Chris Ngaira Isabwa v Postal Corporation of Kenya [2020] KEELRC 1639 (KLR)

REPUBLIC OF KENYA

IN THE EMPLOYMENT AND LABOUR RELATIONS COURT

AT NAIROBI

CAUSE NO. 979 OF 2011

(Before Hon. Lady Justice Maureen Onyango)

CHRIS NGAIRA ISABWA....................................................................CLAIMANT

VERSUS

POSTAL CORPORATION OF KENYA..........................................RESPONDENT

JUDGMENT

The claim herein was instituted vide the claimant’s memorandum of claim dated 17th June, 2011 and filed on 20th June, 2011.  It is the claimant’s averment in the memorandum of claim that he was employed by the respondent herein, a statutory corporation established under the Postal Corporations Act, Cap. 411 Laws of Kenya, vide its letter dated 10th December 2004 on Permanent and Pensionable terms.

The Claimant further avers that on or about 11th January 2005 he was posted to the Finance and Accounts department and was later appointed Manager Procurement in the Finance and Accounts department on 18th July 2005 earning a monthly salary of Kshs.165,010.

The Claimant contends that he worked diligently and to the Respondent’s satisfaction until on or about 30th April 2009 when he received a letter from the Respondent sending him on compulsory leave to pave way for investigations.

The Claimant further contends that he was sent a letter by the Respondent on or about 2nd July 2009 alleging that a forensic audit had been conducted and that he (the Claimant) had been found to have occasioned the Respondent loss of a colossal amount due to his negligence.

He avers that he responded to the allegations on 15th July 2009 despite not being furnished with the said report by the Respondent. He further contends that the Respondent proceeded to dismiss him on the grounds of gross misconduct vide its letter dated 22nd July 2009.

The Claimant further avers that he did appeal against the decision to terminate his services vide his letter dated 4th January 2010, which Appeal was dismissed by the Respondent.

The Claimant contends that the termination of his employment was unfair as it violated the mandatory provisions of Sections 43 and 45 of the Employment Act, 2007 and that it was in breach of the principles of natural justice.

Aggrieved by the decision to unfairly terminate his services, the Claimant filed the instant Claim seeking the following reliefs:-

1. The dismissal of the Claimant from his employment by the Respondent be declared wrongful and unlawful.

2. Claimant be paid his terminal benefits as set out hereunder:

I. Notice Pay

Kshs.165,010 x 3 months.......................... Kshs.495,030

II. Severance Pay

165,010 x 15 days x 4 years................ Kshs.330,019. 99

30

III. Gross Salary for 12 months as per Section 49(1)(c)

Kshs.165,010 x  12 months.................... Kshs.1,980,120

Total      Kshs.2,805,169. 99

3. Respondent be ordered to compensate the Claimant for wrongful dismissal at the equivalent of twelve (12) months gross salary.

4. Costs of the Claim

5. That the Court do issue such orders and give such directions as it may deem fit to meet the ends of justice.

6. Interest on the above at Court rates.

The Respondent in its Memorandum of Response dated 7th July, 2011 and filed in Court on 11th July, 2011 admitted having employed the Claimant as alleged. It however denies that the Claimant worked with diligence during the subsistence of his employment contract.

The Respondent in particular avers that it was suspicious of the existence of fraudulent activities and breach of fiduciary relationship in the procurement of its Electronic Funds Transfer and conducted a forensic audit as a result of which the Respondent found some of its senior officers culpable including the Claimant herein.  That this culminated in the summary dismissal of the Claimant herein

The Respondent further avers that the Claimant had on several occasions been involved in neglect, careless and improper conduct of his duties leading to him being issued with several warnings as evidenced by annexures 1, 2, 3 and 4 in the Memorandum of Response.

The Respondent contends that its decision to terminate the Claimant’s employment was fair and in accordance with the provisions of Section 44(4)(c) of the Employment Act, 2007.

The Respondent further contends that the termination was procedurally fair and therefore the claimant is not entitled to the reliefs sought in his Memorandum of Claim.

