[2024] KEELRC 2319 (KLR)

Ansari v Capcom Limited & another (Cause E134 of 2023) [2024] KEELRC 2319 (KLR) (26 September 2024) (Judgment)

Neutral citation: [2024] KEELRC 2319 (KLR)

Republic of Kenya

In the Employment and Labour Relations Court at Mombasa

Cause E134 of 2023

M Mbarũ, J

September 26, 2024

Between

Mohamed Arshad Ansari

Claimant

and

Capcom Limited

1st Respondent

Rehana Ramzan Suhayl Esmailjee

2nd Respondent

Judgment

1. The claimant is a male adult. The 1st respondent is a limited liability company. The 2nd respondent is the managing director and chief executive officer (CEO) of the 1st respondent.

2. The respondents employed the claimant on 1st March 2011 as a technical manager and rose to the position of general manager. The respondents were engaged in security systems distribution in Mombasa and Nairobi.

3. The claimant worked with the founder director of the 1st respondent, Shakil Salyani and upon his demise in the year 2014 he was succeeded by Rafiq Salyani and later included Suhayl Esmailjee as a co-director with minimal shareholding. The claimant had taken over the management of the 1st respondent's business but without a written contract of employment.

4. The claim is that there was no payment of house allowance or provision of housing for the entire duration of employment. The claimant did not take his annual leave, medical benefits, overtime or paid gratuity. In January 2016, the 1st respondent decided to reduce the due salary from Ksh.200, 000 to Ksh.150, 000 per month without consent.

5. In June 2020 the 1st respondent stopped paying the claimant his salary contrary to Section 13(1) of the Employment Act. From the year 2016 to 2022, there was no annual leave taken or payment instead on public holidays, the claimant remained at work.

6. The claim is that the 2nd respondent took over the running of the 1st respondent in January 2022 and started frustrating the claimant in his employment. She refused to pay for repairs for his motor vehicle leading to its detention at a garage. As a result, the claimant had no means of transport to work. To save the vehicle from being auctioned, the claimant paid for repair costs at Ksh.146, 000 inclusive of storage charges which the respondent has refused to refund. Despite his efforts, the vehicle was reclaimed by the 2nd respondent through Tononoka Police Station forcibly removed from the claimant and handed over to the respondents. To further frustrate the claimant, his salary was reduced to Ksh.100, 000 from Ksh.150, 000 per month.

7. The claim is that there was an unfair termination of employment on 30 November 2022 without notice, hearing or payment of terminal dues. The claimant is seeking the following terminal dues;a.Declaration that employment terminated unfairly, unlawfully, and wrongful on account of constructive dismissal;b.Compensation for wrongful termination Ksh.2,400,000;c.Underpayment of salaries for 54 months from January 2016 to June 2020 at ksh.50,000 per month total of Ksh.2,700,000;d.Withheld salary from June 2020 to November 2022 at Ksh.200,000 total Ksh.5,800,000;e.Accrued leave from 2016 to 2022 for 21 working days each year ksh.1,130,769;f.House allowance for 12 years at 15% of the salary paid Ksh.4,560,000;g.Service pay for 12 years Ksh.1,270,000;h.Work during public holidays for 12 years Ksh.2,322,984;i.Working on rest days for 12 years ksh.10,091,904;j.Refund for expenses for repair of allocated motor vehicle Ksh.146,000;k.Certificate of service;l.Costs of the suit.

8. The claimant testified in support of this claim that he was employed by the respondents and worked diligently until 30 November 2022 when his employment was terminated. In response, the respondents allege that he resigned from his employment which is not true. He stopped attending work due to non-payment of salary and the vehicle he was using to perform his duties was forcibly taken from him through Tononoka Police Station. The vehicle had been allocated to him by the founder director and whenever it required repairs, the respondents would pay for costs. In this case, the vehicle was taken for repairs but the respondents refused to pay. The claimant realized that the garage wanted to auction the vehicle to recover repair and storage charges and he decided to pay Ksh.146, 000 to have the vehicle released to him. The respondents refused to refund these costs.

