https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/1601

A.I.C Litein Hospital v Bett (Employment and Labour Relations Appeal E003 of 2025) [2026] KEELRC 1601 (KLR) (12 June 2026) (Judgment) Neutral citation: [2026] KEELRC 1601 (KLR) Republic of Kenya In the Employment and Labour Relations Court at Kericho Employment and Labour Relations Appeal E003 of 2025 AN Mwaure, J June 12, 2026 Between A.I.C Litein Hospital Appellant and Paul Bett Respondent (Being an Appeal from the Judgment and Decree of the Honourable F. M. Nyakundi, Principal Magistrate, delivered on 28th March, 2025 in Kericho MCELRC No. E007 OF 2023) Judgment 1.The Appellant, being dissatisfied with the Judgment and Decree of Principal Magistrate Honourable F. M. Nyakundi, filed this appeal vide a Memorandum of Appeal dated 10th April 2025, on the following grounds that:1.The learned Magistrate erred in law and fact and fact by failing to consider that the Respondent was dismissed for gross negligence of duty and acute incompetence, which amounted to gross misconduct.2.The learned Magistrate misinterpreted the law by failing to consider that the Respondent was dismissed owing to existing justifiable and compelling grounds that pointed the Respondent to have engaged in acts that were negligent in nature and which affected the property and person of the Respondent.3.The learned Magistrate erred in law and fact in finding that the Respondent was not given an opportunity to defend himself during the disciplinary hearing, or supplied with documents or given opportunity to cross examine his accuser.4.The learned Magistrate misdirected himself in law and fact in failing to note and consider clear evidence that the Respondent was not only responsible with preparing vouchers but also to receiving monies and disbursing/paying monies directly to the claims while being guided by WRP.5.The learned Magistrate erred in law and fact by failing to consider the Claimant had fundamentally breached the terms and conditions of the contractual obligations as Accounts Clerk and as such undermining the very foundation of the employment contract.6.The learned Magistrate misdirected himself by failing to adhere to the remedies available for unfair termination outlined under sections 49 and 50 of the Employment Act 2007 thereby arriving at a wrong decision as there was no such special circumstances that would warrant additional compensation against those provided by the act.7.The learned Magistrate disregarded the law that there is no provision in law for payment of damages to the date of retirement in so much as the contract was referred as to as permanent and pensionable, does not mean it could not be terminated and once terminated, the Respondent can only get damages for the unprocedural or lack of substantive reason for the termination. No employment is permanent.8.The learned Magistrate disregarded the law that there is no provision in law for payment of damages to the date of retirement in so much as the contract was referred to as permanent and pensionable terms does not mean it could not be terminated and once terminated, the Respondent can only get damages for the unprocedural or lack of substantive reason for the termination. No employment is permanent.9.The learned Magistrate was clearly wrong in the exercise of discretion and occasioned injustice in awarding the Respondent undoubtedly unsustainable compensation for the remaining years till retirement in that it has no anchorage in law.10.The learned Magistrate misdirected himself as to the purpose of the compensation in that it is to make good the employee’s loss and not to punish the employer.11.The learned Magistrate erred in law and in fact allowing himself to be guided by immaterial facts that did not form part of the issues for determination thereby exercising his discretion irrationally and in violation of the law and legal principles.12.The learned Magistrate relied on wrong principles of law and fact in arriving at his judgment. 2.The Appellant prays that:a.The judgment of the subordinate court delivered on 28th March, 2025 and the consequential orders thereto be set aside.b.The Respondent’s claim before the subordinate court dated 13th June, 2024 be dismissed with costs to the Appellant.c.The Appeal be allowedd.Costs of the appeal be provided for. 3.The appeal was disposed of by way of written submissions. Appellant’s submissions 4.The Appellant submitted that the Respondent’s termination was both substantively and procedurally fair under the Employment Act, 2007 and cited the case of British Leyland UK Ltd v Swift (1981) I.R.L.R 91 to establish the test of reasonableness, whether a reasonable employer would have dismissed the employee. The Appellant argued that the Respondent was employed as an accounts clerk under a letter of appointment dated 22nd January 2018, which allowed termination with notice or summary dismissal for misconduct. He was bound by the Hospital’s Moral Code requiring honesty, yet during a Paediatric Clinic, disbursed transport funds to 70 patients when only 34 attended, causing a loss of Kshs.14,400/=. The Appellant contended this breach of integrity justified dismissal and that the Trial court erred by overlooking the ethical violation and management discretion. Reference is made to Paul Nyamai Kimanza & Another v Pestlab Limited [2017] KEELRC 1547 (KLR) where the court defined a valid and justifiable reason as:“A reason for termination is justified if it is valid and fair. Valid reason is one which true and that which existed in the subjective construction of the employer at the time of dismissal. On the other hand the reason of termination is fair if it relates to the employees conduct and operational requirements of the employee.”