The Respondent urges this Court to dismiss the instant Claim with costs to the Respondent.

The suit was heard on 17th April, 2018, 15th October, 2018 and 20th February, 2019 with the Claimant testifying on his own behalf and the Respondent calling one witness to testify on its behalf. Both parties thereafter filed and exchanged written submissions after the close of the hearing.

Claimant’s Case

The claimant testified that he was employed by the Respondent on 10th December, 2004 and reported for duty on 11th January, 2005. He testified that he was engaged as a Manager in charge of procurement and was earning a monthly salary of Kshs.165,000.

He further testified that he received a call on 30th April 2009 from the Post Master General inquiring of his whereabouts. That he was asked to report to the Post Master General’s office where he was issued with a letter sending him on compulsory leave to facilitate effective investigation following the forensic report.

The claimant testified that he was never called upon during the forensic audit to give his account of the events despite the fact that his colleagues were called to give their account. He further stated that on 2nd July, 2009 he was called by the General Manager Human Resources and asked to collect a letter which he discovered was show cause letter. He stated that in the said letter he was accused of various offences as per annexure 6 in his Claim.  He was required to respond to the accusations within 7 days.

The claimant testified that he did write to the acting Post Master General on 10th July 2009 seeking to be supplied with the forensic report but was never supplied. He further testified that he responded to the accusations without being furnished with the said report on 15th July 2009.

He testified that on 22nd July 2009 he was informed that he will appear before the board.  He was asked to collect a letter from the Respondent, which he did on 24th July 2009 and that the said communication was a letter of his dismissal.

The claimant avers that he did appeal against the decision to terminate his services on 27th July 2009 but did not get any response from the Respondent on the same until 6th April 2010 when he was informed that the board had upheld the decision to terminate his employment.

He contends that the termination was unfair as 90% of the allegations levelled against him occurred before his appointment by the Respondent and that further the said forensic report had no mention of his name.

He further contends that his role in the tender committee was that of secretary and that he was never involved in the procurement of Electronic Funds Transfer and neither did any documentation relating to that procurement come to his possession. He contends that the Respondent’s top management was responsible for the Electronic Funds Transfer.

The claimant urged this Court to find that his termination was unfair and allow the same in terms of the reliefs sought in his claim.

On cross examination the claimant confirmed having been a member of NSSF and requisite deductions made from his salary. He further confirmed that his employment contract did not provide for gratuity.  The claimant further stated that he was not required to make any representations on his defence during the board meeting of 17th July 2009. He stated that he was only required to respondent to the notice to show cause letter which he responded to and that the meeting with the Board was only a follow up to the response to the show cause letter.

He confirmed that the forensic report is marked private and confidential and that he was not sure how he got a copy of the same but insisted that the same was provided by the Respondent at his request.

Respondent’s Case

The Respondent called one witness, JOHN TONUI, the in charge of Human Resources with the Respondent who adopted his witness statement dated and filed in Court on 9th November, 2018 as his evidence in chief.  He also relied on the list of documents attached to the Memorandum of Response. In his witness statement RW1 reiterated the averments made in the Memorandum of Response.

RW1 further testified that the Claimant was never issued with a copy of the forensic report despite requesting for the same as it was a big document that highlighted various malpractices within the Respondent involving the Claimant and other employees. He insisted that the charges affecting the Claimant were clearly highlighted to him on the letter of notice to show cause.

RW1 stated that the Claimant was given sufficient information necessary for him to make out his defence. He confirmed having been present at the disciplinary hearing as secretary to the committee. He testified that the Claimant’s assertion that his defence was not considered was not true as he was allowed to make his oral presentations.

RW1 further confirmed that the Claimant was employed one (1) month after the process started and took part in its implementation which took several years. He testified that the Claimant was the head of department and was therefore capable of stopping the procurement. RW1 further insisted that the Claimant in his capacity would have noted the anomalies in the tender process and advised the Respondent accordingly.

