Galgalo Jarso Jillo v Agricultural Finance Corporation [2021] eKLR

Key Facts

Transaction Type

Issues

• The court examined if the Respondent provided the Claimant with access to critical documents (e.g., audit report), allowed cross-examination of witnesses, and permitted accompaniment by a co-employee during the disciplinary session. The Respondent's failure to produce disciplinary session minutes and the Claimant's allegations of procedural flaws led the court to find the process unfair.
• The court addressed whether the Agricultural Finance Corporation's termination of Galgalo Jarso Jillo's employment was substantively justified based on allegations of gross misconduct (financial improprieties at the Hola branch) and whether the termination adhered to fair procedures under the Employment Act. The Claimant argued the termination lacked valid grounds and violated procedural fairness, while the Respondent contended it was lawful due to financial misconduct and followed disciplinary processes.
• The court evaluated the legality of the suspension and the Respondent's decision to withhold the Claimant's full salary during the suspension period. It concluded that while administrative suspension is permissible, unilaterally withholding entire remuneration without legal sanction or employee consent constituted a breach of the contract of service.

Holdings

• The Respondent is ordered to pay the Claimant an additional Ksh. 116,500/= as one month's basic salary deficit under the contract of service (three months' salary in lieu of notice was required but only two months were paid).
• The sum awarded shall attract interest at court rates from the date of judgment until payment in full, subject to statutory deductions.
• The court declined to award other reliefs sought by the Claimant, including damages for breach of contract and suspension, due to the Claimant's contributory role in the mismanagement of financial affairs.
• The termination of the Claimant's contract of service is declared unfair only to the extent of the failure by the Respondent to prove that it afforded the Claimant procedural fairness in processing his release.
• The Respondent is ordered to issue the Claimant with a Certificate of Service as required by law, irrespective of the circumstances of termination.
• The Respondent is ordered to pay the Claimant Ksh. 150,750/= as compensation for one month's accrued annual leave that was not commuted at termination.
• The Respondent is ordered to pay the Claimant Ksh. 150,750/= as nominal damages for failure to accord procedural fairness during the termination process.

Remedies

• The Respondent is ordered to pay the Claimant an additional Ksh. 116,500 as compensation for the deficit in the notice period, which was supposed to be three months' salary but only two months were paid.
• The Respondent must pay Ksh. 150,750 to the Claimant as compensation for the annual leave entitlement that was not taken, as the Claimant had rendered one year of service at the time of termination.
• The Respondent is required to issue the Claimant with a Certificate of Service, as mandated by law for departing employees, regardless of the circumstances of their departure.
• The court declares the termination of the Claimant's contract as unfair, specifically due to the Respondent's failure to prove procedural fairness in the termination process.
• The court awards the Claimant Ksh. 150,750 in nominal damages to compensate for the Respondent's failure to fully observe procedural fairness during the termination process.
• The court exercises its discretion to order that each party shall bear their own costs related to the claim, as both were at fault in some way regarding the events leading to the case.
• Interest will be applied to the awarded sums at the court's rate, starting from the date of judgment until the amounts are fully paid by the Respondent.

Monetary Damages

Legal Principles

• The court applied the burden of proof provisions under the Employment Act, requiring the employer to justify the termination's substantive and procedural fairness. The employer failed to demonstrate procedural compliance, leading to a declaration of unfair termination.
• The judgment emphasized adherence to natural justice principles during disciplinary processes, including the right to access documents, cross-examine witnesses, and be accompanied by a colleague. The employer's failure to provide these rights rendered the termination procedurally flawed.
• The court determined that the employer must prove termination reasons on a balance of probability, not beyond reasonable doubt. The employer's inability to substantiate procedural compliance with evidence (e.g., missing disciplinary minutes) invalidated their defense.

Precedent Name

• Thomas Sila Nzivo v Bamburi Cement Limited
• Muthaiga Country Club v Kudheiha Workers
• Josephine M. Ndungu & others v Plan International Inc
• National Bank of Kenya v Samuel Nguru Mutonya
• Transport Workers Union v African Safari Diani Adventure

Key Disputed Contract Clauses

• Section 28 of the Employment Act grants employees one month's salary for annual leave after one year of service. The Claimant was terminated in October 2016 after one year of employment, but the Respondent failed to pay this entitlement. The court awarded the unpaid leave commutation.
• Clause 7 of the 18th June 2015 contract stipulated that either party terminating the contract must pay the other three months' basic salary in lieu of notice. The Respondent paid only two months, leading to a dispute over the unpaid month. The court ruled this clause was breached and ordered the Respondent to pay the deficit.

Cited Statute

• Employment Act, 2007
• Anti Corruption and Economic Crimes Act, 2003

Judge Name

Passage Text

• 76. The only reason why the termination has been declared unfair is because the Respondent did not prove that it upheld procedural fairness in processing the termination.
• 81. Clause seven (7) of the contract of service dated 18th June 2015 provides that either party who opts to terminate the contract pays the other damages equivalent to three (3) months basic salary. By virtue of this clause, the Respondent ought to have paid the Claimant three (3) and not two (2) months' basic salary (Ksh. 233,500/=) as it did.
• 67. Under the general principles of the law of contract, remuneration certainly constitutes one of the fundamental terms in a contract of service. Consequently, breach of such term would result in the collapse of the contract. Indeed, Part IV of the Employment Act recognizes remuneration as a protected right of an employee.

Damages / Relief Type

• Declaration that termination was unfair due to procedural flaws in the disciplinary process.
• Ksh. 116,500 for one month's basic salary deficit in notice period.
• Certificate of Service to be issued to the Claimant.
• Ksh. 150,750 in nominal damages for procedural unfairness during termination.
• Ksh. 150,750 for unutilized annual leave commutation.
• Each party to bear their own costs of the claim.
• Interest on awarded sums at court rates from judgment date until full payment.