[2024] KEELRC 13220 (KLR)

Gichuhi & 3 others v Shoprite Checkers Kenya Limited (Employment and Labour Relations Appeal E049 of 2023) [2024] KEELRC 13220 (KLR) (25 November 2024) (Judgment)

Neutral citation: [2024] KEELRC 13220 (KLR)

Republic of Kenya

In the Employment and Labour Relations Court at Nairobi

Employment and Labour Relations Appeal E049 of 2023

JW Keli, J

November 25, 2024

Between

Christopher Kariuki Gichuhi

1st Appellant

Doreen Wangari Muiga

2nd Appellant

Erick Njenga Karanja

3rd Appellant

Martin Mugendi Njururi

4th Appellant

and

Shoprite Checkers Kenya Limited

Respondent

(An Appeal from the Judgment of the Honourable L.B Koech, PM dated 6th April, 2023 in Nairobi CMELRC Cause No. 700 of 2019)

Judgment

1. The Appellants, being dissatisfied with the Judgment of the Honourable L.B Koech, PM, dated 6th April, 2023 in Nairobi Cause CMELRC No. 700 of 2019 Between Christopher Kariuki Gichuhi, Doreen Wangari, Erick Njenga & Martin Mugendi Njururi Versus Shoprite Checkers Kenya Limited, filed the Memorandum of Appeal dated 11th April, 2023 and an Amended Memorandum of Appeal dated 15th May, 2023 and Record of Appeal dated 15th April, 2024, seeking the orders that:a.This Appeal be allowed;b.A Declaration that the 1st, 2nd, 3rd and 4th Claimant’s termination of employment was unfair;c.For the 1st Claimant:i.12 months salary being damages for unfair termination Kshs. 420,000. 00ii.Interest on (i) at Court rates from the day each payment fell due and payable until payment in fulld.For the 2nd Claimanti.12 months salary being damages for unfair termination Kshs. 360,000. 00ii.Interest on (i) at Court rates from the day each payment fell due and payable until payment in fulle.For the 3rd Claimanti.12 months salary being damages for unfair termination Kshs. 360,000. 00ii.Interest on (i) at Court rates from the day each payment fell due and payable until payment in fullf.For the 4th Claimanti.12 months salary being damages for unfair termination Kshs. 420,000. 00ii.Interest on (i) at Court rates from the day each payment fell due and payable until payment in fullg.Cost of this Appeal.

2. The Appeal was premised on the following grounds : -a.The Learned Magistrate erred in fact and in law and misdirected himself thereon, by finding as she did, that the termination of the Claimants was fair;b.The Learned Magistrate erred in fact and law, in failing to correctly evaluate the evidence adduced before her.c.The Learned Magistrate erred in law and misdirected herself by failing to follow binding judicial precedent.

3. The Respondent being dissatisfied with the Judgment of the Honourable L.B Koech, PM, dated 6th April 2023 in Nairobi Cause CMELRC No. 700 of 2019 Between Christopher Kariuki Gichuhi, Doreen Wangari, Erick Njenga & Martin Mugendi Njururi Versus Shoprite Checkers Kenya Limited, filed a Memorandum of Cross-appeal dated 19th April 2023 and Record of Cross-Appeal dated 18th April 2024 and received in Court on the 22nd April 2024, seeking the orders that:-a.That Judgment of the trial Court be reversed, varied or set aside;b.That cost of the suit be borne by the Respondents;c.The Respondents do bear the cost of the Appeal; andd.This Court does make such further orders as it deem fit.

4. The Cross- Appeal was premised on the following grounds : -a.The Learned Trial Magistrate erred in law and in fact by awarding the Respondents one month’s salary in lieu of notice despite finding that their termination was lawful and fair;b.The Learned Trial magistrate erred in law and in fact by condemning the Appellant to pay costs of the suit despite finding that the Respondents’ termination was lawful and fair;c.The Learned Trial Magistrate erred in law by failing to be bound by the doctrine of stare decisis.