On cross examination RW1 confirmed that the Claimant was sent on compulsory leave on the basis of a forensic report and that the report was dated July, 2009. That the claimant’s leave was effective April 2009. He explained that the Respondent had received a temporary report as the investigations were on going.

He testified that the tender was advertised on 12th November 2004 and that the Claimant was not under the Respondent’s employment at that time. He confirmed that the tender evaluations were done on 3rd December 2004 when the Claimant was equally not under the Respondent’s employment.

On the third allegation against the Claimant herein that the evaluation criteria were not clear, RW1 confirmed that the Claimant was expected to identify envelopes and submit names for evaluation by the evaluation team. RW1 confirmed that the names were sent prior to the Claimant joining the Respondent and that he (the Claimant) was not part of the evaluation team.

RW1 also confirmed that on the charge of failure to advice the management and board on contract variation that led to substantial loss was not supposed to be addressed to the claimant as it was a role that was to be played by the Corporate Secretary who was also part of the negotiation team that later took over the evaluation team. RW1 confirmed that the Claimant was not a member of any of those teams.

RW1 insisted that the Claimant was accorded a fair hearing as evidenced by the minutes attached to the Memorandum of Response. He further confirmed that the Claimant did appeal the decision to terminate his services and that the appeal was unsuccessful.

On re-examination RW1 stated that the Claimant was sent on compulsory leave as he failed in his mandate to advice and ensure proceedings were followed and that all records were properly maintained.

Submissions by the Parties

The Claimant submitted that the allegations levelled against him were false and that most of them occurred prior to his employment with the Respondent herein and therefore he was not liable for any omission (if at all).  The Claimant further submitted that all the allegations levelled against him were false as he was not in the employment of the Respondent at the material time and was therefore incapable of controlling the process.

It is on this basis that the Claimant contends that his termination was unfair and unlawful. The Claimant relied on the case of Fred Odhiambo Vs the Postal Corporation & the Attorney General (2013) eKLR and Andrew K. Tanui Vs Postal Corporation of Kenya (2014) eKLR.These two are cases of former employees of the respondent whom the court found to have been dismissed unfairly for the same procurement process that the claimant was dismissed.

The Claimant further contends that his dismissal was lacking in substantive justification and was procedurally unfair and contrary to the provisions of Section 41, 43, 45 and 47 of the Employment Act, 2007.

He therefore submitted that he is entitled to all the reliefs as sought in his Memorandum of Claim and urged this Court to allow the same as prayed.

Respondent’s Submissions

The Respondent on its part submitted that the Claimant is not entitled to the reliefs sought in his Memorandum of Claim. It is the Respondent’s contention that it did satisfy the procedural fairness requirements as enshrined under Section 41 of the Employment Act, 2007. The Respondent relied on the case of BA Imonikhe Vs Unity Bank Plc SC 68 of 2001 as cited in the Court of Appeal decision in the case of Judicial Service Commission Vs Gladys Boss Shollei & Another (2014) eKLR where the court stated –

“Accusing an employee of misconduct, etc. by way of a query and allowing the employee to answer the query, and the employee answers it before a decision is taken satisfies the requirement of fair hearing or natural justice.  The appellant was given a fair hearing since he answered the queries before he was dismissed.”

The Respondent further submitted that the Claimant owed a duty to it under the provisions of Rule 6(1) of the Exchequer and Audit (Public Procurement Regulations) 2001to ensure that all procurements satisfied the regulations, which duty was not properly executed by the Claimant.

The Respondent further submitted that it had a reason to terminate the contract of the Claimant and that it did so following due process and therefore the Claimant is not entitled to the reliefs sought in his Claim.

The Respondent urged this court to dismiss the Claim filed herein in its entirety with costs to the Respondent.

