Mwosero Stephen Ogello v Sidian Bank Limited [2022] KEELRC 442 (KLR)

Full Case Text

REPUBLIC OF KENYA

IN THE EMPLOYMENT AND LABOUR RELATIONS COURT AT NAIROBI

CAUSE N0. 764 OF 2019

MWOSERO STEPHEN OGELLO....................... CLAIMANT

VERSUS

SIDIAN BANK LIMITED....................................RESPONDENT

JUDGMENT

1. The suit was filed on 1st August, 2019 by the claimant praying for an order in the following terms:-

(a) Commission arrears of 15% on the amount above target totaling to Kshs 29,099,530. 47.

(b) General damages for breach of the express and implied terms of the Employment Contract dated 28th June, 2016 and Section 17(1) and (10) of the Employment Act, 2011.

(d) Interest on (a), (b) and (d) above at Court rates from the date of filing until payment in full.

(e) Any other relief this honourable Court may deem fit to grant in the circumstances.

2. C.W.1 testified that he was the claimant and was employed by the respondent as a Relationship Officer, Debt Recovery on 28th June, 2016 at a gross monthly salary of Kshs 60,000 plus commission on the Bank’s Commission structure payable on the last working day of each month.

3. That the claimant worked faithfully, and diligently until the 29th June, 2019, when he resigned from employment.

4. That at the time of resignation, the respondent had failed and or neglected to pay to the claimant commissions calculated at 15% on the amount collected above the target in the sum of Kshs 29,099,530. 47 as set out under paragraph 6 of the Statement of Claim as follows:-

(a) In the last quarter of 2016 he collected Kshs 46,183,785. 96 against a target ofKshs 60,000,00.

(b) In the first quarter of 2017 he collected Kshs 19,298,933. 62 against a target of Kshs 15,004,237. 16.

(d) In the third quarter of 2017 he collected Kshs 23,717,656. 13 against a target of Kshs 21,603,182. 03

(e) In the fourth quarter of 2017 he collected Kshs 43,412,75. 59 against a target of Kshs 33,541,112. 71.

(f) In the third and fourth quarters of 2018 he collected Kshs 357,342,608. 16 against a target of Kshs 185,473,914. 62.

(g) In the first quarter of 2019 he collected Kshs 78,751,161. 37 against a target of Kshs 75,000,000.

5. That the claimant had persistently claimed payment of the aforesaid commissions to no avail.

6. That by its failure the respondent breached the employment contract and Sections 12(1) and (10) of the Employment Act, 2007. The claimant therefore in addition to the payment of the unpaid commission prays for an award of General damages for breach of express and implied terms of the Employment Contract dated 28th June, 2016.

7. The claimant produced the contract dated 28th November, 2016 which provides at paragraph ‘F’ that:-

“Your duties will include but not limited to these specified in the job description. Management reserves the right to alter these duties from time to time.”

8. The job description is attached to the contract and it provides at paragraph K as follows:-

“Compensation

You will be paid a retainer of Kenya Shillings Sixty Thousand only (60,000) per month and commissions based on the Bank’s commission structure less taxes and any other statutory deductions.”

9. In his testimony, C.W.1 reiterated the targets set and the collection he had actually made as set out under paragraph 6(c) to (g) of the Statement of Claim.

10. The claimant set out these figures and amounts due in the letter of resignation and in the demand letter.

11. Under cross-examination the claimant stated his resignation was actuated by a quest for greener pastures. That though he had indicated his commission was not paid, he did not state that to be his reason for resignation.

12. C.W.1 stated that prior to his recruitment by the respondent he worked for a debt collection firm called Quest Holdings that collected debt from the respondent. That the respondent head-hunted him. That whilst at Quest he was paid 15% commission on collected debt and had worked for Quest for a period of 5 years. That the bank still retained external debt collectors who were paid 15% commission on debt collected but upon employing the claimant they failed and or neglected to pay him the commission provided in the appointment letter. C.W1 stated that he was not paid even once since he was employed. C.W.1 stated that the Human Resource Department had confirmed that the claimant would be paid 15% commission and they were displayed in a screen of the Sales Team which he could not bring to Court. The claimant stated he had no reason to doubt the promise made to him by the respondent. That he worked for 3 years for the Bank.

13. That he did not write to Bank to claim the 15% commission while he worked but had discussions over the matter with the managers and Chief Executive Officer. That the discussions were never reduced to writing. That indeed the payroll had no provision for payment of the commission. That they paid National Social Security Fund and National Hospital Insurance Fund dues for him.

