BERNARD NGUGI V G4S SECURITY SERVICES KENYA LIMITED [2013] KEELRC 372 (KLR)

REPUBLIC OF KENYA

Industrial Court of Kenya

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BERNARD NGUGI...........................................................CLAIMANT

-VERSUS-

G4S SECURITY SERVICES KENYA LIMITED......RESPONDENT

JUDGMENT

The claimant Bernard Ngugi filed the memorandum of claim on 19. 01. 2010 through Wambua Kigamwa & Company Advocates. The claimant prayed for judgment against the respondent for:

a)a declaration that the termination of his employment was contrary to the prevailing employment law and more specifically the Employment Act, 2007;

b)Kshs.2,075,386/= as particularized in paragraph 8 of the memorandum of claim; and

c)Costs and interest.

The respondent filed the memorandum of reply on 2. 06. 2011 and the supplementary memorandum of reply on 23. 03. 2012 through Hamilton Harrison & Mathews Advocates. The respondent prayed that the memorandum of claim be dismissed with costs.

The case was heard on 16. 04. 2013 when the claimant gave evidence to support his claim and the respondent called its Employee Relations Coordinator one Boniface Ngungu Ndwota to support its case.

The claimant testified as follows:

1. He was employed by the respondent as a management trainee with effect from 15. 05. 2000 as per the employment agreement at folio 5 on the memorandum of claim. In May 2000, he was confirmed in the position of a District Manager. He was in charge of security guards in an area designated as a District.

2. He was deployed to serve in various stations including Eldoret, Nakuru, Murang’a, Kisii and Thika.

3. He was last deployed to serve in Eldoret during which service he was promoted to the position of the Branch Manager, a position he held at the time of his termination. As a Branch Manager, he was responsible for administration, sales, budgeting, recommendation of employees for promotion, managing debt collection, overseeing guarding of cash in transit and security systems in the branch. He reported to the Regional General Manager stationed at Kisumu.

4. He had cordial working relations and discharged his duties as per the employment contract. He was professional in service delivery and in 2007-2008 he was named by the respondent as the best performing Branch Manager in the Western Kenya region and second best in all the 42 branches in the country.

5. On 13. 04. 2010 ,he received the letter of termination being appendix 3 on the memorandum of claim. The letter addressed to him and signed by the Human Resources Manager stated:

“RE: TERMINATION OF SERVICE

In accordance with clause 8 of your employment agreement, this letter serves to advise that you are hereby terminated from the service of this company with effect from 14th April, 2010.

You will be paid your final dues comprising-

·30 days salary in lieu of notice.

·14 days worked up to 14th April 2010.

·6 days accrued leave as at 14th April 2010.

Payment will be subject to all statutory deductions. Your pension dues shall also be processed and paid separately.

You must surrender all company property in your possession including the Identification Card before the above stated dues may be released to you.

Yours sincerely,

SIGNED

David Mutisya

HUMAN RESOURCE MANAGER”

6. He was not given any reasons for the termination but in February, 2010 he had been summoned to the respondent’s office in Nairobi. It was at 5. 00 pm and he was required in Nairobi by 9. 00 am the following day. At the Nairobi meeting, he was informed he had been called for a disciplinary committee hearing. He was orally informed about the alleged misconducts of unfair promotions in his branch and the assignment of staff to perform duties they were not supposed to perform. At that meeting, he had explained that the Human Resource Office was responsible for the promotions and he only recommended eligible staff for promotion as their manager and which role was within his valid authority. He forwarded such recommendations through the Regional General Manager and he had not made any promotional decision. On the allegation of assigning staff duties irregularly, he had explained to the meeting that he agreed he had assigned one Onyango, an alarm guard to collect payments by way of cheque as he also dropped invoices to customers as he performed his normal duties involving inspection of the alarms. It was known to the Regional General Manager that the Eldoret Branch had no credit officer to undertake the debt collection duties and such an arrangement was not only agreed upon but also within his authority to make.

7. His evidence was that clause 8 cited in the termination letter was to the effect that either party could terminate by giving a month’s notice or by paying a month’s salary in lieu of such notice.

1. He knew that in 2008-2009 one million went missing and the employee responsible was one Kasper Okerio. The claimant had been on leave when Kasper disappeared with the money and that issue had not been raised at the disciplinary committee meeting. That issue had attracted a warning letter against him as the District Manager and had been concluded.

2. He had been a member of the Nyati Savings Co-operative Society and at termination he had paid all his loans and the Society refunded his shares upon the termination.