(Emphasis ours) 5.The Appellant further submitted that section 41 of the Employment Act outlines the procedural safeguards an employer must follow before terminating an employee. It requires the employer to clearly explain, in a language the employee understands, the specific reasons for the intended termination; to inform the employee of their right to attend the hearing either alone or accompanied by an advocate or another person of their choice; and to consider any representations made by the employee before making a final decision. 6.The Appellant contended that the Respondent’s disciplinary process and the legal principles governing unfair termination. The Appellant explained that the Respondent was issued a Show Cause letter, responded, and later attended a disciplinary hearing, satisfying procedural fairness under the case of Shollei v Judicial Service Commission & another [2022] KESC 5 (KLR). The Appellant relied on section 47(5) of the Employment Act, 2007, which places the burden of proving unfair termination on the employee and of justifying dismissal on the employer, supported by Josephine M. Ndungu & Others v Plan International Inc [2019] KEELRC 663 (KLR). The Respondent, however, failed to discharge this burden, as the record shows he was given opportunities to respond and participate in the hearing but offered inadequate explanations and withheld documents, contrary to the Trial court’s finding of unfair termination. 7.The Appellant further contended that the Respondent’s claim of not receiving the Audit Report lacks credibility, as he was duly invited to the disciplinary hearing with the requested documents enclosed. 8.The Appellant submitted that the Trial court erred in finding the termination unlawful and in awarding reliefs without a proper legal basis. The Appellant maintains that the termination was justified and that the Respondent was not entitled to compensation. The Appellant relied on the cases of D.K. Njagi Marete v Teachers Service Commission [2020] KECA 840 (KLR) where the court expressly held that damages based on an employee’s expected earnings until retirement are not awardable in claims arising from termination of employment. The same reasoning equally invalidates the awards for medical, housing and leave allowances calculated for the remaining 23 years of service. 9.In Elizabeth Wakanyi Kibe v Telkom Kenya Ltd [2014] KECA 765 (KLR), cited the case of Engineer Francis N. Gachuri v Energy Regulatory Commission [2013] eKLR (Industrial Cause No. 203 of 2011) which held as follows:“There is no provision for payment of damages to the date of retirement. This is because employment like any other contract provides for exit from the contract. The fact that the Claimant’s contract was referred to as permanent and pensionable does not mean it could not be terminated and once terminated, he can only get damages for the unprocedural or lack of substantive reason for the termination. No employment is permanent. That is why Employment Act does not mention the word, “permanent employment.” 10.The Appellant further asserted that severance pay applies only in redundancy cases under section 40(1) of the Employment Act, and that payment in lieu of notice was properly executed per the Respondent’s contract terms. The Appellant submitted that by asserting that the awards granted by the Trial Court are legally unsustainable and should be set aside, save for the amount already acknowledged as owed to the Appellant. The Appellant requested that the Respondent be directed to settle any outstanding employment-related debt. 11.The Appellant further submitted that, under section 27 of the Civil Procedure Act, costs of the appeal should be borne by the Respondent. 12.Finally, the Appellant emphasized that the termination was based on valid and fair reasons, urging the court to uphold the appeal and grant the prayers sought in the Memorandum of Appeal. Respondent’s submission 13.The Respondent submitted that the trial magistrate was correct in finding the termination procedurally and substantively unfair. The Respondent emphasized the mandatory safeguards under section 41 of the Employment Act, requiring that an employee be informed of allegations, allowed to respond, accompanied by a representative, and heard before an impartial panel. The Respondent relied on the cases of Chandaria v Mungai [2026] KEELRC 120 (KLR), Ngeno v AIC Litein Hospital [2024] KEELRC 2066 (KLR), and Postal Corporation of Kenya v Tanui [2019] KECA 489 (KLR), the Respondent stressed that failure to comply with either procedural fairness or valid reasons under sections 43 and 45 of the Employment Act renders termination unlawful. 14.The Respondent submitted that the Appellant did not produce the investigation report, forensic audits, or credible witnesses, nor reported the matter to investigative authorities, thereby failing to prove fraud allegations and the Respondent’s testimony clarified his limited role as Accounts Clerk, processing petty cash vouchers already approved by senior officers, and that the disciplinary process was predetermined, denying him confrontation of accusers, cross-examination, or appeal rights. The trial court’s findings were therefore well-grounded in law and evidence. 