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Court of AppealPartially AllowedCivil Appeal No. 291 of 2014

Standard Group Limited v Jenny Luesby [2018] KECA 353 (KLR)

Court of Appeal
3 August 2018
9,054 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~36 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal cut a media executive's Ksh.20 million award to about Ksh.4.6 million, confirming employers must hold a hearing before any dismissal, even for senior staff.

What this practically means

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Executive summary

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The Court of Appeal (Waki, Musinga and M'inoti, JJ.A) heard Standard Group Limited's appeal against an ELRC judgment by Mbaru, J. awarding Jenny Luesby over Ksh.20 million for summary dismissal. Framing two dispositive issues - whether the dismissal was unlawful, unprocedural and unjustified, and the reliefs available - the Court, exercising first-appeal powers under Rule 29(1)(a), found the trial court had given short shrift to the appellant's evidence on the alleged misconduct and was prepared to give the employer the benefit of doubt. However, it affirmed that the mandatory hearing procedure in section 41 of the Employment Act applies even to summary dismissal for gross misconduct; the HR Director conceded no notice of termination or hearing was ever given, rendering the termination procedurally unfair though not wrongful. On remedies, the Court held the section 49(4) factors were ignored, the Ksh.9 million compensation exceeded the unexpired portion of the two-year fixed contract, and substituted Ksh.1,500,000. Significantly, it declared Sonye v Siaya Teachers Sacco of doubtful authority, holding that the ELRC may award general damages for emotional distress beyond statutory compensation where a constitutional breach within the employment relationship is proved, but reduced the Ksh.8,250,000 general damages award to a nominal Ksh.100,000, finding only the withholding of terminal dues actionable. Awards for notice pay, salary for days worked, leave, and the certificate of service were left undisturbed, subject to deduction of Ksh.552,000 less pro rata tax to avoid double payment. The appeal succeeded in part; each party was to bear its own costs of the appeal while the appellant bore the costs below.

Questions the Court framed

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

  1. 1.Whether the summary dismissal of the respondent was unlawful, unprocedural and unjustified
  2. 2.If so, what reliefs is the respondent entitled to
  3. 3.Whether the compensation awarded exceeded the statutory cap of twelve months' gross salary
  4. 4.Whether general damages for emotional distress could be awarded in addition to compensation for unfair termination
  5. 5.Whether payments made to the respondent during the proceedings should have been deducted from the awards

Key legal issues

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01

Whether the summary dismissal was unlawful, unprocedural and unjustified

Holding

The termination was not wrongful but was procedurally unfair because the mandatory hearing under section 41 of the Employment Act was never granted; the HR Director admitted the appellant never notified the respondent of contemplated termination or called her for a hearing.

Reasoning

The court assessed the evidence as a first appeal, giving the appellant benefit of doubt on the alleged misconduct itself. However, section 41 requires the employer to explain the reasons and hear representations before termination, even for summary dismissal under section 44. No documentation or hearing existed; the seniority of the employee is no justification. Failure to hear the employee amounted to unfair termination under section 45.

p. 7
02

Whether the Ksh.9 million compensation award was lawful

Holding

The award was excessive and set aside, substituted with Ksh.1,500,000 (equivalent of two months' salary).

Reasoning

Section 49(4) factors - length of service, employee's contribution to termination, expectation of continued employment - were not considered. The respondent had served one year and 18 days of a two-year fixed contract with only 11 months pending; an award exceeding the remaining contract period was wrong. She may have contributed to the termination; only procedural unfairness attached fully to the appellant.

p. 8
03

Whether general damages for emotional distress are available in addition to statutory compensation

Holding

Such damages are available where a constitutional breach within the employment contract is pleaded and proved, but the award here was reduced to Ksh.100,000 nominal damages for the withholding of terminal dues.

Reasoning

Sonye v Siaya Teachers Sacco, resting on Addis v Gramaphone, predates the 2010 Constitution and the Employment Act and is of doubtful authority. The ELRC has jurisdiction under Article 162(2) and section 12 of ELRCA to award damages beyond unfair-termination compensation. However, the trial court exaggerated the distress; only the failure to settle terminal dues timeously caused compensable anxiety.

p. 9
04

Whether amounts paid to the respondent during proceedings should be deducted

Holding

Yes - Ksh.552,000 (less pro rata tax) covering salary and leave due awarded doubly was to be deducted from the final decree.

Reasoning

The payment of Ksh.452,730 included salary due and leave due, which had also been awarded by the trial court, amounting to double payment. Those heads, less pro rata tax, were deductible from the decree.

p. 10
05

Burden of proof in dismissal disputes

Holding

The employee proves that dismissal occurred; the employer bears the burden of justifying the grounds and proving fair procedure.

