[2024] KEELRC 2269 (KLR)

Amayo v Premier Credit Ltd (Cause E037 of 2023) [2024] KEELRC 2269 (KLR) (23 September 2024) (Judgment)

Neutral citation: [2024] KEELRC 2269 (KLR)

Republic of Kenya

In the Employment and Labour Relations Court at Kisumu

Cause E037 of 2023

CN Baari, J

September 23, 2024

Between

Peter Onyango Amayo

Claimant

and

Premier Credit Ltd

Respondent

Judgment

1. The Claimant lodged this claim against the Respondent vide a Statement of Claim dated 5th June, 2023 and filed on 12th June, 2023, on allegations of unlawful termination. He seeks the following reliefs:i.A declaration that his termination was unlawful, unprocedural, unjustified, discriminatory and a breach of his Constitutional rights.ii.12 months’ salary as compensation for unfair termination.iii.2 months’ salary in lieu of notice.iv.Unpaid leave days.v.Aggravated damages.vi.Interest on items 2,3,4 and 5 above.vii.Costs and interests.

2. In reply made in a Statement of Response dated 21st July,2023, the Respondent maintained that the Claimant’s dismissal was valid and justified.

3. The matter proceeded for hearing on 22nd April, 2024, when the Claimant testified in support of his case while the Respondent presented the evidence of one Japheth Malit Agure in support of its case.

4. Submissions were received from both parties.

The Claimant’s Case 5. The Claimant’s case is that he was employed as a team leader at the Respondent’s Micro Finance Bank and which position entailed counterchecking a customer’s employment details before issuance of a loan.

6. He avers that sometime around 16th August, 2022, the Respondent’s sales agent (Micheal Odoyo Aloo) sourced for a customer named Joshua Momanyi Sindika, ostensibly an Office Assistant at Masinde Muliro University who wanted a loan from the Respondent.

7. He avers that after inspection of the loan application forms, he instructed the agent, the said Micheal Odoyo Aloo to verify whether the customer was indeed an employee of Masinde Muliro University.

8. The Claimant’s further case is that such delegation of duty to sales agents was common practice within the organisation to enable meeting of targets.

9. It is his case that the agent visited the University for the verification of the customer’s employment and had the loan forms duly stamped and signed by the University’s Administrator. He avers further that on receiving the forms, he made a follow up call to the Administrator of the university who confirmed that the customer was an employee of the University.

10. The Claimant states that having carried out due diligence, the loan application was taken for approval by the Respondent’s Regional Coordinator based in Kakamega.

11. It is the Claimant’s affirmation that despite the loan application going through the requisite counterchecks from his desk to that of the Regional Coordinator, the Country Sales Manager and finally that of the Operations Manager, it was later realised that the customer was not an employee of Masinde Muliro University.

12. The Claimant contends that upon detection of the apparent fraud, he took it upon himself to report the matter to the police and with the help of the agent, he had the customer arrested and charged in court.

13. He avers that it is baffling that despite his full cooperation including appearing as a witness in the customer’s criminal case, he was still singled out for dismissal. Additionally, he avows that being the only one in the approval chain, dismissed pointed to outright malice.

14. The Claimant’s further case is that the witch-hunt against him is reinforced by the Respondent’s action of ignoring the Regional Manager’s actions of disbursing the loan on a Saturday and approving the loan using a 1-year Mpesa statement contrary to policy.

15. The Claimant asserts that the disciplinary process was unfair as the disciplinary committee comprised of the Country sales Manager and Regional Manager both of whom were in the loan approval chain.

The Respondent’s Case 16. The Respondent asserts that the loss of Kshs 600,000/= to the fraudster was just one among many misgivings that led to the Claimant’s termination.

17. It is the Respondent’s case that despite being urged to change his attitude and avoid recklessness the Claimant still persisted in his neglect of duty.

18. The Respondent’s further case is that as the team leader it was the Claimant’s duty to do loan bookings, meet clients and visit their working stations to confirm whether they are legitimate employees. Additionally, the Respondent contends that the Claimant’s responsibility was to approve and share a comment in the core banking system indicating the loan has been booked.

19. The Respondent affirms that these duties could not under any circumstance be delegated. It is the Respondent’s case that if the Claimant had visited the University in person, he would have discovered that the sales agent had faked the documents belonging to Masinde Muliro staff.

20. The Respondent’s affirmation is that the loss of money coupled with his admission of neglect of duties made the Claimant’s continued employment untenable.

21. The Respondent’s states that the Claimant was taken through a lawful disciplinary process.

22. In testimony, Japheth Agure (RW1) told court that the Claimant had no mandate to delegate his role, and that it was his duty to verify documents presented by loan seekers and to further conduct due diligence by presenting the documents to the borrower’s employer for approval.

23. RW1 further told court that he could not himself verify the documents since he does not directly meet with customers. It is his evidence that the Claimant was the head of the branch of the Respondent that lost money to fraud, and that it was his duty to ensure things ran smoothly.

