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ELRCPartially AllowedMilimani ELRC Appeal (Judgment in appeal against Milimani CMEL No. E583 of 2022)

Veteran Pharmaceuticals Limited v Ngeresa (Employment and Labour Relations Appeal E052 of 2022) [2023] KEELRC 2919 (KLR)

Employment and Labour Relations Court
10 November 2023
2,433 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~10 min to read original · ~4 min brief

The bottom line

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Kenyan employers claiming an employee absconded must prove they tried to reach them, or face unfair termination awards.

What this practically means

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Executive summary

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Veteran Pharmaceuticals appealed against a magistrate's court judgment (S.A Opande, PM, 24 March 2022) which found that Jeremiah Minyira Ngeresa, a rider employed from June 2016 at a final salary of Kshs. 30,000, was unfairly terminated on 22 February 2020, and awarded him one month's pay in lieu of notice, house allowance, six months' compensation, a certificate of service, costs and interests. The appellant argued the respondent absconded duty after sick leave lapsed, that the salary was consolidated, and that the compensation was excessive. The respondent maintained the employer bore the burden of proving a valid reason and fair procedure. The court, guided by Selle v Associated Motor Boat Co, rehearsed the applicable principles for a first appellate court. It held that although absconding is gross misconduct under section 44(4), the appellant produced no warning letters or evidence of attempts to contact the respondent, so it failed to discharge its statutory burden under sections 43 and 47(5); the finding of unfair termination was upheld. However, clause 4 of the contract provided a gross consolidated salary and the pay slips mentioned no house allowance, so following Sani Orina v Hiprora the house allowance award was set aside. Notice pay was justified under section 36 but corrected to Kshs. 30,000. Following Kenya Revenue Authority v Darasa Investments, the court declined to disturb the six months' compensation. The appeal was allowed in part: notice pay of Kshs. 30,000 and compensation of Kshs. 300,000, totalling Kshs. 330,000, with costs and interests of the suit and 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 Respondent's employment was unfairly terminated
  2. 2.Whether the trial court erred by awarding house allowance and one month's pay in lieu of notice to the Respondent
  3. 3.Whether this court should interfere with the discretion of the lower court in awarding six months compensation to the Respondent

Key legal issues

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01

Whether the Respondent's employment was unfairly terminated

Holding

Yes - the appellant failed to prove that the respondent absconded duties, so termination without valid reason was unfair

Reasoning

Section 43 and section 47(5) of the Employment Act place the burden of proving the reason for termination on the employer. Although absconding is gross misconduct under section 44(4), the appellant produced no warning letters or evidence of any effort to contact the respondent. Inferring termination without valid reason, the trial court was justified.

p. 4
02

Whether the trial court erred in awarding house allowance

Holding

Yes - the award was set aside because the contract provided a gross, consolidated salary

Reasoning

Clause 4 of the contract provided a gross salary of Kshs. 18,000 later increased to Kshs. 30,000, and the pay slips made no mention of house allowance. Following Sani Orina v Hiprora, gross salary includes house allowance, so no separate award was warranted.

p. 5
03

Whether the award of one month's pay in lieu of notice was erroneous

Holding

No - justified under section 36 of the Employment Act given the finding of unfair termination

Reasoning

Having upheld the finding of unfair termination without notice, the court held the notice pay award justified under section 36, though it corrected the quantum from Kshs. 34,500 to Kshs. 30,000, the respondent's actual salary.

p. 5
04

Whether the appellate court should interfere with the six months' compensation

Holding

No - the trial court's discretion was reasonably exercised and no misapprehension of facts was shown

Reasoning

Guided by Kenya Revenue Authority v Darasa Investments, an appellate court interferes with discretion only where the trial court misapprehended the facts leading to an erroneous decision. The trial court reasonably considered the appellant's full payment of salary during sick leave. The appeal on this ground failed.

p. 5

Legal principles established

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  • An employer alleging that an employee absconded duties must demonstrate that efforts were made to contact the employee
  • An appellate court will not interfere with a trial court's exercise of discretion unless the trial court misdirected itself and arrived at a wrong decision
  • A gross (consolidated) salary is presumed to include house allowance

Court orders

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  1. 1.Appeal allowed in part
  2. 2.One month's payment in lieu of notice at Kshs. 30,000/= substituted for the trial court award of Kshs. 34,500
  3. 3.Six months' compensation for unfair termination maintained at Kshs. 300,000/= (recalculated on salary of Kshs. 30,000)
  4. 4.House allowance award of Kshs. 131,400/= set aside
  5. 5.Costs and interests of the suit and the appeal awarded to the Respondent

The bench

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

Wrote the judgment

On appeal from
Magistrates' Court at Milimani (CMEL No. E583 of 2022)
Milimani CMEL No. E583 of 2022
Jurisdiction invoked
First appellate jurisdiction over the subordinate court's judgment in an employment claim

Relief refused

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Appeal against the unfair termination finding and the six months' compensation

The appellant failed to discharge the statutory burden of proving that the respondent absconded duties, and the trial court's exercise of discretion on compensation was not shown to be erroneous

p. 5

Ground of appeal on the 15% house allowance award

Allowed - the court found the lower court erred because the parties' contract provided for a gross (consolidated) salary

p. 5

Costs

Costs and interests of the suit and this appeal (to the Respondent)

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.

In conclusion the Court hereby allows the Appeal in part as shown below a. One Month's payment in lieu of Notice Kshs.30,000/= b. 6 months compensation for unfair termination Ksh.300,000/= Total Kshs 330,000/= c. Costs and interests of the suit and this appeal.
p. 6final orders
In this case failure to demonstrate that an employee who had worked for the Appellant for more than 3 years without any history of absconding duties actually absconded work, leads to the inference that the Appellant terminated the services of the Respondent without any valid reason.
p. 5unfair termination - burden on employer
An allegation that an employee has absconded duties calls upon an employer to reasonably demonstrate that efforts were made to contact such an employee without success.
p. 4abscondment
The lower court therefore erred in awarding housing allowance.
p. 5house allowance - consolidated salary
This court as an appellate court can only interfere with exercise of discretion by a lower court if is apparent that the trial court misapprehended the facts leading to an erroneous decision.
p. 5interference with discretion

Issues in the judgment

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minor

Trial court award figures internally inconsistent - notice pay given as Kshs. 34,500,000 and the three awards do not total the stated Kshs. 372,900

minor

Issue (d) duplicates issue (a) in the list of issues for determination

minor

Numbering of the analysis section restarts (paragraphs 21 to 24 then '1', '2')

material

Substituted notice pay of Kshs. 30,000 plus six months' compensation of Kshs. 300,000 stated as 'Total Kshs 330,000/=' although arithmetic gives Kshs. 330,000 only if compensation is 300,000; stated total is correct but quantum of compensation equals twelve months' salary (Kshs 300,000 = 6 x Kshs 50,000?) inconsistent with salary of Kshs 30,000

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, "Veteran Pharmaceuticals Limited v Ngeresa (Employment and Labour Relations Appeal E052 of 2022) [2023] KEELRC 2919 (KLR)", Case Analysis (2023). Milimani ELRC Appeal (Judgment in appeal against Milimani CMEL No. E583 of 2022). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/2919/eng@2023-11-10

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