https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/1436

Momanyi v Petrafos Energy Limited (Cause E090 of 2024) [2026] KEELRC 1436 (KLR) (26 May 2026) (Judgment) Neutral citation: [2026] KEELRC 1436 (KLR) Republic of Kenya In the Employment and Labour Relations Court at Kisumu Cause E090 of 2024 Nzioki wa Makau, J May 26, 2026 Between Isaac Omwenga Momanyi Claimant and Petrafos Energy Limited Respondent Judgment 1.The Claimant instituted this suit through a Memorandum of Claim dated 26th November 2024 alleging unfair termination of employment. He states that he was employed by the Respondent as an Area Sales Manager stationed in Kisumu with effect from 6th July 2023 at a gross monthly salary of USD 950. According to the Claimant, he diligently discharged his duties until 10th September 2024 when the Respondent terminated his employment. It is the Claimant’s case that his woes began following his requests for reimbursement of work-related expenses. In particular, he states that on 2nd August 2024 and 31st August 2024 he sought reimbursement of Kshs. 18,000/- incurred as fuel expenses for July 2024 and Kshs. 3,950/- incurred as fuel and airtime expenses for August 2024. Instead of effecting the reimbursements, the Respondent informed him through WhatsApp communication dated 27th August 2024 and an email dated 6th September 2024 that reimbursement would only be considered after sales had been made or debts collected, a position he contends was contrary to the terms of his employment. The Claimant further avers that he responded through an email dated 9th September 2024 requesting the Respondent to reconsider its position, but the Respondent instead terminated his employment via an email dated 10th September 2024. In light of the foregoing, the Claimant contends that the termination of his employment was unlawful, unfair and procedurally improper. Consequently, he seeks the following reliefs:1.A declaration that the termination of his employment was unlawful and unfair;2.Payment of USD 13,458.33 together with Kshs. 21,950/- constituting pay in lieu of notice, compensation for unfair termination, leave dues and airtime and fuel reimbursements for July and August 2024;3.Issuance of a certificate of service;4.Costs and Interests of the suit; and5.Any other relief the Court may deem fit to grant. 2.In response the Respondent filed a Reply to Memorandum of Claim dated 2nd July 2025. While admitting that the Claimant was its employee, the Respondent maintained that the termination of his employment was lawful and justified. Contrary to the Claimant’s assertions, the Respondent averred that the Claimant’s tenure was marred by dishonesty, lack of diligence, deception and neglect of duty. Specifically, it averred that the Claimant supplied goods to customers on unauthorized credit amounting to Kshs. 3,252,331/-, failed to remit monies received from customers, falsified stock records and stole the Respondent’s goods. Regarding the claims for reimbursement of fuel and airtime expenses, the Respondent averred that such reimbursements were neither provided for in the contract of employment nor authorized by the company. It further asserted that the Claimant was summarily dismissed on account of his misconduct. Additionally, the Respondent averred that the suit is unwarranted since the Claimant had already been paid Kshs. 400,000/- in settlement of the dispute. On that basis, it urged the Court to dismiss the claim with costs. 3.At the hearing, the Claimant testified on his own behalf while the Respondent called its Head of Sales and Finance. The Claimant adopted his witness statement dated 26th November 2024 as his testimony in chief and produced the documents in his list of documents of even date as Exhibits 1 to 8. He testified that he was never issued with a show cause letter nor invited to any disciplinary hearing prior to the termination of his employment. During cross-examination, however, he acknowledged that although he had authority to undertake sales, he was not authorized to receive money directly from clients. He explained that his role was limited to linking customers with the Respondent, after which the Respondent would approve and dispatch the goods. He further emphasized that any credit arrangements were between the Respondent and its customers. The Claimant also admitted receiving Kshs. 420,000/- after filing suit, although he maintained that there had been no agreement settling the claim and that the amount paid did not adequately compensate him for the reliefs sought. Upon conclusion of his testimony, the Claimant closed his case. 4.On its part, the Respondent called Mr. Samuel Kiprop, its Head of Sales and Finance, who adopted his witness statement dated 9th October 2025 as his evidence in chief. He narrated