5. The Appeal and Cross-Appeal were canvassed by way of written submissions. The Appellant’s written submissions drawn by D.K Githinji & Co Advocates were dated 2nd September, 2024 and received in court on 3rd September, 2024. The Respondent’s written submissions drawn by Humphrey & Co Advocates were dated 13th August, 2024.

Background to the Appeal and the cross-appeal 6. The Appellants/Claimants filed a suit before the trial court in Nairobi CMELRC Cause No. 700 of 2019 against the Respondent for unfair termination. Through the Statement of Claim dated 9th May, 2019 and filed on 10th May, 2019, the Appellants/Claimants sought for the following reliefs: -a.A declaration that the 1st-4th Claimants’ termination of employment was unfair;b.For the 1st Claimant:i.12 months salary being damages for unfair termination Kshs 420,000. 00ii.One month salary in lieu of notice Kshs. 35,000. 00iii.Salary for March 2019 Kshs. 35,000. 00iv.House Allowance for 10 months at 15% of basic salary Kshs. 52,500. 00v.17 Leave days already admitted Kshs. 28,333. 00vi.Interest on i-v at Court rates from the day each payment fell due and payable until payment in fullvii.Certificate of Service for the Claimantc.For the 2nd Claimanti.12 months salary being damages for unfair termination Kshs 360,000. 00ii.One month salary in lieu of notice Kshs. 30,000. 00iii.Salary for March 2019 Kshs. 30,000. 00iv.House Allowance for 8 months at 15% of basic salary Kshs. 43,200. 00v.14 Leave days already admitted . 20,000. 00vi.Interest on i-v at Court rates from the day each payment fell due and payable until payment in fullvii.Certificate of Service for the Claimantd.For the 3rd Claimanti.12 months salary being damages for unfair termination Kshs 360,000. 00ii.One month salary in lieu of notice Kshs. 30,000. 00iii.Salary for March 2019 Kshs. 30,000. 00iv.House Allowance for 8 months at 15% of basic salary Kshs. 43,200. 00v.8 Leave days already admitted Kshs. 11,429. 00vi.Interest on i-v at Court rates from the day each payment fell due and payable until payment in fullvii.Certificate of Service for the Claimante.For the 4th Claimanti.12 months salary being damages for unfair termination Kshs 420,000. 00ii.One month salary in lieu of notice Kshs. 35,000. 00iii.Salary for March 2019 Kshs. 35,000. 00iv.House Allowance for 10 months at 15% of basic salary Kshs. 52,500. 00v.17 Leave days already admitted Kshs. 28,333. 00vi.Interest on i-v at Court rates from the day each payment fell due and payable until payment in fullvii.Certificate of Service for the Claimantf.Cost of this suit(Pages 9-14 of the Record).

7. The Statement of Claim had been supported by the Verifying Affidavit sworn by the 1st Claimant on the 9th May 2019 and accompanied by the 1st to 4th Claimants’ Witness Statements dated 9th May, 2019, the Claimants’ list of documents of even date (Pages 9-17 of the Record).

8. The Respondent entered an appearance by filing a Memorandum of Appearance dated 31st May, 2019 received in Court on the 4th June, 2019 (Page 18) and filed a Response to the Statement of Claim dated 11th June, 2019 (pg.78-82 of the Record).

9. The Cross Appellant/Respondent filed the Appellant’s List of witnesses dated 11th June, 2019, the witness statement of John M. Maina dated 11th June 2019, and the Appellant’s list of Documents dated 11th June, 2019.

10. The Cross-Appellant/Respondent substituted his witnesses and filed Respondent’s Substituted Witness Statements for Joseph Wanjiku and Anton Wagenaar dated 27th February 2020 and 28th February 2022 respectively together with the Respondent’s List of Witnesses dated 28th February 2022 (Pages 187-182 of the record).

