https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/2081

**REPUBLIC OF KENYA** **IN THE EMPLOYMENT AND LABOUR RELATIONS COURT AT NAIROBI** **CAUSE NO. E176 OF 2024** *(Before Hon. Lady Justice Agnes Kitiku Nzei)* **MARY MOMANYI CLAIMANT** *VERSUS* **INTERNATIONAL SOLIDARITY FOUNDATION ..RESPONDENT** **JUDGMENT** 1. The Claimant sued the Respondent vide a Memorandum of Claim dated 6th March, 2024 and pleaded that she had been employed by the Respondent on permanent basis, earning **Kshs.148,299/= per month**, and that her contracts were constantly renewed due to her exemplary performance. That on 11th December, 2023, an unauthorised transaction of Kshs.148,000/= was made from the work phone assigned to the Claimant. That the Claimant immediately reported the matter to her supervisor and to the CID; and to Safaricom and the recipient of the funds requesting for reversal, but all in vain. 2. The Claimant further pleaded that despite her insistence that she was not involved in the unauthorised transaction but was a victim of criminality, the Respondent insisted that the Claimant had fraudulently transferred the funds; which was not true. That the Claimant, being an accountable employee, voluntarily agreed to salary cuts to facilitate recovery of the funds. It was the Claimant’s further pleading that even after settling the matter and agreeing on the mode of recovery, the Claimant was **on 19th February, 2024** abruptly terminated for gross misconduct and misappropriation of company funds, based on the aforementioned incident. That the Claimant was only paid her salary upto and including 19th February, 2024; and compensation for leave days earned between January and February 2024. 3. The Claimant pleaded that as a result of the unlawful and unfair termination, she suffered loss and damage. 4. The Claimant sought the following reliefs;- 5. *A declaration that termination of the Claimant’s employment by the Respondent was unlawful, malicious, unprocedural and an infringement on the Claimant’s rights.* 6. *Maximum compensation of 12 months [salary] for wrongful and unreasonable dismissal.* 7. *One month salary in lieu of notice.* 8. *An award for loss of income for the remainder of the contract.* 9. *General damages for mental anguish and damage to reputation.* 10. *Costs and interest.* 11. Documents filed alongside the Memorandum of Claim included a list of documents dated 6th March, 2024 and an evenly dated witness statement of the Claimant. The listed documents included copies of the Claimant’s payslips, employment contract and termination letter, among other documents. 12. The Claimant filed a supplementary witness statement dated 31st January, 2025 and an evenly dated supplementary list of documents. 13. The Respondent defended the suit vide a Reply to Memorandum of Claim dated 18th April, 2024 and stated, ***inter alia***, that the Kshs.148,000/= was sent to a lady in Mlolongo, who subsequently sent the funds to two unknown individuals. That the lady subsequently recalled back the funds from one person and subsequently withdrew the same from an M-Pesa outlet. The Respondent denied the Claimant’s claim and called for the same to be dismissed. 14. The Claimant filed a Response to Reply to Memorandum of Claim, dated 16th May, 2024. The Respondent, on its part, filed a witness statement of **Lilian Ngandu** dated 13th January, 2025 and a list of documents dated 13th January, 2025, listing 3 documents. The listed documents included minutes of a meeting held on 19th February, 2024, an email sent by the Claimant on 13th December, 2023 and an OB (No. 75). 15. Trial opened before me on 16th February, 2025. The Claimant testified and adopted her filed witness statement as her testimony, and produced in evidence the documents referred to in paragraphs 5 & 6 of this Judgment. It was the Claimant’s testimony:- 16. *that she started working for the Respondent in* ***August 2015*** *as a Monitoring and Evaluation Officer, and then as a Project Manager; and that she worked for 9 years.* 17. *that she worked on contract basis, depending on funding. That at the time of termination, the Claimant had a two year contract for the period* ***January 2024 to December, 2025****; which was an extension of the previous two years’ contract.* 18. *that the Claimant’s contractual salary at the time of termination was* ***Kshs.112,000/=****.