[2017] KEELRC 1224 (KLR)

REPUBLIC OF KENYA

IN THE EMPLOYMENT AND LABOUR RELATIONS COURT OF KENYA AT NYERI

CAUSE NO.140 OF 2016

GRACE WANJIKU MAINA.........................................................................CLAIMANT

VERSUS

THE BOARD OF TRUSTEES, NANYUKI COTTAGE HOSPITAL.....RESPONDENT

(Before Hon. Justice Byram Ongaya on Friday, 9th June, 2017)

JUDGMENT

The claimant filed the memorandum of claim on 15. 06. 2016 in person and later appointed Kimunya & Company Advocates to act for her effective 21. 07. 2016. The amended statement of claim was filed on 11. 10. 2016. She prayed for judgment against the respondent for:

a) A declaration that the termination of the claimant’s employment by the respondent was unjustified, unlawful, unfair, wrongful and illegal.

b) Compensation for unlawful termination at one years’ salary Kshs.612,216. 00.

c) Severance pay at 15 days per year for 25 years’ service Kshs.637, 725. 00.

d) Costs of the suit and interest.

e) Any other or further relief that the honourable court may deem just and fit to award.

The respondent filed the memorandum of response on 04. 10. 2016 through Kariuki Mwangi & Company Advocates. The respondent prayed that the claimant’s suit be dismissed with costs.

It is not disputed that the claimant was employed by the respondent from 01. 05. 1990 to 06. 11. 2015. The claimant was appointed as enrolled community nurse by the letter dated 31. 03. 1990 and effective 01. 05. 1990. The claimant was appointed a pharmacy assistant by the letter dated 24. 03. 2000 and effective 01. 12. 1999. The claimant therefore served without a break in service from an enrolled community nurse and then as a pharmacy assistant as at the time of termination. At termination, the claimant earned Kshs.51,018. 00 per month.

The claimant received an internal memo dated 01. 10. 2015 stating that at the meeting of 09. 09. 2015 instructions were issued about purchasing procedures and approval systems. Further, it had been observed that the claimant had made 44 purchases between 10. 09. 2015 to 30. 09. 2015 without approval. The memo required the claimant to explain the reason behind the 44 purchases and to do so in writing before 05. 10. 2015 at 2. 00pm.

The claimant replied by her internal memo of 05. 10. 2015 stating that the challenges were as follows:

a) The suppliers were not responding effectively to stating their quotations.

b) The procurement office was facing challenges.

c) Scheduled meeting between the concerned had been postponed twice.

d) The re-order level not yet effected.

e) Being a new concept all concerned had to agree on the modalities.

f) Despite the teething hiccups, drugs had to be availed for the patient.

The claimant concluded that if all the challenges were addressed then the problem would not occur again.

The claimant’s employment was terminated by the letter dated 06. 11. 2015. The letter addressed to the claimant stated as follows:

“TERMINATION OF EMPLOYMENT

On 9th September 2015, clear instructions were given in regard to purchasing and approval systems. However, it was observed that you made 44 purchases from 10th September 2015 to 30th September 2015, without competitive bidding or approval. On 1st October 2015, you were given an opportunity to explain why you did so but you had no justifiable reasons. Consequently, on 5th and 6th October, you appeared for a disciplinary hearing where you were found guilty of flouting Hospital regulations.

Failure, refusal and / or neglect to obey a lawful command issued by your employer amounts to gross misconduct which warrants summary dismissal. The Hospital has exercised its discretion and reduced the summary dismissal to termination of service. Your services with the Hospital will therefore be terminated with effect from 7th November 2015.

Please clear with your Department by returning all Hospital property that may be in your custody. You will be advised when to collect your terminal dues.

Yours faithfully,

For: NANYUKI COTTAGE HOSPITAL

SIGNED

BEN MWARANIA

Chief Executive Officer.”