11. The Trial Court proceeded with the hearing of the Claimant’s case with the 4 Claimants testifying on the 15th February 2022. The Defence case was heard on the 7th June 2022 with the Respondent’s Witness Anthony Wagenaar testifying (pages 232-239 of the record).

12. The parties filed written submissions in the lower Court after the closure of the defence. (The Appellant/Claimant’s final submissions dated 21st June, 2022 at pages 109-201 of the Record). (The Cross-Appellant/Respondent filed final written submissions dated 8th December, 2022 at pages 208-208 of the Record).

13. The trial Court (Hon. L.B Koech, PM.) delivered its judgment on the 6th day of April 2023 (pages 209-224 of the Record) partially in favour of the Appellants finding that the termination of the Claimant’s services was fair and was not unlawful. The Leaned Trial Magistrate issued the following Orders:a.1st Claimant 1 month salary in lieu of notice Kshs. 35,000/-b.2nd Claimant 1 month salary in lieu of notice Kshs. 30,000/-c.3rd Claimant 1 month salary in lieu of notice Kshs. 30,000/-d.4th Claimant one month salary Kshs. 35,000/-e.The Claimant to have costs of this suit plus interests at Court rates till payment is made in full.

Determination Issues for determination. 14. The Appellants in their written submissions identified and submitted the issues for determination on the grounds for Appeal.

15. On the other hand, the Respondent/Cross-Appellant in its written submissions identified the following issues for determination:a.Whether the Learned Trial Magistrate erred in law and in fact by finding that the termination of the Respondents was fair;b.Whether the Learned Trial Magistrate erred in law and in fact by condemning the Respondents to pay costs of the suit despite finding that the Respondent’s termination was unlawful and fair.

16. The court taking into consideration the issues addressed by the parties above, finds issues to be determined in both appeal and cross-appeal to be:a.Whether the trial magistrate court erred in law and facts in holding the termination of employment of the Appellants was fair and lawful.b.Whether the appeal is merited.c.Whether cross-appeal is merited.

Decision Whether the trial magistrate court erred in law and fact in holding the termination of employment of the Appellants was fair and lawful 17. The law provides for termination to be held as fair it must meet the two conditions of fairness being substantive fairness (valid reasons) according to Section 43 and 45 (1) of the Employment Act and procedural fairness according to the procedure prescribed under section 41 of the Employment Act. See Walter Ogal Anuno vs. Teachers Service Commission (2013) eKLR which was cited by the Trial Magistrate Court and which I uphold to wit:- “For a termination to pass the fairness test, it must be shown that there was not only substantive justification but also procedural fairness.”

Substantial fairness 18. The Trial Magistrate Court pronounced itself on the reasons for the termination of employment of the Appellants at page 220 (Paragraph 32-35) as follows:-‘’32. From the above notices, its clear that the claimant knew what the respondents were complaining about. It was the purchase of whisky at a price way below the market price, having looked at the Human Resource manual and the claimant contracts of employment and the nature of the claimants work, it is my view that the reasons that were given by the respondent for termination was valid.33. The claimants evidence is that the purchase of the drink did not in any way amount to failing to protect the company’s property. That there was nothing unusual about the price and it was not their duty to set prices. That they followed the established process of buying goods by the staff.34. While I agree with the claimant that they followed the established process for staff for buying goods at specific till, deducted for staff. It is my view that the way they hurriedly and suspicious purchased the wrongly priced was wrong. The claimant knew that drink, they took advantage of wrong pricing instead of alerting the management to correct it. And the fact that there was wrong pricing before, did not give the claimant the right to take advantage of a process.35. The employees work as a team where there is a problem that is likely to affect the company. It is fair that the company. It is fair that the employee raise the issue as soon as it is practical with the employer because once the company is down, they will all be down.’’

19. The Appellants submitted that the trial court did not evaluate the evidence correctly and stated that in paragraph 34 (supra) of its judgment, the court agreed the staff followed due process in purchasing the goods believing they were on offer but the court blamed the staff for purchasing the said goods hurriedly and suspiciously ostensibly to circumvent the process they followed.