14. The claimant denied that he did not achieve 100% target at any one time. The claimant insisted that looked as a whole for the period, he had surpassed 100% target. The claimant admitted that after he left the bank, he was aware employees were paid 1% commission on their collections but there was no bank structure for payment of debt collection commission by employees whilst he worked. That there was only a structure for external debt collectors.

15. C.W.2 Stephen Muiruri testified that he worked with the claimant for the bank and were head hunted together. That their letters of appointment provided for a retainer and commission. That he was not paid commission just like the claimant. That commission was payable on a bank structure in which targets were set against actual collections and once one hit the target, one was entitled to payment of commission. That the structure was given to them by the Human Resource department at the time of recruitment. That they did not doubt the Human Resource Manager at the time.

16. That James Kago, the Human Resource Manager, head hunted them and lured them to employment and offering the favourable terms of employment including payment of commission which was later not paid. C.W.2 stated his contract was the same with that of C.W.1. That they were paid 15% commission while they worked for Quest holdings which was an independent debt collector for the Bank.

17. C.W.3 Juma Jairus Simiyu testified that he was also head hunted together with C.W.1 and C.W.2. That they were given similar contracts and promised payment of retainer and commission on amounts collected above set targets at 15% by the Human Resource Manager. That they were never paid commission upon reinstatement.

18. R.W. 1 Felista Wangia testified that she was the Human Resource Business partner of the respondent Bank. R.W.1 testified that in terms of the appointment of C.W.1, he was entitled to payment of retainer and commission per bank commission structure but there was no commission structure in place then. That the structure available was only for external debt collectors, who were paid 15% commission of any amounts collected above set targets.

17. R.W.1 testified that in 2016, October, 211. 2% collection was made and thus the claimant had exceeded the 100% target set. That in some months, the claimant had exceeded the target but not in others.

18. R.W.1 stated that she was not present when the claimant signed the contract. R.W.1 stated that the claimant only exceeded the target set in 2016 and not any other time.

19. R.W.2 Collins Sebata testified that he was the direct supervisor of the claimant and he signed all the appraisals for the claimant.

20. R.W.2 said that the claimant was a star partner in Quarter two (2) in 2016. He had surpassed his target for the Quarter by over 2 million Kenya Shillings. That for Quarter one (1) of 2017, the target set was 15,000, 237. 16 and C.W.1 collected 19,298,933. 62. That the claimant had met his targets between Quarter 1 in 2017 to Quarter 3 in 2017. That is the only time he achieved his target during his tenure with the Bank. That when one does not achieve their target, they are placed on Performance Improvement Programme (PIP).

21. Claimant achieved his target over all during his tenure with the bank and was not put on Performance Improvement Programme. That C.W.1 did not raise the issue of commission from him until he left the Bank.

22. R.W.2 stated that the letter of appointment provided for payment of commissions and a retainer of Kshs 60,000 based on bank’s structure. R.W.2 said he was not a witness when the claimant signed his letter of appointment though he was involved in the recruitment process. That they recruited six (6) collectors at one. R.W.2 said he did not know who drafted the letter of appointment but the claimant signed it.

23. That the claimant resigned voluntarily to seek greener pastures. That there was no internal commission payment structure for the Bank at the time the claimant was recruited but there was one for external collectors. R.W.2 said he was never paid any commission. That there was no agreement on the percentage payable to employees. That is why the claimant was not paid.

24. The parties filed written submissions the claimant submitting that he was entitled to commission arrears at 15% on the amounts collected above target. That he was also entitled to an award of general damages for breach of express terms of the contract dated 28th June, 2016 read with Section 17(1) and (10) of the Employment Act 2007 and to costs and interest.

25. That Section 9(2) of the Employment Act, provides that:-

“An employee who is a party to a written contract of service shall be responsible for causing the contract to be drawn up stating particulars of employment and the contract is consented to by the employee in accordance with subsection’3. ”

26. The consent in terms of Section 3 is by signing his name or imprint an impression of his thumb or one of his fingers in the presence of a person other than his employer.

27. That there is no dispute the parties signed a contract for service and one of the express terms of the contract was that the claimant would be paid 15% commission on any debt collections above the set target.

28. From the testimony of the claimant, R.W.1 and R.W.2, there are periods when the claimant exceeded the target but was not paid commission.

29. The only excuse the respondent has is that it had not agreed on what percentage it was to pay the commission. The respondent submitted it had only set the percentage structure for external debt collectors at 15 % of the exceeded target.

30. It is not in dispute that the claimant had prior to his recruitment by the respondent enjoyed the 15% commission while he worked for the respondent as an external debt collector. By then the claimant worked for Quest holding, contracted by the respondent for that purpose.

