Nairobi Consumers Co-operative Union Ltd v Mbugua (Civil Appeal 513 of 2019) [2025] KECA 1977 (KLR)
The bottom line
#Kenya's Court of Appeal ruled that being suspended for suspected misconduct is not constructive dismissal, and the employee must pay back Kshs.930,160.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the respondent was constructively terminated or whether she absconded from duty and refused to submit to the internal disciplinary process
- 2.Whether the trial court erred in failing to award the appellant the amount claimed in its counterclaim given the respondent's admitted failure to account for Kshs.930,160
- 3.Whether the trial court erred in awarding the respondent two months' salary as compensation for unfair termination
Key legal issues
#Whether suspension pending investigation amounts to constructive dismissal
It does not. Suspension on reasonable suspicion of misconduct to enable investigation is a lawful employer right; the respondent's failure to report to work and refusal to undergo the disciplinary process could not found constructive termination.
The respondent was suspended after the appellant discovered unaccounted rent, remained on the payroll, and could be summoned back for disciplinary proceedings. Instead of reporting to work or submitting to the internal process, she rushed to file suit. The trial court's finding of constructive termination had no evidential basis and was an error.
Whether the appellant's counterclaim should have been allowed
Yes. The respondent admitted responsibility for the loss and signed an agreement to refund the money to escape prosecution; the trial court was bound to allow the counterclaim.
The audit report revealing the unaccounted sum was not challenged at trial, and the respondent had admitted the loss and executed a refund agreement secured by title deeds. Having found the admission, the trial court erred in declining to award the counterclaimed amount.
Whether the award of two months' salary as compensation was justified
No. It fell with the erroneous finding of constructive termination; the claim was dismissed and the decree of the trial court set aside.
Since the respondent was not constructively terminated but absconded and avoided the disciplinary process, there was no unfair termination to compensate, and the award of two months' salary could not stand.
Legal principles established
#- Suspension of an employee is a right available to an employer who reasonably suspects misconduct, to enable investigation without further exposure to loss, and the employee can be summoned back to work for disciplinary proceedings.
- Suspension pending investigations must be for a reasonable duration and the employer must expedite the disciplinary process to a conclusion.
- Constructive dismissal occurs only where an employee resigns because the employer's fundamental breach of the employment contract makes continued employment unbearable.
- On a first appeal, the appellate court considers the evidence afresh and reaches its own independent conclusions, while making allowance for not having seen or heard the witnesses.
Court orders
#- 1.Appeal allowed
- 2.Judgment and decree of the trial court set aside
- 3.Respondent's claim dismissed with costs
- 4.Appellant's counterclaim dated 17th February 2015 allowed to the extent that the respondent shall pay the appellant Ksh.930,160 with interest at court rates
- 5.Respondent to pay the appellant the costs of the appeal
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- Employment and Labour Relations Court
- Not stated in the judgment
- Jurisdiction invoked
- First appeal to the Court of Appeal against the decision of the Employment and Labour Relations Court
Relief refused
#Respondent's claim for maximum compensation, damages, reinstatement, service pay and certificate of service
The claim was dismissed as the trial court's finding of constructive termination had no evidential basis
Costs
The respondent's claim is dismissed with costs; the respondent shall pay to the appellant the costs of the appeal.
Quotable passages
#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 result is that, we allow the appeal. The judgment and decree of the trial court dated 28th July 2019 is hereby set aside. The respondent's claim is dismissed with costs and the appellant's counterclaim dated 17th February 2015 is allowed to the extent that the respondent shall pay to the appellant Ksh.930,160/ = with interest at court rates.
The respondent shall pay to the appellant the costs of the appeal.
constructive termination or dismissal occurs where the employee resigns due to the employer's fundamental breach of employment contract, and this breach makes continuing employment unbearable.
an employer can suspend an employee for alleged misconduct pending investigations but this suspension must be for a reasonable duration, not indefinite.
The trial court's finding that she was constructively terminated was without any evidential basis. She absconded from work and refused to face the internal disciplinary process.
Issues in the judgment
#The date of the trial court's judgment is given as 26th July 2019 at the opening of the judgment but as 28th July 2019 in the final orders.
The amount the respondent failed to account for is given variously as Kshs.930,000/=, Kshs.914,110/=, Kshs.930,610/= and Kshs.930,160/= in different parts of the judgment; the decretal amount in the orders is Kshs.930,160/=.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Nairobi Consumers Co-operative Union Ltd v Mbugua (Civil Appeal 513 of 2019) [2025] KECA 1977 (KLR)", Case Analysis (2025). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2025/1977/eng@2025-11-21
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.