The Claimant’s Submissions 24. It is the Claimant’s submission that his dismissal was not procedurally fair contrary to the provisions of Sections 41,43,44(2) and 45 of the Employment Act.

25. The Claimant’s further submission is that the disciplinary committee was incapable of impartiality for the reason that it was comprised of the same people who had handled the transaction. Furthermore, the Claimant submits that the extent of his negligence was not proven as neither were the findings of the internal investigations nor the minutes of the hearing availed.

26. It is submitted for the Claimant that given the above reasons, he was not granted a fair hearing. Moreover, he avows that the failure to subject the other employees involved in the transaction to a disciplinary hearing was contrary to Article 27(1) and 50 of the Constitution.

27. Regarding the reasons for termination, it is the Claimant’s submission that delegation of his duty to the sales agent was a customary practice. He avows that even if he visited the institution in person the outcome would still have been the same as the CCTV footage confirmed that the sales agent visited the University.

28. Additionally, he contends that out of abundance of caution he made a follow up call and verified that indeed the customer was an employee of Masinde Muliro University.

29. The Claimant submits that his termination was unfair for the reason that other people in the hierarchy of loan approval were not indicted. He cites the case of John Jaoko Othino v Intrahealth International Nairobi Cause no 561 of 2019 where the judge absolved the Claimant from blame in a situation where the approval process involved many officers.

30. On his entitlement to the prayers sought, the Claimant stakes his claim to 12 months’ compensation on the basis of Peter Mwendwa Kaliki v Public Service Commission & Anor Petition no 14 of 2015.

31. On pay in lieu of notice, the Claimant states that he is entitled to 3 months’ salary as stipulated in the termination letter.

32. It is his submission that he suffered emotionally and psychologically hence he is entitled to Kshs 1,000,000/= in aggravated damages.

33. In conclusion the Claimant submits that he is entitled to interest from the day of filing suit and costs of the Claim.

The Respondent’s Submissions 34. In support of its case, the Respondent’s submission is that the Claimant’s underperformance and dereliction of duty were valid reasons for termination. It avows that as the first approver he was under duty to verify documents before passing them up the chain.

35. It is the Respondent’s submission that the Claimant carried out this duty casually resulting in a huge loss. The Respondent submits that it was incumbent upon the Claimant to carry out his duties with full commitment and not expect his mistakes to be corrected further up the chain.

36. The Respondent submits that the delegation of duties specifically assigned to him amounted to ‘wilful neglect’ which was a ground for summary dismissal under Section 44 (4) (c) of the Employment Act. It cites the case of Joseph Ondieki Akuma v Tandu Alarm Systems Limited [2020] eKLR for the holding that an employer was justified in terminating an employee’s employment if the employee proved incapable of achieving his tasks and goals.

37. In respect of the procedure employed in the Claimant’s dismissal, the Respondent submits that the Claimant was invited for a disciplinary hearing but refrained from defending himself or exercising his right to avail a representative. Additionally, the Respondent asserts the issue of impartiality of the disciplinary committee was not raised at the hearing. Furthermore, the Respondent submits that there was no need for notice as the Claimant was summarily dismissed.

38. The Respondent submits that the Claimant is not entitled to the reliefs sought and sought to rely in the case of Meshack Auta Ongeri v Nyamache Tea Factory Limited [2019] eKLR where the court denied the Claimant the reliefs sought on account of lawful termination.

Analysis and Determination 39. Upon careful appraisal of the pleadings, oral testimonies, and submissions by both parties, the issues that crystallize for determination are whether the Claimant’s termination was fair, and whether he is entitled to the reliefs sought.

Whether the Claimant’s termination was fair 40. Section 41 of the Employment Act, 2007 demands that before terminating an employment contract on the grounds of misconduct, poor performance or physical incapacity, the employer must grant the employee an opportunity to make representations either in the presence of a colleague or representative of a trade union if he is a member of one.

41. It is now settled that even in instances of summary dismissal the employee is still entitled to a hearing as per the provisions of section 41 (2) of the Employment Act.

42. Section 41 (2) of the Employment Act provides as follows: -“(2)Notwithstanding any other provision of this part, an employer shall before terminating the employment of an employee or summarily dismissing an employee under section 44(3) or (4) hear and consider any representations which the employee may on the grounds of misconduct or poor performance and the person, if any, chosen by the employee within subsection (1) make.”

43. In his written statement the Claimant alludes to his disciplinary process not being independent on the premise that the persons who took part in approving the loan subject of his dismissal participated in the disciplinary hearing.

44. On its part, the Respondent contends that the Claimant was suspended pending investigations and thereafter invited for a disciplinary hearing on 3rd February 2023. Additionally, the Respondent avers that it accorded the Claimant an opportunity to make representations and to appear with a representative of his choice.

45. The court has had occasion to look at the correspondences produced in evidence by the Respondent. The email dated 5th September 2022 informs the Claimant that a review of the loan accounts will be held at the head office on 3rd October 2022 in the presence of the disciplinary committee.

46. Further, a cursory look at the letter clearly shows that the Claimant was invited for a review of loan accounts before the disciplinary committee. The letter equally informs the Claimant that his oversight in dealing with the accounts had occasioned loss to the company which could result in termination of his contract.