31. The respondent submitted that the respondent has not proved on a balance of probabilities that the respondent and the claimant had an enforceable contract setting the commission at 15% for purposes of calculating the commission which would have been paid to him.

32. The respondent submits that it had not yet set up the percentage structure for payment of commission to its employees but only paid a retainer.

33. The respondent denies that it has breached the contract of service between it and the respondent.

Determination

34. The only issue for determination is whether an interpretation of the contract between the parties entitles the claimant to payment of commission and if so, at what percentage and on what collected amounts should the payments be made.

35. The respondent relies on the case of Patrick Lumumba Kimiyu -vs- Prime Fuels (K) Limited [2018] eKLR as follows:-

“Except where expressly provided under statute, the burden of proof in Civil Cases always rests on the party who alleges(see sections 107 – 109 of the Evidence Act Cap. 80 Laws of Kenya). It is for the party that alleges a fact to be true to prove the existence and veracity of the fact. This is under the basic principle of Evidence that, he who asserts must prove(see Jennifer Nyambura Kamau –vs- Humprey Mbaka Nandi NYR CA Civil Appeal No. 342 of 2010 [2013] eKLR. That is also the purport of Section 107(1) of the Evidence Act, which provides:-

“107. (1) whoever desires any Court to give Judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist.

There is also an evidential burden that is cast upon any party who desires the Court to believe the existence of a fact. That is captured in sections 109 of the Act as follows:-

“109. The burden of proof as to any particular fact lies on the person who wishes the Court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person.”

36. The Court of Appeal in Five Forty Aviation Limited -vs- Erman Lanoe [2019] eKLR held that:-

“The position in law with regard to binding nature of a contract executed willingly by the parties has now followed a well beaten path” InNational Bank of Kenya Limited–vs- Pipe Plastic Samkolit (K) Limited and Another [2011] eKLRthe Court was categorical that:-

“It is clear beyond par adventure, that save for that special cases where equity might be prepared to relieve a party from a bad bargain, it is ordinarily no part of equity’s function to allow a party to escape from a bad bargain.”

37. The Court of Appeal also in Pius Kimaiyo Langat -vs- Co-operative Bank of Kenya Limited [2017] eKLR , after reviewing case law on the subject reiterated as follows:-

“We are alive to the hallowed Legal maxim that it is not the business of Courts to rewrite contracts between parties. They are bound by the terms of their contracts, unless coercion, fraud or undue influences are pleaded and proved.”

38. In light of the above, the express terms of the contract between the parties herein gave a right to the claimant to be paid commission for any debt collection above the exceeded set target for specific periods.

40. The contract also made an obligation on the respondent to provide Bank’s Commission Structure upon which the commission earned shall be calculated.

41. For the period between 28th June, 2016, when the contract became effective and 31st May, 2019 when the claimant resigned from employment, the respondent failed, refused and/or neglected to fulfil his part of the contract of employment to the loss and detriment of the claimant who despite exceeding targets set by the respondent for debt collection for specific periods, the respondent failed to pay him commissions under the pretext that it had not yet set a structure for payment of commissions on the amounts collected beyond the set target.

42. It is common cause that the respondent had set a structure for payment of commissions for exceeded debt collection targets for external debt collectors.

43. It is also common cause that the claimant was at all material times before his recruitment and during the tenure of his employment aware of this debt collection commission payment structure for the external debt collectors.

44. The claimant has testified that when he was head-hunted by the Human Resource Manager of the respondent he was promised that he would receive commission at 15% of any debt collection that exceeded set target. The claimant testified that indeed the Human Resource Manager had at the time of recruitment promised the claimant and C.W.2 and C.W.3 and others recruited at the same time with the claimant that they would earn their commission at 15% of amounts that exceeded set targets, over and above the retainer which in the case of the claimant was Kshs 60,000 per month.

45. It is important to note that what was paid to the claimant monthly was not a salary or wage but was expressed in the contract to be a “retainer of Kenya Shillings Sixty Thousand Only (Kshs 60,000) per month and commissions based on the bank’s commission structure less taxes and any other statutory deductions.”

46. The term retainer is derived from the word retain. Black’s Law Dictionary Tenth Edition defines the word retain as follows:-

“To hire; to engage for the provision of service (as by a lawyer, an accountant, an employee) etc.”

47. The term retainer is then defined as:-

“A fee that a client pays to a lawyer simply to be available when the client needs Legal help during a specified period or on a specified matter”(emphasis mine).

48. In the context of this case, the Kshs 60,000 paid to the claimant was a retainer simply to keep him available to collect debts for the respondent and to be paid commissions upon exceeding the set collection targets.