9. The claimant testified that he started at a salary of Ksh.250, 000 per month but the respondents reduced it without notice or indicating the reasons. He was not issued with a written contract of employment and this led to violation of his rights. From January 2016 to June 2020, the respondents paid a salary less Ksh.50, 000 and from June 2020 to November 2022 the respondents paid the due salary less Ksh.200, 000. These arrears should be paid.

10. The claimant testified that for his expenses while at work, he submitted payment vouchers and he signed. There was an accountant who kept records all in the custody of the respondents. He had no medical benefits, there were no statutory payments and the respondents paid salary in cash to avoid tax returns. Service pay is due for non-payment of statutory dues.

11. The claimant testified that he worked overtime and was not compensated. The respondent kept all work records. There were worksheets to be filled out daily but due to the nature of his duties, the claimant was not always at the office to sign them. He was largely in the field assisting clients.

12. Upon cross-examination, the claimant testified that the respondent reduced his salary from the year 2018 to reduce the records to KRA – PAYE to indicate gross pay of Ksh.64, 000 and a cash payment of Ksh.100, 000 paid through vouchers. His salary was reduced from Ksh.150,000 to Ksh.100,000 but the records show he was paid Ksh.135, 000 per month. There is no record of the cash payments.

13. Work was for 6 days each week without compensation for the rest day and work during public holidays. As a technical officer, the claimant would be in the field most of the working hours and end up with overtime without compensation. He was allocated a motor vehicle given to him by the founding director and serviced by the respondents. The vehicle remained the property of the respondent and he had to repair it at his cost. For many years he was the only technical person and hence did not take annual leave.

14. The respondent submitted a letter alleged to be a resignation letter which is not the case. Upon termination of employment, the claimant thanked the respondents for offering him a professional chance to serve them. He offered to take annual leave at the end of his employment but his emails were blocked and could not access these records.

Response 15. In response, the respondent’s case is that the 1st respondent is a limited liability company and the 2nd respondent is the administrator of the Estate of Suhel Bakirali Nurdin Esmailjee (Deceased). The deceased held 65% of the shares in the 1st respondent and was fully responsible for the running and management of the company. The other shareholders, Nahida Abdulkadir Yusuf and Mohamed Rafique Mohamed were always silent partners who were not involved in the management but shared in the profits.

16. The claimant was employed as a senior technical manager from 1st March 2011 until 1st November 2022 when he resigned. He was not diligent in his duties and was disrespectful, abusive and insulting to the respondents.

17. The claimant went on annual leave every year and all his NSSF and NHIF dues were remitted. The salary paid was inclusive of house allowance and he never worked overtime.

18. The salary payments were never reduced as alleged. Between 2016 to 2020 the claimant earned a gross salary of ksh.64, 000 per month. Between 2021 and 2022 he earned a gross salary of Ksh.135, 000 per month. The respondents did not frustrate the claimant in his duties as alleged as this would have been detrimental to the business since he was the most skilled employee with information relating to the operations of all the project.

19. Following the demise of the majority shareholder, the claimant was the only person with all information about company operations. The 2nd respondent did not become part of the operations until later after the mourning period between January to May 2022.

20. The respondents own a motor vehicle KBS 574E. The claimant took advantage of the 2nd respondent who was not conversant with the company affairs and absconded duty with this vehicle and put it into personal use. The 2nd respondent made a report at Tononoka Police Station upon which the claimant returned the vehicle which was in a state of decay and the respondents have been forced to repair it. The accident leading to damage to the vehicle was caused by the claimant for reckless use.

21. The claimant was paid his gross monthly salary of Ksh.135, 000 until he resigned on 1st November 2022. He refused to complete pending projects and is therefore not entitled to the claims made.