15.On remedies, the Respondent submitted that he defended the trial court’s discretion under section 49 of the Employment Act, noting factors such as permanent and pensionable employment, abrupt dismissal, lack of cogent evidence, and denial of fair hearing. The award was consistent with section 49(4) of the Employment Act and relied on the case of KK Lodgit Limited & Another v Katura [2026] KEHC 70 (KLR), which cautions appellate courts against interfering with discretionary awards absent of error. 16.Ultimately, the Respondent submitted that the Appellant has not demonstrated any misdirection in law or fact, and urges dismissal of the appeal with costs, affirming the trial court’s judgment. Analysis and determination 17.Being the first appeal, the court must re-evaluate the evidence and come to a conclusion since it was not present when the evidence was adduced or see the witnesses as set out in Selle v Associated Motor Boat Co. Ltd [1968] 1. E.A 123 and Kenya Ports Authority v Kustron (Kenya) Limited [2011] KECA 98 (KLR). 18.Having considered the record of appeal, memorandum of appeal, and the rival submissions by both parties, the issue for determination is whether the appeal is merited. 19.Section 47(5) of the Employment Act provides as follows:“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.” 20.In Postal Corporation of Kenya v Tanui(supra), the Court of Appeal cited the case of Isindu v Lavington Security Guards Ltd [2017] KECA 225 (KLR) stated on the burden of proof: -“There can be no doubt that the Act, which was enacted in 2007, places heavy legal obligations on employers in matters of summary dismissal for breach of employment contract and unfair termination involving breach of statutory law. The employer must prove the reasons for termination/dismissal (section 43); prove the reasons are valid and fair (section 45); prove that the grounds are justified (section 47 (5), amongst other provisions. A mandatory and elaborate process is then set up under section 41 requiring notification and hearing before termination. The Act also provides for most of the procedures to be followed thus obviating reliance on the Evidence Act and the Civil Procedure Act/Rules. Finally, the remedies for breach set out under section 49 are also fairly onerous to the employer and generous to the employee. But all that accords with the main object of the Act as appears in the preamble:“..to declare and define the fundamental rights of employees, to provide basic conditions of employment of employees..”Those provisions are a mirror image of their constitutional underpinning in Article 41 which governs rights and fairness in labour relations.Section 47 (5) of the Act provides for the procedure to be followed in matters of complaints of unfair termination as follows:“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 of the termination of employment or wrongful dismissal shall rest on the employer.” [Emphasis added].So that, the appellant in this case had the burden to prove, not only that his services were terminated, but also that the termination was unfair or wrongful. Only when this foundation has been laid will the employer be called upon under section 43 (1):“to prove the reason or reasons for the termination, and where the employer fails to do so, the termination shall be deemed to have been unfair within the meaning of section 45.” [Emphasis added]. 21.In this instant case, the Appellant employed the Respondent as an Accounts Clerk, but his termination stemmed from irregularities noted during the paediatric weekend clinic of 24th June 2023, where records showed 70 participants received transport reimbursement totalling Kshs.28,000/=, despite only 34 attendees being present. This prompted an internal investigation, after which the Respondent was issued with a show cause letter dated 7th August 2023, to which he responded on 9th August 2023. He was subsequently invited to a disciplinary hearing via a letter dated 29th August 2023. The Respondent requested more time through his letter of 30th August 2023, which was granted, and he was furnished with documents on 17th August 2023. The disciplinary hearing was eventually conducted on 24th August 2023, culminating in his dismissal. The Respondent, however, maintains that the process was unfair and procedurally flawed, insisting that his termination was unlawful as determined by the trial court. 22.The court has perused critically the minutes of the Disciplinary hearing of 24th August 2023. The Claimant was informed he could take a witness of his choice. This is as per proviso in Section 41 of the Employment Act 2007. The Claimant does not seem to have called a witness. 23.The court noted the proceedings took off and Claimant was given an opportunity to defend himself. The court does not fault the proceedings and is clear the Respondent followed the due process at the hearing. There is however no copy of the minutes duly signed by the Claimant. That omission raises a red flag as to whether the Claimant was updated on the outcome of the hearing. 24.Again, the question before the court is whether the Respondent proved there was a valid reason and well proved for the termination of the Claimant. The court did not see clear list of the 70 participants and evidence of those paid twice and any other anomalous. 