The claimant appealed against the dismissal by her letter dated 10. 11. 2015 addressed to the respondent’s Chairman. The claimant stated that she had served the respondent for 25 years, 10 years as a nurse and 15 years as a pharmacy assistant – throughout that period without warnings or reported indiscipline. She stated that she had not failed or neglected to obey a lawful command because of the following reasons:

a) The health soft lacked provision for quotation by the time some orders were made.

b) There were no email addresses for the suppliers.

c) All the ordered drugs were from established suppliers with the Hospital.

d) By the time some of the orders were made there was no procurement officer to guide on procedure.

e) Some of the prescribed drugs by the doctors were urgent as the patients were already on treatment and there was no enough time to get the quotation.

The appeal was rejected by the respondent’s letter dated 21. 11. 2015 as the dismissal was upheld.

The 1st issue for determination is whether the termination of the claimant’s employment was unfair or unlawful. The minutes of the meeting of 09. 09. 2015 have been filed. At Min. 1 on current order system, it is stated that the different order ordering systems and stock management were explained at large from various departments and it was resolved that ordering will be standardised to one system. At minute 6 on stock ordering it is stated that departmental heads will prepare their orders and present them to accounts. At minute 7 on approval of orders it is stated that the accountant will check the orders in regard to price, maximum and minimum order levels and then present the orders to the Chief Executive Officer (CEO) for approval. It is stated that nothing will be bought without the CEO’s approval.

The respondent’s CEO also the respondent’s witness no. 1 (RW1) testified that the charge against the claimant was that she made unauthorised purchases. RW1 testified that he was not sure that a procurement officer had been employed at all material time to assist to implement the competitive bidding system. RW1 further testified that the orders in issue were approved by the accountant but not the CEO as required. Respondent witness no. 2 (RW2) was the respondent’s accountant. He testified that he was not involved in preparation of order documents. He testified that the resolutions of 09. 09. 2015 could only be implemented gradually because the forms used in making orders had no provision for checking or verification by the accountant and then approval by the CEO. RW2 testified that he had no evidence that anyone in the hospital had complied with the new procurement instructions. RW2 testified that he approved payments despite being aware that the payments were with respect to irregular orders.

The court has considered the evidence. The court finds that it was the duty of the claimant to prepare the order documents and for the accountant to check and then the same accountant to present the same for approval by the CEO. The court finds that under the instructions of 09. 09. 2015, the claimant as a head of department was to prepare orders and present them to the accountant. The court returns that it was misconceived and not in line with the instructions to visit the claimant with the failure by the CEO to approve the orders because it was the duty of the accountant to check the orders and to take them to the CEO for approval. It is clear that some of the orders were duly approved by the CEO and not others but which may have been paid for without such approval. Nevertheless, the court finds that the claimant advanced valid grievances about the new procedure such as suppliers who were not responsive in quotations, urgency in serving patients and absence of procedures that would in event of such emergencies viewed against the new approval system and the inconsistent health soft system that had been installed by the respondent for the purpose. Under section 46 (h) of the Employment Act, 2007, an employee’s initiation or proposed initiation of a complaint or other legal proceedings against the employer, except where the complaint is shown to be irresponsible and without foundation, does not constitute a fair reason for dismissal or imposition of a disciplinary penalty. The court returns that the challenges as advanced by the claimant amounted to responsible and well founded complaint about the difficulties she was experiencing in implementing the new procurement procedures; and the same could not constitute the reason for termination of her employment and the court returns that RW1 specifically confirmed that he was not aware or could not remember if the procurement officer was in place to assist implement the system. It was further confirmed by RW2 that the forms used in making orders had not been amended to reflect the new system. The court considers that in such status of deficient operational systems, the employees including the claimant were left to their discretion to do their best in the circumstances and cannot be punished for adverse consequences to the respondent who opted to maintain the defective operational system.