* 19. *that on 13th December, 2023, the Claimant picked from a drawer the office phone allocated to her and noted that some Kshs.148,000/= had on 11th December, 2023 been transferred to one* ***Agnes Makokha,*** *upon which the Claimant called Safaricom seeking reversal. That the Claimant also called the Respondent’s Finance Co-ordinator and Acting Country Director* ***(Maria)*** *and informed them. That the Claimant also reported the matter to Kisii Police [Station]. The Claimant produced the OB in evidence.* 20. *that the Project Assistant* ***(Rosemary Osano)*** *had access to the phone’s pin and password, as the Claimant had handed them over to her in September 2023 as the Claimant proceeded on leave.* 21. *that the Claimant did not transact the impugned transaction.* 22. *that the Claimant was terminated for lack of trust.* 23. *That the Police (DCI) did not do comprehensive investigations, and that the Claimant was a victim of criminality.* 24. *that the Claimant had, prior to termination,* ***been given a warning letter*** *after she took responsibility over the phone issue as the phone’s pin had not been changed after the Claimant resumed duty.* 25. *that the Claimant took responsibility over the lost money and undertook to pay. That the warning letter indicated that her contract could be terminated if negligence was repeated. That the Claimant did not commit any negligence between the date of the said undertaking/warning letter and the date of termination.* 26. *that the* ***warning letter*** *had been signed by the Country Director* ***(Maria)****.* 27. *that deductions were made from the Claimant’s January and February 2024 salary (towards recovery of the lost money), and the Claimant’s understanding was that the issue had been closed. That the Respondent [later] said that they had subsequently received the DCI’s report. That the DCI report was never given to the Claimant.* 28. *that the Claimant was not issued with a show cause letter, and was not given an opportunity to defend herself.* 29. *that the Respondent sent out an email to staff and partners stating that the Claimant had been involved in fraud. That this has affected the Claimant’s chances of getting another employment.* 30. Cross-examined, the Claimant further testified that she had handed over the work phone, together with its password and Pin, to **Rosemary Osano** (the Project Assistant) as she proceeded on leave. That the Claimant was given a warning on 16th January, 2024 for giving out the phone Pin and Password. That the Claimant took responsibility to repay the lost money, which was lost mysteriously. That the warning came after the money had been lost. That the warning letter was in regard to the Claimant’s sharing of a Pin with her Assistant. That the Respondent was aware of the Pin sharing as the phone was used while the Claimant was on leave; and did not object to the sharing. That Mary used the phone and made reports to the Respondent’s Finance until the Claimant reported back after her leave. 31. The Respondent called one witness, **Lilian Angela Ngandu**, the Respondent’s Finance and Administration Co-ordinator. She adopted her filed witness statement as her testimony, and produced in evidence the Respondent’s listed and filed documents. The witness **(RW-1**) further testified:- 32. *that the Claimant was terminated on account of the conflicted accounts she gave to the DCI regarding the lost funds. That the account she gave to the DCI was different from the one she gave to the Respondent.* 33. *that there was no official or written handover before the Claimant proceeded on leave. That the only people who knew of the handover were the Claimant and Rosemary.* 34. *that according to the DCI, the phone in issue was in the Claimant’s residence when the lost money was disbursed.* 35. *that* ***the reason for the warning was the handing over of the Phone Password and Pin without formal communication to the employer; and failing to change the same on resuming from leave****.* 36. *that the Claimant committed to pay the lost money, and that* ***the Respondent agreed****. That the first instalment was recovered in January 2024.* 37. Cross-examined, **RW-1** testified:- 38. *that the DCI report had* ***not*** *been produced in Court; and had* ***not*** *been given to either the Claimant or her Counsel.* 39. *that* ***no*** *show cause letter had been produced, and that the termination letter was dated* ***17th February, 2024****; and that this was* ***before*** *the disciplinary hearing on 19th February, 2024.