49. A plain interpretation of the contract is therefore clear that the claimant was in addition to the payment of a retainer to remain available for the period of the contract of employment, the respondent was mandated by the contract to pay him commission on any amounts collected above the set debt collection targets.

50. The claimant has adduced parole evidence to supplement the written contract and/or clarify the ambiguity created by the default by the respondent of failing to specify the percentage upon which the commission was to be calculated.

51. The evidence by the claimant which was confirmed by all other witnesses who testified is that the bank had only one structure for payment of commissions to debt collectors in respect of amounts collected above the set target. That agreed percentage was set by the bank at 15%.

52. In the absence of any other evidence, the Court is guided by Section 98 of the Evidence Act Cap 80 Laws of Kenya which provides:-

“when the terms of any contract or grant or other disposition or property, or any matter required by law to be reduced to the forms of a document, have been proved according to Section 97 of this Act, no evidence of any oral agreement or statement shall be admitted as between the parties to any such instrument or their representatives in interest for the purpose of contradicting, varying, adding to or subtracting from its terms provided that:-

(i) ........................

(ii) the existence of any separate oral agreement as to any matter on which a document is silent and which is not inconsistent with its terms, may be proved, and in considering whether or not this paragraph of this proviso applies, the Court shall have regard to the degree of formality of the document.”

53. In the present case, and in terms of Section 9 of the Employment Act, a contract of service may be an oral agreement or reduced to writing. However, in terms of subsection 9(1) (b) a contract of service for performance of any specified work which could not reasonably be expected to be completed within a period or a number of working days amounting in the aggregate to the equivalent of three months, shall be in writing (emphasis mine)

54. The work performed by the claimant was continuous and not expected to be completed within three months. The respondent was therefore bound to reduce the terms of the contract of service to writing in terms of Section 9(2) of the Employment Act, which provides:-

“9(2) An employer who is a party to a written contract of service shall be responsible for causing the contract to be drawn up stating particulars of employment and that the contract is consented to by the employee in accordance with subsection (3).”

Section 10(2) further provides:-

“A written contract of service shall state:-

(h) the remuneration, scale or rate of remuneration, the method of calculating that remuneration and details of any other benefits.

55. Section 10(7) profoundly, provides:-

“(7) If in any Legal proceedings an employer fails to produce a written contract or the written particulars prescribed in subsection (1) the burden of proving or disproving an alleged term of employment stipulated in the contract shall be on the employer.”

56. In the present case, the respondent has failed to produce the scale or rate and the method of calculating the commission payable to the claimant, which commission is expressly provided in the contract of service.

57. C.W.1, C.W.2 and C.W.3 have adduced evidence that the respondent has always paid commission in respect of debts collected above the set target at 15%. R.W.1 and R.W.2 confirmed this evidence by the claimant but stating that the 15% rate was only applicable to debt collectors for the bank without a retainer.

58. The claimant, C.W.2 and C.W.3 have contradicted this testimony by the respondent stating that they were informed by the person who recruited them, the Human Resource Manager that their commission shall be calculated and paid at 15% of debt collection that exceeded the set target.

59. The Court finds that the respondent has failed to discharge the burden placed on it under Section 10(7) of the Employment Act, 2007 and have failed to disprove the alleged term by the claimant.

60. Accordingly, the Court finds that the claimant has proved on a balance of probabilities that he is entitled to payment of the commission set out in the Statement of Claim as follows:-

(a) Second Quarter of 2017 when he collected Kshs 19,736,033. 87 against a target of Kshs 17,639,827. 40

(b) Third Quarter of 2017, when he collected Kshs 23,717,656. 13 against a target of Kshs 21,603,182. 03.

(d) First quarter of 2019 when he collected Kshs 78,751,161. 37 against a target of Kshs 75,000,000.

61. The Court finds that the collection of the third and fourth quarter of 2018 against the set target were not properly specified by the claimant and therefore not proved.

(I) (a) In the final analysis, judgment is entered infavour of the claimant against the respondent for the commission payable for the first; second; third and fourth quarters in the year 2017 and for the first Quarter of 2019 as set out in paragraphs 6(a); (c); (d) (c) and (g) of the statement of claim and in the witness statement of the claimant.

(b) The total payable commission be computed and filed by the respondent within 30 days and served on the claimant who may also file a counter computation within 15 days of service.

(II) Interest on (1) above at Court rates from date of judgment till payment in full.

(III) Costs of the suit.

DATED AND DELIVERED AT NAIROBI (VIRTUALLY) THIS 24TH DAY OF MARCH, 2022.

MATHEWS N. NDUMA

JUDGE

Appearances

M/s Kimathi for claimant

Mr. Mureithi for Respondent

Ekale – Court clerk.