20. The Appellants submitted that apprehension can only be reasonable if firmly bottomed on grounds discernable from the facts of the case and is not speculative or merely imagined. They relied on the decision in Mwangi Stephen Muriithi vs. Attorney General (1981) eKLR where the court held:-“In my view reasonable apprehension clearly means apprehension on reasonable grounds”. That the trial court erred in being persuaded by the unreasonable apprehension of the Respondent and clouded itself with that veil, have divested itself with causing of evaluating evidence objectively.

21. The Appellants contended that they sought and were allowed by their immediate supervisor to purchase goods on the basis that the same were on offer and the supervisor also purchased. The Appellants submit that the employer as defined under section 2 of the Employment Act includes a manager or agent of the employer and further relied on the decision in Lucy Nyandia Mwangi vs. Mathenge & Muchemi Advocates (2013) eKLR, where the court held that according to the definition of employer under the Employment Act, it was possible for persons acting for principal employer to be held to be employers themselves if they control the work of the employees, exercise decisional control or pays the salary. The Judge stated even an associate of a law firm with such powers can be deemed to be an employer. The Appellants relying on the decision submitted that it was difficult to fault them for obeying instructions from their boss (supervisor). The Appellants submitted that the sales manager/supervisor also filed a case arising from the same cause.

22. The Appellants submitted that they did their best in compliance with organizational framework. That RW1 had no basis whatsoever to lay blame on the Appellants and the trial court agreed when, except suspicion, the Appellants had followed due process.

23. The Appellants submitted that the Respondent could not be a beneficiary of own wrong, negligence or malfeasance. To buttress this point, the Appellants relied on the decision of H.C. in Mitatech Enterprises Ltd vs. Equatorial Commercial Bank Ltd (2021) eKLR where it was held that it was a clear principle of law that a party can never be viewed to benefit from its own breach.

24. The Appellant further relied on the decision of the court in David Wanjeru vs. Standard Chartered Bank Kenya Ltd at paragraph 152 where the court held:-“It is unfair and an inequitable for an employer to summarily dismiss an employee from employment on account of matters fermented by its own systemic lapses without evidence that under its practices and or instruments it was the responsibility of the employee to innovate and put in place systems and control measures as was in this case.”

25. The Appellant further submitted that at the material time the Respondent was winding up its operations in the country hence used the opportunity to edge out the employees who found themselves out of no mistake of their own in the intricate web.

Cross-Appellants/Respondents submission on substantial fairness 26. The Respondent contended that this being the first appeal the court ought to evaluate the evidence and satisfy itself that the decision of the trial court was well founded as stated in Selle & Another vs. Associated Motor Boat Company Ltd & others (1968) EA 123; Peters vs. Sunday Post Limited (1958) EA 42 …… which was cited in Nawilar Nassir vs. Scala Enterprises Limited (2021) eKLR.

27. That it was not contested that the Claimants bought the 11 Glenfiddich 12 Whisky bottles that had been erroneously priced (relied on statements of the appellants at pages 111 - 115 of the record in response to the disciplinary proceedings). That the purchase was done during working hours in cahoots with other employees as evidenced in the CCTV footage adduced before the trial court. The court was asked to see CCTV recording of the occurrence of 20th February 2019.

28. That the trial court agreed with the Respondent that the Appellant actions were hasty and questionable of purchase of 11 bottles of Glenfiddich 12 Whisky, fully aware that they had been incorrectly priced and failing to notify the line manager of the error contrary to the best interest of the company. That the actions were in violation of the staff buying policy constituting gross misconduct under section 44 (4) ( c) of the Employment Act .

29. The court sitting on first appeal has re-evaluate the evidence before the trial court to reach own conclusion taking into consideration it had neither seen or heard the witnesses. (see Selle's decision).