Reasoning

Section 47(5) of the Employment Act allocates the burden: the employee must show unfair termination or wrongful dismissal occurred, while the employer must justify the grounds and demonstrate that termination followed fair procedure. The appellant failed to discharge this burden because no hearing or notice was given and no records of the alleged misconduct were kept as required by section 74(1).

p. 7

Legal principles established

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  • Compliance with the hearing procedure in section 41 of the Employment Act is mandatory before any termination, including summary dismissal for gross misconduct, regardless of the seniority of the employee.
  • An employer bears the burden of justifying the grounds of termination and of proving that termination followed fair procedure.
  • Where an employer has a fair reason but terminates without conforming to statutory procedure, the termination is unfair; wrongful dismissal concerns breach of the employment contract.
  • Judicial restraint must be exercised in exceeding the statutory cap of 12 months' salary in compensating employees; compensatory awards are not meant to punish the employer.
  • The Sonye decision (which barred damages for distress in employment) is of doubtful authority post-2010 Constitution; an employee who pleads and proves breach of a constitutional right within the employment contract may be awarded reliefs over and above those for unlawful termination.

Court orders

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  1. 1.Declaration that although the termination may not have been wrongful, it was procedurally unfair
  2. 2.Compensation of Ksh.9 million set aside and substituted with Ksh.1,500,000
  3. 3.General damages of Ksh.8,250,000 set aside and substituted with a nominal award of Ksh.100,000
  4. 4.Award of notice pay of 3 months at Ksh.2,250,000 not disturbed
  5. 5.Award of salary due for 18 days worked at Ksh.403,977 not disturbed
  6. 6.Award of accrued 10 days of leave at Ksh.359,090 not disturbed
  7. 7.Order for issuance of certificate of service not disturbed
  8. 8.Sum of Ksh.552,000, less pro rata tax on that sum, deducted from the final decree
  9. 9.Each party to bear its own costs of the appeal; appellant to bear the costs of the suit before the lower court

The bench

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

majority
majority
majority
On appeal from
Industrial Court of Kenya (now Employment & Labour Relations Court) at Nairobi
Industrial Cause No. 137 of 2014
Jurisdiction invoked
First appeal under Rule 29(1)(a) of the Court of Appeal Rules from the Employment & Labour Relations Court established under Article 162(2)(a) of the Constitution

Relief refused

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Restoration of the full Ksh.9 million compensation for unfair termination

The award exceeded the remaining contract period and ignored section 49(4) factors including the employee's contribution to the termination and length of service

p. 8

General damages of Ksh.8,250,000 for emotional distress

The trial court took an exaggerated view of the tribulations undergone by the respondent; only the withholding of terminal dues justified any award

p. 10

Finding that the dismissal was wrongful

The court was prepared to give the appellant the benefit of doubt on the alleged misconduct; only procedural unfairness was established

p. 10

Costs

Each party shall bear its own costs of the appeal, but the appellant shall bear the costs of the suit before the lower court.

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.

That hearing is as important as the law made it mandatory even in the worst case scenario where an employee grossly misconduct oneself.
p. 7Mandatory pre-termination hearing under section 41
It follows that the act of summarily dismissing the respondent without giving her an opportunity to be heard amounted to unfair termination as defined in section 45 of the Act.
p. 7Consequence of failing to hear employee
judicial restraint must be exercised in exceeding the capping of 12 months' salary, in compensating Employees for the wrongful acts of their Employers.
p. 9Statutory cap on compensation
in view of the express jurisdiction granted to the ELRC under Article 162 (2) of the Constitution as read with section 12 of the Act, the Sonye case (supra) is of doubtful authority.
p. 9Availability of general damages in employment disputes
(i) Each party shall bear its own costs of the appeal, but the appellant shall bear the costs of the suit before the lower court.
p. 11Final orders - costs
(b) We find and hold that the damages awarded in compensation for unfair termination in the sum of Ksh.9 million is excessive. The award is set aside and substituted with an award of Ksh.1,500,000.
p. 10Final orders - substituted compensation

Issues in the judgment

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minor

The judgment's summary of the payment breakdown does not reconcile arithmetically: the listed items total Ksh.662,000 before deductions, but the net figure given is Ksh.452,730 and the court then uses Ksh.552,000 as the amount deducted from the decree.

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (6)

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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, "Standard Group Limited v Jenny Luesby [2018] KECA 353 (KLR)", Case Analysis (2018). Civil Appeal No. 291 of 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2018/353/eng@2018-08-03

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