that on 27th August 2024 the Claimant declined to report to work on account of not being reimbursed his expenses. He further testified that on 28th August 2024 he instructed the Claimant to deliver supplies to a customer within Kisumu, but the Claimant refused, insisting that he had to be reimbursed first. He stated that despite express company policy forbidding sale on credit, the Claimant still incurred unauthorized debts amounting to Kshs. 3,252,331/- which remain outstanding. The witness additionally testified that the Respondent paid the Claimant Kshs. 270,000/- and remitted Kshs. 150,000/- to his advocate as legal fees on the understanding that the suit would be withdrawn, but the Claimant failed to honour that arrangement. At this juncture the Respondent’s case was closed and parties filed written submissions. Claimant’s Submissions 5.In his submissions, the Claimant identified the following issues for determination:a.Whether his dismissal was fair and procedural; andb.Whether he is entitled to compensation for wrongful dismissal. 6.On the issue of fairness and procedural propriety, the Claimant submitted that his dismissal was both substantively and procedurally unfair contrary to the provisions of the Employment Act. With regard to procedural fairness, he asserted that he was neither informed of the allegations against him nor accorded an opportunity to be heard prior to termination. He pointed to the abrupt termination communicated through the email dated 10th September 2024. In support of this argument, the Claimant relied on the case of Walter Ogal Anuro v Teachers Service Commission [2013] KEELRC 386 (KLR) for the proposition that compliance with section 41 of the Employment Act is mandatory and that termination must satisfy both substantive and procedural fairness. The Claimant further relied on Gichuru v Package Insurance Brokers KESC 12 (KLR), where the Court held that failure to accord an employee an opportunity to respond to allegations against them rendered termination unfair within the meaning of section 45 of the Employment Act notwithstanding any contractual provision permitting summary dismissal. He additionally relied on the case of Kariuki v Kangunu Famers Cooperative Society (Civil Appeal 63of2018) 2025 KECA 2101 (KLR), where the Court of Appeal emphasized that an employee facing dismissal for gross misconduct must be informed of the reasons for dismissal, be accorded a hearing in a language understood by the employee, and be allowed representation during the disciplinary process. 7.On substantive fairness, the Claimant submitted that no valid reasons were advanced to justify his dismissal. He contended that the email terminating his employment did not disclose any reasons for dismissal and that the allegations later raised by the Respondent’s witness were merely an afterthought intended to sanitize an otherwise unlawful termination. He further contended that he had proven his case on a balance of probabilities whereas the Respondent failed to tender documentary evidence substantiating the allegations of misconduct levelled against him. In support of this contention, he relied on the case of Stephen Gachau Githaiga & another v Attorney General [2015] eKLR, for the principle that where a party fails to adduce evidence, the opposing party’s evidence remains uncontroverted and unchallenged. 8.On the second issue of entitlement to remedies, the Claimant submitted that he is entitled to compensation for wrongful and unfair dismissal under section 49 of the Employment Act. He contended that his dismissal occasioned him substantial hardship given that he earned USD 950 per month and had remained unemployed since the termination of his employment. He further submitted that the Respondent’s failure to issue him with a certificate of service adversely affected his prospects of securing alternative employment. With regard to the alleged settlement, the Claimant contended that the discrepancy between the Kshs. 400,000/- pleaded in the Reply to Claim and the Kshs. 420,000/- referred to in RW1’s testimony amounted to an admission of wrongdoing rather than proof of a full and final settlement of the dispute. The Claimant therefore urged the court to allow the claim relying on Ondoro v Kisii County Government (Cause E011 of 2025) [2025] KEELRC 3567 (KLR), in which the court awarded the Claimant 12 months salary compensation after considering the suffering occasioned by the unlawful termination. Respondent’s Submissions 9.On its part the Respondent identified the following issues for determination:i.Whether it had valid and lawful grounds to summarily dismiss the Claimant;ii.Whether the Claimant fundamentally breached the employment relationship through misconduct and neglect of duty;iii.Whether the Claimant