The respondent’s witness testified as follows:

1. In 2010, the respondent received the information that the claimant’s Eldoret branch was not running in accordance with the respondent’s systems and policies. The claimant was called on 5. 02. 2010. Appendix 1 on memorandum of response shows the investigation report. The respondent’s internal investigation report concluded that the Eldoret Branch Manager (the claimant) was not in control of the branch and consequently various respondents’ procedures had been breached. To confirm the breaches, in October 2008 the claimant had allowed a staff who was not properly vetted to be deployed to duties involving cash transit services and as a result the respondent lost Kshs.1,006,950/=; without authority, the claimant had retained a guard as a credit controller; and there were no fuel controls in place.

2. The claimant was accorded a hearing at the meeting of the disciplinary committee held on 5th February, 2010. The notice of the disciplinary proceedings was appendix 3 on the memorandum of reply.

3. The witness admitted that the issue of Kshs.1,006,950/= lost in 2008 was handled by the disciplinary committee in 2008 and concluded with the warning issued to the claimant.

4. The claimant did not issue any promotional letter to staff and he could not disobey the instructions or directions given by the Regional General Manager. Further, the standing policy was that the regional credit officer delivers and picks chegues. Eldoret was under a credit officer based in Kisumu.

5. The claimant owed a co-operative loan of Kshs.28,603/= and the money was withheld and paid to the co-operative.

6. The respondent maintained a contributory pension scheme where employees contributed 5% and the respondent contributed 7% of the basic salary. The claimant was therefore a beneficiary of the contributory scheme.

The issues for determination in this case are as follows:

1. Whether the termination was fair.

2. Whether the claimant is entitled to the prayers made in the memorandum of claim.

On the first issue, the claimant has submitted that the respondent was not entitled to terminate the contract of employment under clause 8 of the contract which provided for a termination notice of one month or pay of one month salary in lieu of the notice. The respondent has submitted that the claimant was served a notice and was given a hearing as required in law. The claimant has relied on the court’s decision in Shankar Saklani -Versus- Dhl Global Forwarding (K) Limited, Industrial Court Cause No. 562 of 2012 at Nairobiwhere this court stated thus,

“Section 35 of the Act prescribes the period of the termination notice in various circumstances. Under Section 35(1) (a), a contract to pay wages daily is terminable by either party at the close of any day without notice. That is the only circumstance where a termination notice is not required and for the obvious reason that service of the notice would be impracticable or of little practical value. The Court holds that to be the only circumstance in which the employer can terminate a contract of service without a notice as envisaged under Section 44 (1) of the Act. Thus, Section 44(1) of the Act does not entitle the employer to terminate without notice in any other circumstance other than in a contract to pay wages daily and misconduct. In all other cases, the Court holds that Section 44 (1) of the Act only entitles the employer to terminate on account of gross misconduct with less notice than which the employee is entitled by any statutory provision or contractual term.

To answer the question if notice and hearing are mandatory in cases of summary dismissal, except for contracts of service to pay a daily wage, the employer must serve a notice and accord the employee a hearing as contemplated in Section 41 of the Act. The only leeway the employer is entitled to under Section 44 (1) is to serve a shorter notice, on account of gross misconduct, than that to which the employee was entitled to under statute or contract.”

Further, the respondent submitted that the claimant was terminated in accordance with the cited clause 8 of the contract of employment. With respect to that submission, the court in the case of Naomi J. Morogo -Versus- Valley Hospital Limited, Cause No. 3 of 2013 at Nakuru, page 5-6,stated:

“Subsection 44(2) of the Act is clear in stating that, ‘44. (2) Subject to the provisions of this section, no employer has the right to terminate a contract of service without notice or with less notice than that to which the employee is entitled by any statutory provisions or contractual term.’

The provision is imperative that only in circumstances envisaged under section 44 of the Act is an employer permitted to invoke summary dismissal. It is the court’s consistent and deeply held opinion that section 35 of the Act that permits termination of employment without giving due termination notice, and instead paying in lieu of the termination notice, must be understood within the clear provisions of section 44 of the Act on summary termination. Payment in lieu of termination notice is available only where, as envisaged under section 44, the employee has by his or her conduct indicated that he or she has fundamentally breached his obligations arising under the contract of service. Under subsection 44(4), such conduct is referred to as gross misconduct and examples are enumerated under the subsection. The court further finds that any contractual provision on termination of employment by paying in lieu of a termination notice must be construed to accrue and apply only where gross misconduct has been established against the employee as envisaged under section 44 of the Act; otherwise such provisions would be unlawful and in contravention of subsection 44(2) of the Act.

In making this holding, the court has been guided by the provisions of Article 47 of the constitution which provides that every person is entitled to administrative action that is expeditious, efficient, lawful, reasonable and procedurally fair. Further, the Article provides that if a right or fundamental freedom of a person has been or is likely to be adversely affected by administrative action, the person has the right to be given written reasons for the action. The court finds that in the instant case the Claimant’s livelihood which depended on her employment was at stake. The decision to terminate her employment obviously had serious adverse consequences and the Respondent was bound under the provisions of Article 10 on national values and principles of governance to uphold the Claimant’s right to fair administrative action.”