22. In evidence, the 2nd respondent testified that she is the administrator of the estate of the late Suhel Bakirali Nurdin Esmailjee and only came into the 1st respondent's operations in May 2022 after the mourning period. The claimant was responsible for all projects which he mismanaged and called to account, he resigned on 1st November 2022 leaving dissatisfied clients. The claimant had been allocated a company vehicle to run his duties, he caused an accident and it remained in the garage without attendance and eventually, he took it up for his personal use. The 2nd respondent was forced to seek assistance from Tononoka Police Station to get it back. All along the claimant had claimed that he was given the vehicle but she checked with NTSA and established that the ownership was by the 1st respondent. As the Administrator, she had a duty to collect all company assets.

23. The 2nd respondent testified that the claimant remained the most senior employee of the company but refused to cooperate and check in and out of work like other employees. His work records are not documented due to his attitude and approach to requests to sign which he refused to address. The salary paid was Ksh.135, 000 per month which included provision for housing. There are records to confirm remittances to NSSF and NHIF.

24. Through a letter dated 1st November 2022, the claimant resigned from work at a time when the company solely depended on him as the most skilled employee. The 2nd respondent did not terminate his employment since she was dependent on him and there were incomplete projects. The claimant did not submit any receipts for repairs of the vehicle allocated to him to justify his claims for a refund.At the close of the hearing, both parties filed written submissions.

25. The claimant submitted that the respondents have alleged he resigned from his employment which is not correct. The 2nd respondent took over the running of operations and despite the claimant assisting her, she started frustrating his employment to force him to resign. The claimant had been assigned vehicle KBS 574E for his duties but on 8 February 2022 it developed mechanical problems and he was forced to take it to the garage at a cost of Ksh.56, 250. A receipt was issued but the respondents refused to pay. After 6 months, the garage wanted to auction the vehicle forcing the claimant to pay storage and repair charges to claim the vehicle. The 2nd respondent filed malicious charges at Tononoka Police Station that the claimant was keeping this vehicle illegally leading to the police forcefully taking it back. There was no payment of the costs the claimant had incurred in repairs of the vehicle.

26. The claimant submitted that there was constructive dismissal due to the respondents placing him under intolerable working conditions as held in Coca-Cola East and Central Africa Limited v Maria Kagai Ligaga [2015] eKLR. The claimant resigned at the instance of the respondents who made his continued attendance at work impossible after taking the vehicle he was supposed to use while on duty. The respondents reduced their salary drastically from Ksh.250, 000 to Ksh.100, 000 without justification and contrary to the law. These frustrations repudiated the employment contract.

27. The claimant submitted that he tendered his resignation on 1st November 2022 with effect from 10 November 2022 however, when the 2nd respondent received it, she made it conditional that the claimant be available for the next 6 months to complete ongoing projects. In the case of Edwin Beiti Kipchumba v National Bank of Kenya Limited [2018] eKLR the court held that withdrawal of a resignation must be within a reasonable time.

28. The claimant submitted that he is entitled to his claim for underpayment over the years. There was no house allowance paid, no leave records, no service for 12 years, and no compensation for overtime and working during public holidays. The claimant was forced to repair the motor vehicle allocated to him for which there was no refund. A certificate of service should be issued with costs.

29. The respondents submitted that there was voluntary termination of employment through resignation. The respondents could not force the claimant to work against his will. However, he left pending projects incomplete and without attendance and a request was put to him to attend and complete but he declined. The claimant had at his disposal a company vehicle which he recklessly used leading to an accident and was at the garage for a long time. He alleged to have paid for repairs and storage but these facts were not addressed with the respondents. The claimant had treated this vehicle as his property with the knowledge that ownership had remained with the 1st respondent and upon the 2nd respondent taking over operations, she secured information from NTSA and recovered the vehicle with assistance from the police.

