justification for the maximum award, we are inclined to intervene with the award.
p. 6Maximum compensation under section 49
This is a first appeal and it is our duty to analyze and reassess the evidence on record and reach our own conclusions.
p. 3Duty of first appellate court
we find that the trial court did not err in holding that Freight In Time Kenya Limited was the parent company to the Rwandese Company.
p. 3Jurisdiction and corporate structure

Issues in the judgment

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minor

The cause number is given as Nairobi Industrial Cause No. 1199 of 2011 in the body of the judgment but as No. 1199 of 2012 in the coram/heading

minor

The compensation figures for twelve months' gross salary are inconsistently stated in the judgment (Ksh.856,896/= vs Ksh.856,895/= vs Ksh.856,969/=)

minor

The respondent's name appears as 'Rosebell Wambui Munene' in the heading and 'Rosebell Wambui Muthee' in the body

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (3)

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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, "Freight In Time Limited v Rosebell Wambui Munene [2018] KECA 148 (KLR)", Case Analysis (2018). Civil Appeal No. 234 of 2013. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2018/148/eng@2018-11-09

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