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ELRCPartially AllowedNot stated in judgment (Employment and Labour Relations Court claim)

Erick Muhalia v Keroche Breweries Limited [2021] KEELRC 1405 (KLR)

Employment and Labour Relations Court
18 February 2021
1,838 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~7 min to read original · ~4 min brief

The bottom line

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A Kenyan court ruled that suspending an employee indefinitely without ever concluding investigations or giving a hearing makes the eventual dismissal unfair and compensable.

What this practically means

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Executive summary

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The claimant, employed on 19th January 2015 as stores and distribution manager at a monthly salary of Kshs.100,000, was suspended in October 2015 following alleged fraud at the respondent company. The suspension was extended repeatedly and finally made indefinite on 9th November 2015, without any disciplinary hearing or conclusion of investigations. When he enquired about his employment status in June 2016, he was informed his contract had been terminated. The respondent alleged fraud but called no evidence in defence. The court, in a first-instance decision by M. Mbaru J, framed two issues: whether termination was wrongful, unfair and unlawful, and whether the claimant was entitled to the reliefs sought. Relying on authorities including Gregory Otieno Owuoth v Mumias Sugar Company, Grace Gacheri Muriithi v Kenya Literature Bureau and Walter Ogal Anuro v Teachers Service Commission, the court held that suspension must be addressed by recalling the employee to answer charges or resuming duty, and that termination must be shown to have both substantive justification and procedural fairness. Sections 41 and 43 of the Employment Act were not complied with: the claimant was neither given notice of allegations, an opportunity to be heard, nor was any valid reason proved. Termination was unfair. The court awarded compensation of Kshs.300,000 (three months' gross salary), notice pay of Kshs.100,000, unpaid salary for six months of suspension (Kshs.600,000), leave pay of Kshs.100,000, and costs of the suit. The claims for nine months' salary and separate general damages were not awarded as prayed, the latter being subsumed in the section 49 compensation.

Questions the Court framed

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

  1. 1.Whether the termination of the claimant's employment by the Respondent was wrongful, unfair and unlawful
  2. 2.Whether the claimant is entitled to the reliefs sought

Key legal issues

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01

Whether termination was wrongful, unfair and unlawful

Holding

Termination was unfair both procedurally and substantively; the claimant was never given a hearing nor informed of the outcome of investigations

Reasoning

The claimant was suspended indefinitely over alleged fraud, then terminated by email without being invited to a hearing or told the outcome of the investigations. Section 41 of the Employment Act required notice of allegations and a chance to respond; section 43 required a valid reason. The respondent called no evidence and filed no investigation report, so it failed to prove the reasons for termination. Termination did not pass the fairness test and was unlawful.

p. 4
02

Whether the claimant was entitled to salary during the suspension period

Holding

Yes - salary for the six months of suspension was due, as the employer neither recalled him nor conducted disciplinary proceedings

Reasoning

Following the authorities on suspension, the court held that an employee on suspension who is exculpated or never disciplined is entitled to pay. The respondent kept the claimant on indefinite suspension without concluding investigations, recalling him or disciplining him. The court awarded salary for six months of the suspension period (October 2015 to April 2016) as an unfair labour practice to withhold it.

p. 4
03

Entitlement to remedies under section 49

Holding

Claimant entitled to one month notice pay, three months' compensation, unpaid suspension salary and leave pay

Reasoning

Having found unfair termination, the court exercised its discretion under section 49 of the Employment Act. Considering length of service (19 January 2015 to 8 April 2016), it awarded compensation of three months' gross salary, one month's notice pay, six months' unpaid salary during suspension, and leave pay for the period of service at the basic salary, together with costs.

p. 4

Legal principles established

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  • Suspension is a neutral administrative measure which must be addressed - the employee must be recalled, heard or reinstated; indefinite suspension without follow-up turns into punishment
  • For termination to pass the fairness test there must be both substantive justification and procedural fairness, and the employer must prove the reasons for termination

Court orders

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  1. 1.Compensation of Kshs.300,000
  2. 2.Notice pay of Kshs.100,000
  3. 3.Unpaid salary of Kshs.600,000
  4. 4.Leave pay of Kshs.100,000
  5. 5.Costs of the suit to the claimant

The bench

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

majority

Wrote the judgment

Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (first-instance employment claim)

Relief refused

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Damages for unfair termination of Kshs.1,200,000 as a separate head

Compensation addressed under section 49 of the Employment Act; the general damages claim subsumed in compensation awarded

p. 4

Unpaid salary for nine months (Kshs.900,000) as claimed

Court awarded only six months' salary for the suspension period

p. 4

Costs

Costs of the suit awarded to the claimant

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.

Accordingly, judgement is hereby entered for the claimant against the respondent in the following terms; a) Compensation Ksh300,000; b) Notice pay Ksh.100,000; c) Unpaid salary Ksh.600,000; d) Leave pay Ksh.100, 000; and e) Costs of the suit.
p. 4Final orders - reliefs awarded
The suspension must be addressed one way or other. The claimant be called to answer to any charges/allegations or be returned to work.
p. 3Employer's duty following suspension
For termination to pass the fairness test, it ought to be shown that there was not only substantive justification for the termination but also procedural fairness.
p. 4Substantive and procedural fairness in termination
Although it was not a formal punishment, an employee on suspension is saddled with the uncertainty of not knowing his fate. His self-esteem is punctured and his right to work is interfered with.
p. 3Indefinite suspension as punishment

Issues in the judgment

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minor

Judgment states the letter terminating employment issued on 8th April, 2016 in the remedies section, while the narrative dates it to 13th/16th June, 2016

minor

Respondent's role/title of claimant is not named in the judgment as reproduced; the parties are referred to only as claimant and respondent

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Erick Muhalia v Keroche Breweries Limited [2021] KEELRC 1405 (KLR)", Case Analysis (2021). Not stated in judgment (Employment and Labour Relations Court claim). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2021/1405/eng@2021-02-18

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