* 40. *that the Claimant was not given the DCI report before hearing.* ***That this was not a fair hearing****.* 41. *that the Claimant had a spotless record* ***before*** *11th December, 2023, and that her two (2) year contracts had been* ***repeatedly*** *renewed due to her* ***hard work and reliability****.* 42. *that the DCI’s report gave a* ***general area*** *of where the Claimant lived, but did not give any co-ordinates of her house. That the DCI officer had* ***not*** *been called as a witness.* 43. *that by the time of the Claimant’s termination,* ***she had already gotten a warning letter, and her salary had already been deducted (slashed). That the warning letter is dated 16th January, 2024, and indicated that if negligence was repeated, measures (including termination could be taken). That there was no subsequent case of negligence between 16th January, 2024 and 19th February, 2024 when the Claimant’s employment was terminated****.* 44. *that the Claimant was terminated before her contract ended.* 45. Having considered the pleadings filed herein and the evidence adduced, issues that fall for determination, in my view, are as follows:- 46. ***Whether termination of the Claimant’s employment was unfair.*** 47. ***Whether the reliefs sought are available to the Claimant.*** 48. On the first issue, for any termination of employment to pass the fairness test, there must be both substantive justification for the termination and procedural fairness. Substantive justification has to do with establishment of a valid reason for the termination, while procedural fairness addresses the procedure adopted by the employer in effecting the termination **(Walter Ogal Anuro – vs – Teachers Service Commission [2013] eKLR)**. 49. On substantive fairness, **Section 43(1) of the Employment Act** provides as follows: ***“(1) In any claim arising out of a termination of a contract, the employer shall be required 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.”*** 1. **Section 45(2)(a) of the Employment Act** provides as follows:- ***“(2) A termination of employment by an employer is unfair if the employer fails to prove –*** 1. ***that the reason for the termination is valid.*** 2. ***. . .”*** 3. In the present case, it was a common ground that money belonging to the employer, some Kshs.148,000/=, was transferred from an M-Pesa account in the employer’s phone which had been assigned to the Claimant for use in execution of her contractual duties. It was also a common ground that the Claimant had, some times in September 2023, handed over both the said phone and its Pin and Password to her Assistant as the Claimant proceeded on leave. 1. It was also a common ground that on resuming duty, the Claimant did not change the said phone’s Pin and Password, and that the aforesaid sum was unlawfully transferred from the said phone on 11th December, 2023 to a person in Mlolongo. No evidence was placed before the Court to show that the unlawful transaction was, indeed, transacted by the Claimant. Although the matter was said to have been reported to the DCI and a report on the issue prepared, the DCI were not called to testify, and the alleged report was **neither** produced in Court nor shared with the Claimant. 2. Further, it was a common ground that the Claimant took responsibility over the lost money and agreed to refund, pursuant whereof she was issued with a warning letter and deductions commenced on her salary to recover the lost money. **That the warning letter stated that termination would result if there was further negligence on the part of the Claimant**. That the warning letter was issued on 16th January, 2024. 3. The Respondent’s witness **(RW-1)** testified that the Claimant’s employment **was terminated by the Respondent upon subsequent receipt** by the Respondent of a report by the DCI that the impugned M-Pesa transaction had been transacted from the Claimant’s area of residence. As already stated in this Ruling, the alleged DCI report was neither shared with the Claimant nor produced in evidence in Court. The allegation of **fraud** by the Respondent against the Claimant was, therefore, not proved. 4. It was a common ground that the Claimant admitted wrong doing by failing to change the aforesaid phone’s pin and password on resuming duty after her leave, and agreed to refund the lost money. That a warning letter was issued to the Claimant and recovery of the money from her salary was commenced. **RW-1** testified that there was **no** incident of negligence on the part of the Claimant from the date of the warning letter upto the date of her termination; **which was 19th February, 2024**. 