proved entitlement to the monetary claims sought;iv.Whether the Claimant’s acceptance of Kshs. 400,000/- compromised the suit; andv.Whether the Claimant is entitled to the reliefs sought 10.On the legality of the summary dismissal, the Respondent submitted that the termination of the Claimant’s employment was lawful, justified and compliant with sections 43 and 44 of the Employment Act. It contended that the evidence before Court established that the Claimant deliberately refused to report to work and declined to perform his duties unless the Respondent first reimbursed him his airtime and fuel costs. The Respondent referred to the testimony of RW1 to the effect that on 27th August 2024 the Claimant refused to attend to customer supplies and expressly communicated that he would not continue discharging his duties unless the alleged dues were paid. It also pointed to the Claimant’s admission during cross-examination that he stopped reporting to work. In view of the foregoing, the Respondent maintained that the summary dismissal was justified due to the Claimant’s unilateral suspension of his contractual obligations. It cited section 44(4)(a), (c) and (e) of the Employment Act which recognize absence from work, wilful neglect of duty and refusal to obey lawful instructions as acts amounting to gross misconduct warranting summary dismissal. To buttress its position, it relied on Judicial Service Commission v Gladys Boss Shollei & another [2014] eKLR, where the Court held that an employer need only demonstrate on a balance of probabilities that it genuinely believed the reasons for dismissal existed. The Respondent also cited Co-operative Bank of Kenya Limited v Banking Insurance & Finance Union (Kenya) [2017] eKLR, for the proposition that the applicable test is whether the employer acted reasonably in the circumstances rather than whether the employee was actually guilty. 11.On the issue of fundamental breach of the employment relationship, the Respondent submitted that the Claimant acted in breach of the trust and fidelity expected of an employee by issuing unauthorized credit to customers amounting to over Kshs 3 million. It highlighted the Claimant’s admission during testimony that he supplied customers on credit but failed to produce any policy, memo, contractual provision or approval authorizing him to extend such credit facilities on behalf of the Respondent. The Respondent further submitted that the Claimant failed to rebut evidence that he neglected his duties, failed to remit monies and falsified stock records. The Respondent submitted that once the trust underpinning the employment relationship had been fundamentally breached through dishonest or reckless conduct, it could not reasonably be expected to continue retaining the Claimant in employment. In support of this proposition, it relied on Kenfreight (EA) Limited v Benson K. Nguti [2016] eKLR, where the Court of Appeal held that an employee who deliberately breaches the terms of his contract cannot expect compensation. The Respondent also cited CMC Aviation Limited v Mohammed Noor [2015] eKLR, for the principle that compensation for unfair termination is not automatic and that the conduct of the employee is a relevant consideration. 12.Regarding the reimbursement and other monetary reliefs sought, the Respondent submitted that the Claimant failed to prove any contractual or legal basis for the same. It contended that the Claimant did not produce any contractual clause, written policy, amendment to the contract, approval or acknowledgment establishing entitlement to reimbursement of fuel and airtime expenses. Furthermore, the Respondent submitted that the Claimant failed to prove that he had authority to suspend performance of his duties pending payment of the reimbursements. It maintained that parties are bound by the terms of their contracts and courts cannot rewrite contracts for parties. In support of this submission, the Respondent relied on National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & another [2001] eKLR, where the Court held that courts cannot rewrite contracts between parties unless coercion, fraud or undue influence is pleaded and proved. 