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Court of AppealDismissedCivil Appeal No 83 of 2019· [2025] KECA 687 (KLR)

Ondari v National Hospital Insurance Fund (Civil Appeal 83 of 2019) [2025] KECA 687 (KLR)

Court of Appeal
11 April 2025
SKS. ole KantaiALAli-AroniJMJ. Mativo
4,583 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~18 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal upheld NHIF's dismissal of a senior finance manager, confirming employers need only genuinely believe their termination reasons were valid.

What this practically means

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Executive summary

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This was a first appeal to the Court of Appeal at Nairobi from the dismissal of an employment claim by a former General Manager Finance and Control of the National Hospital Insurance Fund, whose employment was terminated on 10th March 2014 on grounds of gross misconduct following audits and an investigation by the Efficiency Monitoring Unit which, according to the respondent, revealed loss of public funds exceeding Kshs. 26,596,878. The appellant had sought a declaration of unfair termination, reinstatement, or in the alternative Kshs. 33,002,200/= covering salary, accrued leave and twelve months' compensation. The Court framed two key issues: whether the respondent had valid reasons for termination, and whether the process was fair. Applying section 43(2) of the Employment Act, the Court reaffirmed that the employer's burden is partly subjective - it must prove only the reasons it genuinely believed existed - and found the interdiction letter, internal audit and EMU reports sufficient. The Court agreed with the trial judge that the court has no supervisory role to audit the truth of an employer's reasons where they are valid and due process was followed. On procedure, the chronology of reports, representations, board hearings and an internal appeal satisfied sections 41 and 45. The appeal was dismissed with costs to the respondent.

Key legal issues

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01

Whether the respondent had valid reasons for terminating the appellant's contract

Holding

Yes. The interdiction letter, internal audit report and EMU report implicated the appellant for negligence and loss of public funds, satisfying section 43(2)'s genuine-belief test.

Reasoning

The Court interpreted section 43(2) as a partly subjective test requiring only that the employer genuinely believed the reasons existed at termination. Three investigations - the preliminary audit, internal audit and the EMU investigation - all implicated the appellant in acts and omissions causing loss of public funds of Kshs. 26,596,878. The termination letter recited these reasons. The Court held that where an employee's negligence causes loss of funds, no more is required.

p. 7
02

Whether the trial judge erred in holding that it is not for the court to audit the truth of the reasons for termination

Holding

No. The Court agreed the court has no supervisory role and need not interrogate or substitute the employer's reasons where valid reasons exist and due process was followed.

Reasoning

Following its own precedents, including Kenya Airways Ltd v Aviation & Allied Workers Union, the Court held the court is not required to substitute the thoughts of an employer where there is a valid reason and due process was followed. The reasons were genuine and grounded in the audit reports; the court's duty is not to audit their truth but to test their validity and fairness within section 45.

p. 8
03

Whether the termination procedure was fair under section 41 and section 45 of the Employment Act

Holding

Yes. The appellant was furnished with reports, given opportunities for written and oral representations, heard by the board, and had an appeal considered under the HR Procedure Manual.

Reasoning

The Court traced the chronology: the November 2013 audit report was discussed in the appellant's presence; he was interdicted with reasons and given the preliminary report; he made written representations on 2nd December 2013; he received the EMU report and appeared before the board on 25th February 2014; he answered a show-cause letter on 28th February 2014 and was heard on 10th March 2014; and his appeal was considered and declined. This satisfied sections 41 and 45.

p. 8

Legal principles established

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  • Section 43(2) of the Employment Act imposes a partly subjective test: the employer need only prove the reasons it genuinely believed to exist at the time of termination.
  • Where an employer has a valid reason to terminate employment and due process has been followed, the court has no supervisory role and must not substitute its own view for that of the employer.
  • The employer bears the statutory burden under section 43 to prove both that the reason for termination was valid and fair and that the termination followed fair procedure.

Court orders

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  1. 1.Appeal dismissed
  2. 2.Costs of the appeal awarded to the respondent

Authorities

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Legislation

  • Employment Actsection 41
  • Employment Actsection 43
  • Employment Actsection 45
  • Employment Actsection 45(4)(b)
  • Constitution of Kenya, 2010Article 47
  • National Hospital Insurance Fund Actsection 13

Cases cited (18)

  • Stephen S. Pareno vs. The Judicial Service Commission
    Civil Appeal No. 120 of 2004
  • Jared Aimba vs. Fina Bank Limited
    Civil Appeal No. 198 of 2011
  • Kenfreight (E.A.) Limited vs. Benson K. Nguti
    Civil Appeal No. 31 of 2015; 2016 KECA 688 (KLR)
  • Association for the Physically Disabled of Kenya vs. Kenya Union of Domestic Hotels Education Hospital and Allied Workers Union & Another
    [2018] eKLR
  • Selle & Another vs. Associated Motor Boat Company Limited & Others
    [1968] 1 EA 123
  • CFC Stanbic Bank vs. Danson Mwashako
    [2015] eKLR
  • Reuben Ikatwa & 17 Others vs. Commanding Officer British Army Training Unit Kenya & Another
    [2017] eKLR
  • Samuel Kalomit Murkomen vs. Telkom Kenya Limited
    [2017] eKLR
  • Nampak Corrugated Wadeville vs. Khoza
    [1998] ZALAC 24
  • British American Tobacco (K) Limited vs. Kenyan Union of Commercial Food and Allied Workers (KUCFAW)
    [2019] eKLR
  • Judicial Service Commission vs. Gladys Boss Sholei & Another
    [2014] eKLR
  • British Leyland UK Limited vs. Swift
    [1981] IRLR 91
  • Ol Pejeta Ranching Limited vs. David Wanjau Muhoro
    [2017] eKLR
  • Janet Nyandiko vs. Kenya Commercial Bank Limited
    [2017] eKLR
  • Ng’ati Farmers’ Co-Operative Society Ltd. vs. Ledidi & 15 Others
    [2009] KLR 331
  • Kenya Power & Lighting Company Limited vs. Aggrey Wasike
    [2017] eKLR
  • Kenya Revenue Authority vs. Reuwel Waithaka Gitahi & 2 Others
    [2019] eKLR
  • Kenya Airways Limited vs. Aviation & Allied Workers Union Kenya & 3 Others
    [2014] eKLR
On appeal from
Employment and Labour Relations Court (trial court)
Jurisdiction invoked
First appeal under the Court of Appeal's appellate jurisdiction ( Employment and Labour Relations Court decision; no specific constitutional provision cited)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (5)

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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, "Ondari v National Hospital Insurance Fund (Civil Appeal 83 of 2019) [2025] KECA 687 (KLR)", Case Analysis (2025). Civil Appeal No 83 of 2019. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2025/687/eng@2025-04-11

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