30. The respondents submitted that the alleged underpayments are not with evidence and the last salary earned was Ksh.135, 000 inclusive of house allowances and statutory deductions. There is evidence of statutory payments and the claim for service pay is not justified. There were no pending leave days and the claimant did not submit any application to take his annual leave. In the case of Daniel Mburu Muriu v Hygrotech East Africa Ltd [2021] eKLR the court held that there was no evidence by the employee that he was entitled to the leave days claimed.

31. Under the provisions of Section 31 of the Employment Act, an employer is allowed to pay a consolidated salary as held in Charity Wambui Muriuki v M/s Total Security Surveillance Limited [2017] eKLR.

32. The respondents submitted that service pay is not due to an employee where the employer presents evidence of statutory payments following Section 35(6) of the Employment Act. In the case of James Muiruri Njenga v Nakumatt Holdings Limited [2015] eKLR the court held that evidence of statutory payments is sufficient to remove an employee from claiming service pay. Also, a claim for working during public holidays and overtime should be particularized which the claimant has failed to address.

33. The motor vehicle repairs to KBS 574E are without evidence submitted to the respondents and the claimant cannot justify a claim to be refunded thereof. A Certificate of Service dated 17 November 2023 has already been issued to the claimant through his advocates.

34. The respondents submitted that the 2nd respondent is only attending as the administrator and should be found culpable over matters of the 1st respondent. There is a counterclaim for the damage caused to vehicle KBS 574E at Ksh.240, 000 and recovery changes through Tononoka Police Station and the same should be allowed with costs and the claim dismissed with costs.

Determination 35. Through a letter dated 1st November 2022, the claimant resigned from his employment with the respondents and he gave one month's notice taking effect on 30 November 2022. He thanked the respondents for offering him the opportunity for professional development.

36. The claimant has made a case that his resignation was not voluntary, he was placed under intolerable working conditions and hence forced to terminate employment and claims constructive dismissal. His case is that the vehicle he was using was forcefully taken from him by the respondents at the instigation of the 2nd respondent who took over the running of the company in May 2022 upon the demise of the founding director who had given him the vehicle.

37. The claimant's case is also that he had been forced to repair this vehicle at his costs and the respondents refused to refund the costs. At this point, his salary had been reduced drastically from Ksh.250, 000 to Ksh.100, 000, and despite seeking reasons for such action, there was no explanation. Cumulatively, he was forced to resign.

38. The respondent’s case is that the claimant never owned motor vehicle KBS 574E and any repairs were not brought to the attention of the employer to justify a claim for a refund. The claimant kept this vehicle for personal use after causing an accident and extensive damage leading to the respondents recovering it with assistance from the police. The claimant had a given salary and has no evidence of reduction as alleged. The claimant resigned voluntarily and efforts to have him complete pending projects failed to elicit any response.

39. Indeed, in constructive dismissal, an employee is required to demonstrate that the employer placed him under intolerable working conditions leading to termination of employment through a resignation. In the case of Coca-Cola East & Central Africa Limited v Maria Kagai Ligaga [2015] eKLR the Court of Appeal addressed the issue of what constitutes constructive dismissal and held that;a.What are the fundamental or essential terms of the contract of employment?b.Is there a repudiatory breach of the fundamental terms of the contract through the conduct of the employer?c.The conduct of the employer must be a fundamental or significant breach going to the root of the contract of employment or which shows that the employer no longer intends to be bound by one or more of the essential terms of the contract.d.An objective test is to be applied in evaluating the employer’s conduct.e.There must be a causal link between the employer’s conduct and the reason for the employee terminating the contract i.e., causation must be proved.f.An employee may leave with or without notice so long as the employer’s conduct is the effective reason for termination.g.The employee must not have accepted, waived, acquiesced or conducted himself to be estopped from asserting the repudiatory breach; the employee must within a reasonable time terminate the employment relationship under the breach.h.The burden to prove a repudiatory breach or constructive dismissal is on the employee.i.Facts giving rise to repudiatory breach or constructive dismissal are varied

40. These elements outlined above are reiterated in the case of Herbert Wafula Waswa v Kenya Wildlife Services [2020] eKLR and the case of Enid Nkirote Mukire v Kenya Yearbook Editorial Board [2022] eKLR.