25.The Claimants show cause letter indicted him for reimbursing 70 participants totalling Kshs.28,000/=instead of 34 participants. 26.The Claimant in his response to the show cause pointed out that he was not the one tasked by the Respondent to request for transport reimbursement of the participants. He said he was not responsible to do any tasks related to program activities. He said the role of erasing or editing the list was by WRP Accounts Department. The court is not clear what WRP stands for.He says he would be called at the end of the day to pay for transport and staff allowance as per the register. 27.During the hearing the committee observed one Mr. Ng’eno (the WRP Programme Co-ordinator) that he was the one who prepared the petty cash surrenders for the activity.He claimed on that day he had to travel and so could not tell how many participants were paid. Mr. Ng’eno said the participants of that day were 70 not 34. The Committee stated that Mr. Ng’eno had not been diligent in his responsibilities. 28.The court was not clearly briefed on the role of the Claimant who was the Accountant and the role of the WRP Co-ordinator. Of the two it is not abundantly clear who dropped the ball in this case.Indeed Mr. Ng’eno the WRP Coordinator admitted the participants that day were 70 while the Respondent says they were 34. 29.The court on the issue of whether the Claimant was fairly terminated, this court agrees with the findings of the trial court. The substantive justification for termination being valid reasons as provided in Sections 44(4), 43 and 45 of the Employment Act are not proved. The holding of the trial court is therefore upheld. 30.As for reliefs, the court will revise some of the reliefs as follows: -(1)One month salary in lieu of notice is upheld and is awarded Kshs.63,144.90.(2)Claimant’s award of 12 months equivalent of his salary as compensation is reduced from 12 months to 7 months considering provisions of Section 49 of Employment Act and in particular considering the period Claimant worked for the Respondent.63,144/90 X 7 =Kshs.442,014.30.(3)On the award of basic salary allegedly worked for 70 months, the Court held that there was no legal basis, noting that the learned magistrate misdirected himself as there was no evidence to support such a claim. The award was therefore set aside.(4)Regarding compensation up to retirement, the Court was persuaded by the case of Elizabeth Wakanyi Kibe v Telkom Kenya Ltd(supra), which cited Engineer Francis N. Gachuri v Energy Regulatory Commission [2013] eKLR which emphasized that damages cannot extend to retirement age since employment contracts, even when described as “permanent and pensionable,” are terminable. Remedies are limited to compensation for unfair or unlawful termination, not speculative future earnings. Accordingly, the court set aside the award for retirement compensation and granted none.(5)The award for leave days was substituted with only those earned but not taken in 2023 which will be Kshs.63,144/90.(6)The house allowance was revised to conform with section 31 of the Employment Act, limiting entitlement to the allowance due in 2023 being Kshs.9,471.60.(7)The award for medical allowance the court will strike it out for want of proof, in line with sections 107, 108, and 109 of the Evidence Act. 31.Ultimately, the Court partially allowed the appeal, confirming that the Respondent was unfairly and unlawfully terminated but adjusting the remedies as follows:a.No compensation for basic salary allegedly worked for 70 months;b.One month salary in lieu of notice – Kshs.63,144.90c.Compensation for unlawful termination equivalent to 7 months’ salary – Kshs.442,014/30;d.No compensation for retirement;e.Leave days restricted to those earned but not taken in 2023 = Kshs.63,144/90;f.Entitlement to house allowance for the year 2023 only Kshs.9,471.06;g.No award for medical allowance. 32.The Respondent to be awarded costs of the appeal and of the lower court and total award is Kshs.577,775/07. 33.Interest will be at 14% per annum from date of this judgment till full payment.Orders issued accordingly. DATED, SIGNED AND DELIVERED VIRTUALLY AT NAKURU THIS 12TH DAY OF JUNE, 2026.ANNA NGIBUINI MWAUREJUDGEOrderIn view of the declaration of measures restricting Court operations due to the COVID-19 pandemic and in light of the directions issued by His Lordship, the Chief Justice on 15th March 2020 and subsequent directions of 21st April 2020 that judgments and rulings shall be delivered through video conferencing or via email. They have waived compliance with Order 21 Rule 1 of the Civil Procedure Rules, which requires that all judgments and rulings be pronounced in open Court. In permitting this course, this Court has been guided by Article 159(2)(d) of the Constitution which requires the Court to eschew undue technicalities in delivering justice, the right of access to justice guaranteed to every person under Article 48 of the Constitution and the provisions of Section 1B of the Civil Procedure Act (Chapter 21 of the Laws of Kenya) which impose on this Court the duty of the Court, inter alia, to use suitable technology to enhance the overriding objective which is to facilitate just, expeditious, proportionate and affordable resolution of civil disputes.A signed copy will be availed to each party upon payment of Court fees.ANNA NGIBUINI MWAUREJUDGE