5. In my view, termination of the Claimant’s employment on 19th February, 2024 was **without a valid reason** as the incident involving the transfer of money by M-Pesa **on 11th December, 2023** had already been delt with by the Respondent and **concluded** by issuance of a warning letter **on 16th January, 2024** and commencement of deductions from the Claimant’s salary to recover the lost money. By going back to the issue **on 19th February, 2024** and terminating the Claimant’s employment on account of the said **concluded issue**, the Respondent subjected the Claimant to **double jeopardy**, which amounted to an unfair labour practice. 6. I rendered myself as follows in the case of **Brink Security Services Limited – vs – Nzou Katenge [2025] KEELRC 2156 (KLR):-** **“21. . . . Warning letters, in their nature, are a conclusive disciplinary action against an employee regarding specified wrongs committed at specified times. The employer, in exercise of his managerial discretion, decides to formally warn an employee and to allow him and/or her to continue working.** **22. Going back to the warning letters years later and purporting to dismiss and/or again discipline the employee based on the issues that formed the basis of the warning letters is an unfair labour practice. The situation may, however, be different where an employee is formally warned and allowed to continue working on condition that he or she does not repeat the impugned act or omission; or does not commit a related act or omission within a specified period of time. This was not shown to have been the case in the present matter.”** 1. The Claimant in the instant case is **not** shown to have **repeated** any act of negligence between the date of the said warning letter and the date of her termination. Her termination on 19th February, 2024 was **without a valid reason**, and was therefore substantively unfair. 2. On procedural fairness, the Respondent is not shown to have complied with the mandatory provisions of **Section 41 of the Employment Act**, although misconduct on the part of the Claimant had been alleged. Termination was procedurally unfair. **(Benson K. Nguti – vs – Kenfreight [E.A] Limited [2014] KEELRC 435 (KLR))**. 3. I return a finding that termination of the Claimant’s employment was substantively and procedurally unfair, and I so declare. 4. On the second issue, and having made a finding that the Claimant’s employment was unfairly terminated, I award the Claimant **the equivalent of six month’s salary**, being compensation for unfair termination of employment. The Claimant testified that her contractual salary was **Kshs.112,000/= per month**. The equivalent of six months’ salary is **Kshs.672,000/=**, which I award to the Claimant. I have taken into account the undisputed fact that the Claimant has not been able to secure an alternative employment due to negative publicity by the Respondent after her termination. 5. I allow the claim for payment in lieu of notice pursuant to **Section 35(1)(c) of the Employment Act**, and award the Claimant **Kshs.112,000/=** in that regard. 6. The claims for loss of income for the remainder of the contractual period and damages for mental anguish are declined, as the same are not provided for under Section 49(1) of the Employment Act. 7. In sum, and having considered written submissions filed on behalf of both parties, Judgment is hereby entered for the Claimant against the Respondent as follows:- 8. **Compensation for unfair termination of employment ……………………………………………….. Kshs.672,000/=** 9. **Payment in lieu of notice ……………… Kshs.112,000/=** **Total ………………………….…Kshs.784,000/=** 1. The awarded sum shall be subject to Pay As You Earn **(PAYE)** pursuant to Section 49(2) of the Employment Act. 2. The awarded sum shall attract interest at Court rates from the date of this Judgment until payment in full. 3. The Claimant is awarded costs of the suit. **DATED, SIGNED AND DELIVERED AT NAIROBI THIS** **17TH DAY OF JULY 2026** **AGNES KITIKU NZEI** **JUDGE** **ORDER** This Judgment has been delivered via Microsoft Teams Online Platform. A signed copy will be availed to each party upon payment of the applicable Court fees. **AGNES KITIKU NZEI** **JUDGE** Appearance: Miss Ochieng for the Claimant Miss Kamau for the Respondent