Veteran Pharmaceuticals Limited v Ngeresa (Employment and Labour Relations Appeal E052 of 2022) [2023] KEELRC 2919 (KLR)
The bottom line
#Kenyan employers claiming an employee absconded must prove they tried to reach them, or face unfair termination awards.
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's employment was unfairly terminated
- 2.Whether the trial court erred by awarding house allowance and one month's pay in lieu of notice to the Respondent
- 3.Whether this court should interfere with the discretion of the lower court in awarding six months compensation to the Respondent
Key legal issues
#Whether the Respondent's employment was unfairly terminated
Yes - the appellant failed to prove that the respondent absconded duties, so termination without valid reason was unfair
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.
Whether the trial court erred in awarding house allowance
Yes - the award was set aside because the contract provided a gross, consolidated salary
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.
Whether the award of one month's pay in lieu of notice was erroneous
No - justified under section 36 of the Employment Act given the finding of unfair termination
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.
Whether the appellate court should interfere with the six months' compensation
No - the trial court's discretion was reasonably exercised and no misapprehension of facts was shown
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.
Legal principles established
#- 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
#- 1.Appeal allowed in part
- 2.One month's payment in lieu of notice at Kshs. 30,000/= substituted for the trial court award of Kshs. 34,500
- 3.Six months' compensation for unfair termination maintained at Kshs. 300,000/= (recalculated on salary of Kshs. 30,000)
- 4.House allowance award of Kshs. 131,400/= set aside
- 5.Costs and interests of the suit and the appeal awarded to the Respondent
The bench
#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
#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
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
Costs
Costs and interests of the suit and this appeal (to the Respondent)
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.
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.
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.
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.
The lower court therefore erred in awarding housing allowance.
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.
Issues in the judgment
#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
Issue (d) duplicates issue (a) in the list of issues for determination
Numbering of the analysis section restarts (paragraphs 21 to 24 then '1', '2')
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
#Practical implications
#Frequently asked questions
#Cite this brief
#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.