Analysis and Determination

Having considered the facts of this cause, evidence adduced by the parties hereto, submissions and authorities adduced by the parties, the following are the issues for determination:

1. Whether the termination of the Claimant’s employment was valid both procedurally and substantively

2. Whether the Claimant is entitled to the reliefs sought.

Unfair termination

Under Section 45(2) of the Employment Act termination of an employee’s contract of service is unfair where his employer fails to prove that it was founded and/or grounded on a valid reason which relate to the employee’s conduct, capacity or compatibility and that while arriving at the decision to terminate the services of such an employee fair procedure was followed.

The statutory burden for a complaint of unfair termination of employment or wrongful dismissal is contained in section 47(5) of the Employment Act. The section provides that –

For any complaint of unfair termination of employment or wrongful dismissal the burden of proving that an unfair termination of employment or wrongful dismissal has occurred shall rest on the employee, while the burden of justifying the grounds for the termination of employment or wrongful dismissal shall rest on the employer.

An employee therefore has the burden of proving that an unfair termination of employment has occurred while the employer’s burden is justify the reasons such termination.

Reason for Termination

The reason cited for the termination of the Claimant herein was gross misconduct.  He was accused of negligence of duty and mismanagement of Postapay product that lead to the loss of a colossal amount of money being Kshs.17,348,352. The Respondent further contends that the Claimant failed to carry out his role as Manager Procurement as provided under the Exchequer and Audit (Public Procurement) Regulations 2001 and in particular his role in advising the Respondent.

The Claimant on the other hand contends that the process of procurement begun prior to his employment with the Respondent and that there was no handing over to him of all relevant documentation by his predecessor. That there was therefore nothing he could do.  He further contends that he is being punished for offences not committed by him. He contends that his termination was unfair and un-procedural.

On cross examination RW1 confirmed that the charges levelled against the Claimant herein occurred prior to the Claimant’s employment with the Respondent and in particular, the offence of failure to adhere to timelines allowed for proposal preparation. He further confirmed that the tender evaluation was done on 3rd December 2004 when the Claimant was not under the Respondent’s employment.

RW1 further confirmed that Claimant was also not a member of the evaluation committee. He also confirmed that the Claimant’s name was not included in the initial list of 5 employees that were found to be culpable.  That it was on that basis of the Forensic Audit that the Respondent terminated the services of the Claimant as in its view the Claimant’s conduct amounted to gross misconduct.

From the foregoing I find that the Respondent had no valid reason for terminating the Claimant’s employment as RW1 admitted that the claimant was not adversely mentioned in the Audit report and the claimant’s name was not in the list of employees against whom disciplinary action was recommended.

In the case of Walter Ogal Anuro –v- Teachers Service Commission (2013) eKLR the Court held that:

“…. For a termination of employment to pass the fairness test, there must be both substantive justification and procedural fairness. Substantive justification has to do with establishment of a valid reason for the termination while procedural fairness addresses the procedure adopted by the employer to effect the termination.”

Further, Section 45(2) provides that where the employer fails to prove either procedural fairness or validity of reason the termination of employment is unfair.

Remedies

Given the length of service and the fact that the claimant did not contribute to the events that led to the termination of his employment, he is entitled to compensation under Section 49 of the Employment Act, 2007.  I have taken into account that the claimant was not named in the forensic report and thus there was absolutely no basis to subject him to disciplinary action based on the report together with the employees named in the report. I award him twelve (12) months’ salary as compensation in the sum of Kshs.165,010 x 12 = Kshs.1,980,120

The Claimant is entitled to one (1) month’s salary in lieu of notice by dint of Section 36 of the Employment Act, 2007.  I award him one month’s salary in lieu of notice in the sum of Kshs.165,010

The Claim for severance is rejected as this is only available in a case of redundancy under Section 40 of the Employment Act, 2007 and the claimant was not declared redundant.

The total award is Kshs.2,145,130.

The Claimant is awarded costs of this suit and interest shall accrue at Court rates from the date of Judgment until payment in full.

DATED, SIGNED AND DELIVERED AT NAIROBI ON THIS 13TH DAY OF FEBRUARY 2020

MAUREEN ONYANGO

JUDGE