30. The 1st Appellant, Christopher Kariuki, stated he had not signed the company staff rules and that there was a specific till and one would be taken to the management after the purchase to sign the receipt. (page 232 of receipt).

31. During cross-examination, the 1st Appellant agreed there was in place staff buying procedures of which they were informed of at training. He did not take whiskey. It was the first time to see the whisky in the store. He was receiving clients. He had seen one Erick carry 3 of the Glenfiddich bottles and thought the same was an offer. He went and bought it. He said he bought it when his shift ended at 3. 00 p.m. He said the Glenfiddich was on offer and did not breach any rules.

32. CW2 was Doreen Wangari Muigai (2nd Appellant). She knew of the staff purchasing procedures. She did not normally drink whisky. She bought for herself and a friend. She worked with Martin who sent money to her to buy the whiskey. It was the end of her shift and she had 2 bottles. She put them under the counter. She was at the till. She was the supervisor. She was purchasing at the money market till. Her shift was ending at 4 p.m. but was extended. In her opinion, the employer should have deducted money and given them a warning and a last chance. That it was not serious as the offer was at 35%. On re-exam, she told the court there were other items on offer and even the sales manager did that. (page 234 of record).

33. CW3 was Erick Njenga Karanja (3rd Appellant). He told the trial court he was aware of staff purchasing procedures and complied. On cross-examination, RW3 stated he was informed by the sales manager about the offer. He bought 3 bottles at Kshs. 492. His shift ended at 4. 30pm and closed out at 4. 30 p.m. He bought the bottles at the till and the receipt was cancelled as per procedure by David between 5p.m to 5. 30 p.m. He told the court they should have been surcharged as the employer said it was a wrong purchase. He was not aware it was the wrong purchase.

34. CW4 was Martin Mugendi Njururi. He sent money to CW2 to buy him the whiskey. She had called him about the offer and asked if he was interested. He sent money to Doreen (CW2) on being informed it was on offer (pages 232 - 236)

The Respondent’s evidence 35. RW1 was Antony Andrew Wagenaar. He was the divisional manager. He told the Trial Court that Doreen agreed it was a pricing issue. The Appellants purchased knowing it was wrong purchase.

36. During cross-examination, RW1 said the sale was hurried and suspicious. Martin had googled and found the purchase was wrong but believed he did nothing wrong. All staff were to protect the company property. The purchase was through the cashiers. CW1 said he would not defraud the company willingly and informed the manager of the wrong purchasing before. RW1 did not understand why the staff did not report to the line manager. The process was to purchase and keep the goods in designated areas and not store them before purchase. He agreed they had pricing issues before. (page 237 - 239).

37. The court having evaluated the evidence before the trial court established that there was an error in pricing the Glenfiddich whiskey. The Appellants had knowledge that the offer was not genuine and that explains why Doreen called her friend Martin to ask if he was interested in the product. There was no evidence the appellants flouted staff purchase policies save for Doreen who kept her stock under the counter. Doreen stated it was not a serious issue and they should have been surcharged. The Claimant relied on the decision in Standard Chartered Bank(supra) to submit they could not be blamed for the lapses in pricing of the product which they bought believing it was an offer. The court holds while it was true the Appellants were not responsible for the wrong pricing, they took unfair advantage of the employer. The employer under the verdict blamed the Appellants for relying on wrong information from the sales manager to purchase the alcohol. The court finds that the sales manager also participated in the said “windfall” to purchase Glenfiddich (2750 ml whiskey at KShs.420/=. He was minding his own business and not that of the company.