In view of that finding and the deficient operational system in that regard, the court upholds its opinion in GraceGacheri Muriithi –Versus- Kenya Literature Bureau (2012) eKLR thus,

“To ensure stable working relationships between the employers and employees, the court finds that it is unfair labour practice for the employer to fail to act on reported deficiencies in the employer’s operational policies and systems. It is also unfair labour practice for the employer to visit upon the employee adverse consequences for losses or injury to the employer attributable to the deficiency in the employer’s operational policies and systems. The court further finds that it would be unfair labour practice for the employer to fail to avail the employee a genuine grievance management procedure. The employee is entitled to a fair grievance management procedure with respect to complaints relating to both welfare and employer’s operational policies and systems. The court holds that such unfair labour practices are in contravention of Sub Article 41(1) of the Constitution that provides for the right of every person to fair labour practices. Further the court holds that where such unfair labour practices constitute the ground for termination or dismissal, the termination or dismissal would invariably be unfair and therefore unjust.”

Accordingly, the court returns that termination was unfair for want of a valid reason as envisaged in section 43 of the Employment Act, 2007 and for want of a lawful reason as the respondent failed to consider the unlawfulness of the advanced reason as envisaged in section 46 (h) of the Act.

The 2nd issue is if the signing of the discharge upon payment of the terminal dues precluded the claimant from filing the suit alleging unfair termination. The court returns that despite signing the disclaimer discharging the respondent of further liability at receipt of some terminal dues, the respondent was not thereby discharged of the claimant’s claims for unfair termination. The court follows its opinion in Duncan Mwirigi Arithi –Versus- Jhpiego Kenya [2015]eKLR that the exit agreement and discharge of liability did not bar the claimant from urging the case of unfair termination because in any event, section 35 (4) of the Employment Act, 2007 provides that nothing in the section (on pay of service pay or pay in lieu of notice) affects the right of the employee whose services have been terminated to dispute the lawfulness or fairness of the termination in accordance with section 47 of the Act. Further the court follows the opinion in Simon Muguku Gichuki –Versus- Taifa Sacco Society Limited [2012]eKLR where Ndolo J. stated thus,“Before proceeding to address the issue of remedies, I will dispense with the discharge note signed by the claimant to the effect that he had no further claims to make against the respondent. I take judicial notice that this is a common requirement by employers for departing employees. It is however expected that parties will work within the law. An employer cannot therefore circumvent their obligation to an employee by producing a form of discharge executed by an employee. If the law is not followed, no form of discharge can cure the irregularity. I have therefore disregarded the discharge note executed by the claimant in determining this case.”

The 3rd issue for determination is whether the claimant is entitled to the remedies as prayed for. It is not disputed that the claimant had served for a continuous period of over 25 years. It is also not disputed that as at the time of termination she had been serving on fixed term contract, the last of such contract having lapsed on 30. 04. 2015 and termination coming on 06. 11. 2015. It is not also in dispute that the claimant had applied for renewal of the term contract but had not received a response but had continued in employment for 6 months without a written renewal. The court has considered the long continuous service of over 25 years. The court has considered the aggravating factor that the respondent maintained a defective operational system including an inconsistent health soft system and expectation of an approval system that was not compliant with the prevailing system to buy from limited prequalified suppliers as well as the matters the claimant referred to as challenges and which remained unresolved. Taking the factors into account, the court awards the claimant 9 months’ pay compensation for the unfair termination at Kshs.51, 018. 00 per month making Kshs.459, 162. 00.

The claim for severance pay was not justified under statutory or contractual provisions and the court returns that the same will fail as unfounded.

In conclusion, judgment is hereby entered for the claimant against the respondent for:

a) The declaration that the termination of the claimant’s employment by the respondent’s letter dated 06. 11. 2015 and upheld by the letter dated 21. 11. 2015 was unfair, unjustified, and unlawful.

b) The respondent to pay the claimant a sum of Kshs.459,162. 00by 01. 08. 2017 failing interest to be payable thereon at court rates from the date of this judgment till full payment.

c) The respondent to pay the claimant’s costs of the suit.

Signed, datedanddeliveredin court atNyerithisFriday, 9th June, 2017.

BYRAM ONGAYA

JUDGE