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ELRCPartially AllowedELRC Cause (Kericho), memorandum of claim dated 20th December 2022 (Criminal Case No. E3448 of 2021 referenced)

Kothary v Rai Cement Company Limited (Employment and Labour Relations Cause E022 of 2022) [2024] KEELRC 1149 (KLR)

Employment and Labour Relations Court of Kenya
2 May 2024
6,199 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~25 min to read original · ~4 min brief

The bottom line

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A Kenyan court ruled that stopping an employee's salary without explanation counts as unfair dismissal, awarding the worker compensation and costs.

What this practically means

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Executive summary

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The claimant, employed by the respondent as a regional sales manager from 18th April 2018 at a gross salary of Kshs 73,000, was arrested on 10th September 2021 and prosecuted for stealing by servant in Criminal Case No. E3448 of 2021, from which he was acquitted under section 215 of the Criminal Procedure Code. He claimed unfair termination and sought Kshs 10,934,500 comprising notice pay, severance, compensation, damages for defamation and malicious prosecution, plus a certificate of service. The respondent denied terminating him, asserting he absconded after arrest and that he was responsible for losses of Kshs 13,199,040 from undelivered or unpaid cement orders. The court framed three issues: whether the claimant was dismissed or absconded; whether any termination was fair and justified; and remedies. It held that the respondent's unexplained stoppage of the claimant's salary amounted to a termination rather than desertion. The respondent admitted issuing no termination letter and conducting no disciplinary hearing, and produced no delivery notes to substantiate the alleged losses, so the dismissal was both procedurally and substantively unfair. On remedies, mindful of the claimant's own failure to follow up payments, the court awarded only three months' salary as compensation (Kshs 231,000) plus one month's notice pay (Kshs 73,000), less statutory deductions, ordered a certificate of service, and awarded costs to the claimant. The larger damages claims were not granted. Judgment was delivered virtually on 2nd May 2024 by Hellen Wasilwa, Judge.

Questions the Court framed

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

  1. 1.Whether the claimant was dismissed or absconded duty.
  2. 2.If he was terminated whether the termination was fair and justified.
  3. 3.Whether the claimant is entitled to the remedies sought.

Key legal issues

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01

Whether stoppage of salary constituted termination

Holding

The claimant did not abscond; he was terminated by the respondent

Reasoning

The claimant's last day at work was 10th September 2021 when he was arrested and prosecuted. He received no termination letter and inferred termination from the stoppage of his salary and denial of access to the premises. The court held that the employer has a mandatory statutory duty to pay wages under section 17 of the Employment Act, and that unexplained stoppage of wages was a breach of that obligation capable of amounting to termination or dismissal, so the claimant was terminated rather than a voluntary absconder.

p. 10
02

Whether the termination was fair and justified

Holding

The dismissal was unfair and unjustified

Reasoning

The respondent admitted it issued no termination letter and took the claimant through no disciplinary process. Delivery notes that would have substantiated the alleged loss were never produced in court, so the validity of the reasons for dismissal was not established. Section 41 of the Employment Act requires explanation and a hearing before termination on grounds of misconduct; neither occurred, and section 45(2) requirements were therefore not met.

p. 12
03

Remedies

Holding

Compensation limited to 3 months' salary plus one month's notice pay, and a certificate of service

Reasoning

Although the termination was unfair, the court took into account that the claimant, as the sales manager responsible for corporate clients, had a duty to ensure payment for supplies which he failed to do. It therefore exercised discretion to award only 3 months' salary as compensation under section 49 of the framework, plus one month's salary in lieu of notice, less statutory deductions, and ordered issuance of a certificate of service and costs.

p. 12

Legal principles established

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  • Non-payment of an employee's salary or wages when due, without explanation, can amount to a termination or dismissal
  • An employer must conduct a disciplinary process and establish valid reasons before dismissing an employee; absent both, the dismissal is unfair

Court orders

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  1. 1.Compensation of 3 months' salary for unfair termination (Kshs 73,000 x 3 = 231,000) less statutory deductions
  2. 2.One month's salary in lieu of notice (Kshs 73,000)
  3. 3.The claimant to be issued with a Certificate of Service
  4. 4.The respondent to pay the costs of the suit

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 (unfair termination claim under sections 41, 43 and 45)

Relief refused

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General damages for character damage/reputation, employment-related defamation and malicious prosecution (part of the Kshs 10,934,500 claim)

Not awarded; the court only granted compensation for unfair termination, notice pay, certificate of service and costs, having found the claimant bore responsibility to follow up payments for deliveries

p. 12

Severance/gratuity pay for the 3 years worked

Not awarded in the disposition

Access to the claimant's previous residential place at the company's premises to collect personal belongings

Not granted in the final orders

Costs

The respondent will pay cost of this suit.

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.

It is therefore my finding that the claimant didn’t abscond duty but was terminated by the respondent.
p. 10Non-payment of salary as constructive termination
In the absence of any disciplinary hearing and in the absence of established validity of reasons leading to the claimant’s dismissal, I find his dismissal unfair and unjustified.
p. 12Substantive and procedural fairness under sections 41 and 45
I award him 3 months’ salary as compensation for the unfair termination being 73,000/- x3 =231,000. I also award him 1-month salary in lieu of notice= 73,000/= Total= 302,000/= Less statutory deductions. The claimant should also be issued with a Certificate of Service. The respondent will pay cost of this suit.
p. 12Final orders and disposition

Issues in the judgment

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minor

Paragraph numbering jumps from paragraph 71 to paragraph 78 in the judgment as reproduced

minor

Typographical errors throughout (e.g. 'ofiense' for 'offence', 'afiecting' for 'affecting', 'dive' for 'differ'), including in quoted authorities

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, "Kothary v Rai Cement Company Limited (Employment and Labour Relations Cause E022 of 2022) [2024] KEELRC 1149 (KLR)", Case Analysis (2024). ELRC Cause (Kericho), memorandum of claim dated 20th December 2022 (Criminal Case No. E3448 of 2021 referenced). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/1149/eng@2024-05-02

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