47. It is trite law that before summarily dismissing an employee, the employer is under obligation to hear and consider any representations by the employee before making the decision to dismiss or give any other sanction. (See Anthony Mkala Chitavi v Malindi Water & Sewerage Company Ltd [2013] eKLR).

48. From the email, it is easily decipherable that the reasons for contemplated summary dismissal were communicated to the Claimant and a forum to make representations was availed to him.

49. I light of the foregoing, I am convinced that the basic tenets of procedural fairness were adhered to and which renders the dismissal procedurally fair and so I hold.

50. The second limb in determining fairness or otherwise of a dismissal, is the question of whether the dismissal meets the substantive fair test envisaged under Sections 43, 45 and 47 (5) of the Employment Act. The Act has placed upon the employer the duty to prove the reasons for termination, prove that the reasons are valid and fair and to justify the reasons for termination/dismissal.

51. The reason for termination as gleaned from the termination letter is breach of Section 8 of the Respondent’s Code of Conduct. The Respondent did not avail the code of conduct to enable the court satisfy itself as to its provision. However, the letter generally alludes to the Claimant neglecting duty and not following policies and procedures. Of specific relevance to this case is the Claimant’s failure to personally verify the loan applicants’ details before disbursement resulting in loss of Kshs 600,000/= to a fraudster.

52. It is not in dispute that indeed the Kshs 600,000/= was lost to a fraudster. It is also not in dispute that it was the Claimant’s duty to verify and ensure authenticity of prospective loanees and their documents. This fact is acceded to by the Claimant himself in his Claim and during cross-examination.

53. It is also not in contention that the documents used to procure the loan were later found to be forgeries and which fact the Claimant similarly admitted.

54. The Respondent’s contention is that the Claimant derelicted duty by allowing a sales agent of less than two months to appraise the loan, as well as for having met the client/customer in person and failing to verify his documentation.

55. The Respondent equally produced an email dated 26th August,2022 in which it avers that its officials visited Masinde Muliro with the Claimant and unearthed that the documents were forgeries and which evidence was not in any way controverted.

56. In his own defence the Claimant asserted that he delegated the verification duty to a sales agent which practice he said was customary. Moreover, he avers that he made a follow up call and was informed that the prospective loanee was indeed an employee of Masinde Muliro University.

57. In his further defence the Claimant states that there were other officers in the chain of command who equally had the responsibility of verifying documents and that he should not have been vilified alone.

58. It is trite law that whoever as per the provisions of Section 109 of the Evidence Act that whoever wants the court to believe in the existence of a given fact must prove its existence. In this case it was incumbent upon the Claimant to prove that the verification was above board.

59. The only way he would have done this is by calling the sales agent or even the administrator he made a phone call to at Masinde Muliro University to back his assertions. In the absence of this evidence it is difficult for the court to satisfy itself that the Claimant indeed carried out his duties diligently.

60. The issue of delegation being a customary practice was not proven in any way by the Claimant. In any case as the delegator he bears the ultimate responsibility in case things go bust.

61. The Court of Appeal in the case of Daniel Toroitich Arap Moi v Mwangi Stephen Muriithi & another [2014] eKLR stated as follows:“By that or such evidence as the learned judge should have required, the 1st Respondent would have been on his way to prove existence of facts to satisfy the court that indeed those facts existed. That was his burden. He did not discharge it.”…………..“when the 1st Respondent came to court, he was bound by law and practice to lay the evidence to support existence of the facts he pleaded.”

62. Under section 44 (4) (c) of the Employment Act, careless and improper performance of duties under contract qualifies as a reason for summary dismissal. All evidence herein points to the Claimant being nonchalant, unbothered and casual in the way he carried out his duties as evinced by the numerous uncontroverted warning letters.

63. In the circumstances, this court reaches the conclusion that the reasons for the Claimant’s dismissal were proven on a balance of probabilities, and which renders the dismissal substantively fair.

Whether the Claimant is entitled to the remedies sought. 64. The Claimant sought a declaration that his termination was unlawful, unprocedural, unjustified, discriminatory and a breach of his Constitutional rights, 12 months’ salary as compensation for unfair termination, 2 months’ salary in lieu of notice, unpaid leave days, aggravated damages Interest and costs.

65. The Court has found the Claimant’s dismissal fair which holding renders the prayers for compensation and award of aggravated damages moot.

66. The grounds for the Claimant’s summary dismissal have equally been found to be justified and for this reason the prayer for pay in lieu of notice fails and is hereby dismissed.

67. The suit is accordingly dismissed in its entirety with no orders as to costs.

68. It is so ordered.

SIGNED, DATED AND DELIVERED BY VIDEO-LINK AND IN COURT AT KISUMU THIS 23RD DAY OF SEPTEMBER, 2024. C. N. BAARIJUDGEAppearance:Ms. Kisaka present for the ClaimantMs. Itumo h/b for Mr. Musyoki for the RespondentMs. Anjeline Wanjofu-CA.