41. Has the claimant met the threshold for a claim for constructive dismissal?

42. The claimant does not contest that he was allocated motor vehicle No. KBA 574E to facilitate his work duties. This vehicle is the property of the 1st respondent.

43. Further, the claimant does not contest that while using vehicle KBS 574E he had an accident leading to damage and need for repairs. The vehicle was taken for repairs and later returned to the claimant’s use. The claimant submitted receipts under his name from Sim Mambos Auto Works for Ksh.90, 000 which is undated and payment of Ksh.56, 000 which is also undated.

44. The claimant submitted a quotation dated 9 February 2023 for repairs to vehicle KBS 574E. This is a period post his employment with the respondents. He was not the owner of this vehicle to follow up with its repairs post-employment.

45. On the issue that there was a reduction of the salary over the years, the claimant testified that his initial salary was ksh.250, 000 which was reduced by Ksh.50, 000 per month. That part of his salary was paid through voucher and in cash. This was done to evade KRA returns.

46. The claimant cannot enjoy an illegality. Payment of salaries should be with records kept by the employer. The respondents have admitted that the initial salary was Ksh.64, 000 and increased to Ksh.135, 000. The Employer is the legal custodian of work records. Any salary paid in cash to evade tax returns is not lawful and cannot aid the claimant in claiming any underpayments as alleged.

47. In the case of Stephen Kibowen v Agricultural Finance Corporation [2015] eKLR the court held that where there is an apparent illegality, the court cannot apply it to the benefit of either party. In the case of Nellie Benignus Wamalwa v Rafiki Deposit Taking Microfinance (K) Ltd [2019] eKLR this position is reinforced and in the case of Gathara v Athi Water Works Development Agency & 2 others (Petition 3 ‘A’ of 2022) [2022] KEELC the court outlined at length how an illegality apparent to the court should not benefit any party and that;… in seeking further compensation for the car wash on the riparian land the petitioner is seeking to benefit from an illegality. see the case of Standard Chartered Bank Kenya Ltd v Intercom Services Limited & 4 others (2004) eKLR & Republic v Ministry of Roads & Anor Exparte Vipingo Rodge Limited & Anor (2016) in support of the proposition that no court ought to enforce an illegal contract or allow itself to be made the instrument of enforcing obligations alleged to arise out of a contract or transaction which is illegal, if illegality is brought to the notice of the court and if the person invoking the aid of the court is himself implicated in the illegality. It matters not whether the defendant had pleaded the illegality or whether he has not. If the evidence Adduced by the plaintiff proves the illegality the court ought not to assist him.

48. In this case, the circumstances of the claimant’s case addressed, the court finds no proper case to infer constructive dismissal. He cannot justify keeping the property of the respondents for his personal use and when taken away claim that he was forced to resign. Because he caused the accident to damage the allocated vehicle, the claimant was aware that the vehicle required repairs and could not use it. The respondents did not prompt the resignation and were out of their free will.

49. Indeed, the claimant was not prompt and definite in his alleged constructive dismissal. He offered 30 days’ notice and within which period to take his annual leave. Within the leave period, the claimant remained in the employment of the respondents. The 2nd respondent was justified in recalling back to work to attend to incomplete projects. He failed to attend.

50. Employment only ceased on 30 November 2022. The claimant cannot justify why he failed to attend to his duties as directed by the 2nd respondent.Notice pay and compensation are remedies removed from the claimant.