The court upholds the opinions in the cited cases. Under our legislative framework in the Employment Act, 2007 shorter termination notices that is agreed between parties or as provided in statute are only permissible in instances of gross misconduct. It cannot be that an employee who is innocent and not accused of any misconduct is treated at a lower protection standard than one who is culpable of misconduct or even poor performance. Termination of employment, unless proven otherwise, is a serious decision with invariably adverse consequences to the affected employee. Preparation by way of a valid notice and hearing is crucial. Reasons must be attributed to the termination as envisaged under section 43 of the Employment Act, 2007. These must be given in cases of alleged poor performance, misconduct, ill health and even termination in accordance with the agreed termination clause. In this case, the alleged reasons for termination were not proved. The alleged irregular promotions were not established to have taken place and undertaken or instigated by the claimant. The alleged irregular assignment to unqualified staff to collect cheques was attributable to the respondent’s failure to deploy a credit officer at the Eldoret Branch to collect the debts and it is the court’s view that the claimant was entitled to assign the responsibility to the available staff. Of defective operational systems and policies, this court stated in GraceGacheri Muriithi –Versus- Kenya Literature Bureau (2012) eKLR as follows,

“To ensure stable working relationships between the employers and employees, the court finds that it is unfair labour practice for the employer to fail to act on reported deficiencies in the employer’s operational policies and systems. It is also unfair labour practice for the employer to visit upon the employee adverse consequences for losses or injury to the employer attributable to the deficiency in the employer’s operational policies and systems. The court further finds that it would be unfair labour practice for the employer to fail to avail the employee a genuine grievance management procedure. The employee is entitled to a fair grievance management procedure with respect to complaints relating to both welfare and employer’s operational policies and systems.The court holds that such unfair labour practices are in contravention of Sub Article 41(1) of the Constitution that provides for the right of every person to fair labour practices. Further, the court holds that where such unfair labour practices constitute the ground for termination or dismissal, the termination or dismissal would invariably be unfair and therefore unjust.”

The court upholds that opinion and in this case. The respondent failed to deploy the credit officer at Eldoret. The claimant’s supervisor, the Regional General Manager at Kisumu was aware of that staffing deficiency. It was within the claimant’s authority as a manager to do the best with the available staff.

It is the holding of the court that under the redefined constitutional and statutory policies as set out in the cited cases, termination clauses that employment can be terminated by notice or payment in lieu of notice cannot stand the clear provisions of the section 44 of the Act. Where a notice is shorter, there must be established a case of gross misconduct failing which, the employer must serve the agreed notice. In the opinion of the court, the payment in lieu of the agreed or statutory termination notice would undermine due process and deny the employee the well deserved preparation before facing loss of employment, and therefore loss of livelihood and the inherent dignity of engaging in useful work.

In this case, the respondent failed to be categorical on the reasons for the removal of the claimant from employment. First the termination letter alleged clause 8 as agreed between the parties. However, in the pleadings, evidence and the submissions, disciplinary action was invoked and disciplinary committee proceedings cited. Such wavering and shifting of positions on the part of the respondent is a clear manifestation of bad faith that is inconsistent with the high trust, confidence and cooperation expected between parties in the employment relationship.

Secondly, even if the respondent were to rely on the disciplinary procedure as founded upon the notice of 4. 02. 2010, it is obvious that the proceedings did not meet the standards in section 41 of the Employment Act, 2007. The requisite notice period was shorter than agreed and the notice shows that the claimant did not have a representative at the hearing. Under the conditions set out in the notice, he was entitled to at least two days preparatory notice but which was never granted. The court holds that disciplinary proceedings have serious consequences on the employee and the employer must be clear on the consequences and strictly comply with the agreed and statutory procedures. From the outset, it must be conveyed to the employee that the proceedings may result in imposition of serious punishment such as termination and it is not open for the employer to shift the intention mid-stream as it happened in this case. The process must be consistent in intention failing which the employee is entitled to plead foul play.

The court is alert that in undertaking administrative disciplinary proceedings against an employee the employer is not undertaking a judicial process. Nevertheless, the standards in the Act and as expected to be applied by well establish employers, like the respondent, impose a high standard of due process very close to a quasi- judicial proceeding. In that regard, this court has offered guidance in the case of Titus Musau Ndivau and Another –Versus- Waridi Limited, Cause No. 903 of 2012 at Nairobi at pg 14-15 where the court stated:

“In the circumstances it is the court’s opinion that unless the preliminary inquiry into the alleged misconduct do obviously disclose gross misconduct, it were wiser for employers to consistently follow the wider path of notification and hearing as envisaged under Section 41 of the Act. Such wider path of the statutory due process of fair termination of employment would entail the following import steps:

(a)reporting of misconduct, to the appropriate authority of the employer, that may occasion disciplinary action and therefore termination of the contract of employment;

(b)undertaking a preliminary inquiry as to gravity of the alleged misconduct and available material and relevant evidence;

(c)if preliminary inquiry discloses gross misconduct, that is, an obvious employee’s conduct that fundamentally breached the obligations arising under the contract of service, the employer may summarily dismiss by communicating the dismissal decision most preferably in writing – but if obvious gross misconduct is not disclosed, the next steps will follow;

(d)informing the affected employee in writing, in a language that the employee understands, the misconduct and full particulars of the allegations leveled against the employee;

(e)the notice in (d), commonly called a show cause letter, must inform the employee the reasonable or agreed time-frame and method for raising his or her defence;

(f)the notice in (d) must also inform the employee, in making his or her defence, that it is contemplated by the employer that a punishment including termination or dismissal is contemplated against the employee if the employee fails to exculpate himself or herself;

(g)an objective and factual or scientific investigation should be accorded to the concerned employee including an opportunity to be heard, call and cross-examine witnesses, produce documents and be assisted with a trade union representative or workmate or any other person of the employee’s choice;

(h)during the hearing and even in the show cause letter, the employee ought to be informed of any circumstances that may aggravate or mitigate the consideration of the case as the circumstances are known to the employer including the employee’s previous record of service;

(i)during the hearing the employee should be given an opportunity to make representation on any mitigating factor;

(j)the concerned employee must be informed, in a language that he or she understands the findings on the particulars of the misconduct alleged and the findings on the aggravating or mitigating factors;

(k)the concerned employee must be informed the decision made including the punishment imposed or termination of employment or measures the employee must implement in future in view of the findings and the decision that employment shall continue but employee’s improvement is desired;

(l)in view of statutory or contractual provision, informing the employee any right to appeal or apply for review; and

(m)if external processes shall follow such as conciliation or adjudication, the employer shall provide all the relevant information necessary for fair determination of the dispute arising out of the employer’s decision in the disciplinary proceedings.

Accordingly, it is the opinion of the court that the Employment Act, 2007 envisages serious due process of justice on the part of the employer in event of alleged misconduct, poor performance or even physical incapacity of an employee. It is not a casual undertaking that can lead to termination of employment without adequate explanation of the circumstances and the reasons taken into account before making the termination decision. To put emphasis on the seriousness of the decision to terminate, Section 78 of the Act provides that an employer shall notify the termination of every employment and of each lay-off of a person in writing to the nearest employment service office within two weeks of the termination or lay-off.”

Those being the standard guidelines and taking into account the findings of the court in this case, the court finds that the termination of the claimant by the respondent was unfair.

The second issue for determination is whether the claimant is entitled to the remedies as prayed for. The court makes the following findings:

1. The claimant is entitled to Kshs.84,200/= being thirty days pay in lieu of the agreed notice, Kshs.39,293/= being pay for days worked in April, 2010, Kshs.16,840/= being pay for the accrued leave less permissible deductions of Kshs.65,095/= making the claimant’s undisputed claim under the headings as Ksh.75,240/= as submitted by the respondent.

2. The claimant was a member of the National Social Security Fund and enjoyed the contributory pension scheme. These are not disputed and the court finds that the claimant is not entitled to the service gratuity as prayed for. Section 35(5) of the Employment Act, 2007 is clear that the claimant would not be entitled as prayed in circumstances whereby he is a member of the Fund and the pension contributory scheme.

3. As the claimant was unfairly dismissed and considering the claimant’s bumpy record of service and the substantial contributory pension of slightly below Kshs.1,000,000/= the claimant was entitled to and has been paid, the court considers that Kshs.505,233. 30/= being six months gross salaries at the rate of Kshs.84,205. 55/= per month is a fair compensation in this matter. The respondent cited the cases of Dalmas B. Ogoye –Versus- K.N.T.C (1996) e KLR and Joseph Mujibi Ouma –Versus- Natonal Cereals & Produce Board & Two Others (2006) e KLR for the proposition that the claimant would be entitled to only one month pay in lieu of the one month contractual termination notice. However, the court finds that the authorities do not apply in view of the finding of unfair termination and in view of the intervention of section 49(1) (c) which clearly prescribe such payment in view of the unfair termination. It is obvious that the decisions were made before the enactment of the Employment Act, 2007.

In conclusion judgment is entered for the claimant against the respondent for:

a)a declaration that the termination of the respondent’s employment was unfair;

b)the respondent to pay the claimant Kshs.580,473. 30/= plus interest at court rates from the date of judgment till full payment; and

c)the respondent to pay half of the costs of the case.

Signed, datedanddeliveredin courtatNakuruthisFriday, 10th May, 2013.

BYRAM ONGAYA

JUDGE

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