38. The reasons to justify termination are ones that the employer believes to exist. The employer established justifiable reasons to suspect the Appellants took unfair advantage to the disadvantage of company property. The employer-employee trust was broken by the actions and omissions of the Appellants. The court finds the decision of termination of their employment was reasonable in the circumstances and the decision met the reasonableness test by Lord Denning in British Leyland UK Limited v Swift(1981)I.R.L.R 91 who held that:- ‘‘The correct test is: Was it reasonable for the employers to dismiss him? If no reasonable employer would have dismissed him, then the dismissal was unfair. But if a reasonable employer might reasonably have dismissed him, then the dismissal was fair. It must be remembered that in all these cases there is a band of reasonableness, within which one employer might reasonably take one view: another quite reasonably take a different view…’’The court returns any reasonable employer in equivalent business would have severed relationship with the Appellants. They were no longer trustworthy. The court in the instant case holds the termination decision was reasonable on account of broken trust and finds issuance of a notice of one month salary in lieu under section 35 of Employment Act sufficed.

39. Section 35 of the Employment Act states: - ‘’(1) A contract of service not being a contract to perform specific work, without reference to time or to undertake a journey shall, if made to be performed in Kenya, be deemed to be—‘’(c )where the contract is to pay wages or salary periodically at intervals of or exceeding one month, a contract terminable by either party at the end of the period of twenty-eight days next following the giving of notice in writing.’’

40. The Court finds that the notice payment in lieu under section 35 is also a remedy for unjustified termination under section 49 of the Employment Act as follows:- ‘’49(1) Where in the opinion of a labour officer summary dismissal or termination of a contract of an employee is unjustified, the labour officer may recommend to the employer to pay to the employee any or all of the following—(a) the wages which the employee would have earned had the employee been given the period of notice to which he was entitled under this Act or his contract of service;’’

41. The court holds that the employees took advantage of the lapse by the employer in pricing the whiskey in question and benefitted. That the purchase was not in violation of the policy per se but the employee –employer trust was broken entitling the employer to terminate the employment under section 35 of the Employment Act by the issuance of notice of one month or payment of notice in lieu. Notice was not issued or paid. The trial court awarded notice payment in lieu which is hereby upheld.

Procedural fairness 42. Procedural fairness is as provided under section 41 of the Employment Act which states:- “41. Notification and hearing before termination on grounds of misconduct(1)Subject to section 42(1), an employer shall, before terminating the employment of an employee, on the grounds of misconduct, poor performance or physical incapacity explain to the employee, in a language the employee understands, the reason for which the employer is considering termination and the employee shall be entitled to have another employee or a shop floor union representative of his choice present during this explanation.(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. The court evaluated the disciplinary proceedings being Claimant’s statements (page 112 - 115), suspension notices (page 116 - 120), Notice to attend disciplinary hearing (page 21 - 25), minutes of Claimant’s disciplinary hearing (126 - 140), Notification of findings of disciplinary hearing (142 - 145), Appellants appeals (page 147 - 149) and the Dismissal Letters. (page 151 - 154). The reasons for termination were stated (pages 151 - 154). The employees were paid for days worked (pages (158 - 161).

44. The court holds the procedural fairness according to section 41 of Employment Act was complied with.

Determination on the Cross appeal 45. The trial court awarded a one-month salary in lieu of notice to each of the Appellants. A cross-appeal was filed on the basis that the notice pay was not deserved the court having held the termination was lawful and fair. The Court has already determined the notice pay was justified and payable under sections 35 and 49(2) of the Employment Act. The Cross-appeal is dismissed.

Conclusion 46. In conclusion, the Court upholds the award by the trial court of 1 month notice pay and costs to the appellants. The appeal fails and is dismissed. The judgment of Hon. C. K. Koech of 6th April 2023 is upheld. This cross-appeal is dismissed for lack of merit.

47. In the conclusion, both Appeal and cross-appeal are dismissed. Each party is to bear its costs in the appeal and cross-appeal.

48. It is so Ordered.

READ, DELIVERED AND SIGNED IN OPEN COURT AT NAIROBI THIS 25thDAY OF NOVEMBER, 2024. JEMIMAH KELIJUDGEIn The Presence Of:C/A CalebGithinji for the AppellantsMwaniki for the Respondent