51. On the claim for underpayments, as outlined above, the employer is the custodian of work records under Section 10(6) and (7) of the Employment Act. The respondents have admitted that the claimant started at Ksh.65, 000 gross salary and ended with Ksh.135, 000 per month. Any salary paid in cash to evade KRA returns should have been reported and addressed instantly. For the claimant to enjoy such illegality, he cannot claim any benefit under the same. The last earned gross salary is Ksh.135, 000.

52. The claim for accrued leave is on the basis that from the year 2016 to November 2022 the claimant did not take his annual leave. The claimant resigned through a letter dated 1st November 2022 and gave a 30-day notice. He opted to use the notice period for his annual leave.

53. This put into account, that the employee has a right to take annual leave under Section 28 of the Employment Act. The employer must keep and submit the work records to demonstrate how this right was secured and applied. However, under Section 28(4) of the Employment Act, annual leave is not to be accumulated for over 18 months. Where the employee has applied to take annual leave but is not allowed, such a record can be used to claim accrued leave days over the years. In this case, the claimant is only entitled to 33 leave days in the absence of any record by the respondent going back to the year 2016.

54. For 33 days at the gross salary of Ksh.135, 000, the claimant is entitled to Ksh.148, 500.

55. On the claim for a house allowance, the claimant was not issued with a written contract of employment for his employment over the years. The respondents admitted that he was a senior technician and highly qualified. Without a written contract, the respondents exposed themselves to the claims made herein. However, the claimant was not earning a basic/minimum wage regulated under the Wage Orders which allow for a claim for house allowance. Without any written contract to outline the benefit of a house or an allowance thereof, the salary earned at ksh.135, 000 is over and above the minimum taking into account the house allowance.

56. On the claim for working during public holidays, these are days published and gazette by the Minister. They are not particularized and made as a general claim. Without the details as to how the claim for payment of Ksh.2, 322,984 accrued, this claim is not justified.

57. On the claim that the claimant worked during his rest days for 12 years, the claim is that there was work for 6 days each week. Section 27 of the Employment Act allows every employee to take one rest day each week. Working over Saturday is a working day under the law. Where the claimant was called to attend to any duty over and above the 6 days allowed under the law, he has not addressed such particulars. The general claim for 12 years at ksh.10, 091,904 also negates the claimant’s evidence that he was for a long period without the allocated vehicle and hence unable to attend to his duties. To make a general claim in this regard does not aid his case.

58. On the claim for a refund for expenses for repair of the allocated motor vehicle Ksh.146, 000, the basis is that the vehicle KBS 574E was taken to the garage following an accident. It remained in the garage for a long and later the claimant learned that it was up for auction and decided to pay the costs. These payments are made without sanction by the employer or the owner of the subject vehicle. The quotation for the motor vehicle repairs was issued to the claimant.

59. The claimant had no obligation to pay for the repairs for the employer’s property. Where did so, he ought to have obtained approval from the respondents that upon his attending, he would be refunded for incurring repair costs.

60. Even in a case where the claimant found it necessary to pay for the repair costs, he failed to submit the quotation to the respondents to give them a fair chance to pay for these costs. He cannot claim after the fact.A Certificate of Service has since been issued.

61. On costs, the claim herein is largely without merit save for leave pay at ksh.148, 500.

62. On the counterclaim outlined in the written submissions, the respondents too did not call upon the claimant to address the claims made before the end of his notice period. Although the 2nd respondent was learning the company operations, the entity of the 1st respondent should have had systems to address workplace misconduct or gross misconduct. To wait until employment is terminated to claim as herein done is to avoid taking responsibility. Any claim post-employment is without merit.

63. Accordingly, the claimant is awarded leave pay at ksh.148, 500 only. The respondent shall pay the award within 30 days after which the same will accrue interest at court rates until paid in full. For costs, each party bears its costs.

DELIVERED IN OPEN COURT AT MOMBASA THIS 26 DAY OF SEPTEMBER 2024. M. MBARŨJUDGEIn the presence of:Court Assistant: Japhet…………………… and …………………