13.On the effect of the settlement payment, the Respondent submitted that the Claimant’s retention of the settlement amount while simultaneously pursuing the present claim amounts to approbation and reprobation, unjust enrichment and an abuse of the court process. In support of this position, the Respondent relied on Serah Njeri Mwobi v John Kimani Njoroge [2013] eKLR, where the Court of Appeal held that no litigant should benefit from his own wrong and that a party cannot approbate and reprobate simultaneously. Accordingly, the Respondent urged the Court to find that the Claimant’s conduct disentitles him to equitable relief under section 49 of the Employment Act. In conclusion the Responded urged the Court to dismiss the claim with costs. Disposition 14.The Court has considered the pleadings, testimony, the law and submissions of parties together with case law cited, in coming to this decision. Before delving into various aspects of testimony and the law, the Court notes the Respondent relied on the case of Kenfreight (EA) Limited v Benson K. Nguti [2016] eKLR. It was asserted that the Court of Appeal held that an employee who deliberately breaches the terms of his contract cannot expect compensation. In the case, the ratio was that there had been unfair and unlawful dismissal. In the decision by the Court of Appeal, (Makhandia, Ouko & M’Inoti, JJ.A.) with Ouko SCJ (as he then was) made the following determination:We come to the conclusion and find, in agreement with the trial judge, that the termination of the respondent’s contact of service, in the circumstances, was unfair, the payment in lieu of notice notwithstanding. What then are the remedies for unfair termination under the law? Where it is demonstrated that the termination of a contract of service was unjustified, a range of remedies is available, subject to certain considerations. An employer can pay to an employee whose services are unfairly terminated;[Underline for emphasis] 15.Nowhere did the Appeal Court make a determinative finding that an employee who deliberately breaches the terms of his contract cannot expect compensation. This phrase is a hallucination by the Respondent as it does not comprise the decision of the Court of Appeal. When quoting an authority, it is important for the person citing it to read and comprehend the decision. The next thing to do is accurately capture the ratio decidendi. The error in the statement regarding the determination in a case that has been determined by the Employment and Labour Relations Court, upheld on appeal by the Court of Appeal and also subject of a further appeal to the Supreme Court where the Supreme Court upheld the decision made is worrying. 16.Back to the matter at hand, the Court distils the following as the issues for determination:a.Whether the Claimant’s dismissal was fair and procedural;b.Whether the Claimant is entitled to any relief for the alleged wrongful dismissal; andc.Who is to bear costs. 17.The Claimant was an employee of the Respondent serving as an Area Sales Manager stationed in Kisumu. He was engaged in that position with effect from 6th July 2023 earning a gross monthly salary of USD 950. The Claimant was terminated from his service to the Respondent via an email dated 10th September 2024. The Respondent asserts that the Claimant’s tenure was marred by dishonesty, lack of diligence, deception and neglect of duty. Specifically, it alleged that the Claimant supplied goods to customers on unauthorized credit amounting to Kshs. 3,252,331/-, failed to remit monies received from customers, falsified stock records and stole the Respondent’s goods. The Respondent further asserted on the claims for reimbursement of fuel and airtime expenses that such reimbursements were neither provided for in the contract of employment nor authorized by the company. It further asserted that the Claimant was summarily dismissed on account of his misconduct. 18.The Employment Act has a cure for an employee who does what the Respondent asserts the Claimant did. In section 41 of the Employment Act, the law provides as follows:41.(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. 19.The above provisions of the law clearly indicate that the employer must accord an employee a hearing. An employer must demonstrate as a matter of fact that it (i) Explained to the employee in a language the employee understood the reasons why it was considering the termination (ii) Give the employee this explanation in the presence of a representative of the employee, who is either a fellow employee or a shop floor representative during the explanation of the reasons the employer is contemplating the dismissal; (iii) Hear and consider any explanations by employee or his representative; (iv) Where the employer has more than 50 employees as required by section 12 of the Employment Act, that it had complied with its own internal disciplinary rules. 20.The law contemplates what unfair termination entails in section 45 of the Act. The section provides as follows: 45.Unfair termination(1)No employer shall terminate the employment of an employee unfairly.(2)A termination of employment by an employer is unfair if the employer fails to prove—(a)that the reason for the termination is valid;(b)that the reason for the termination is a fair reason—(i)related to the employees conduct, capacity or compatibility; or(ii)based on the operational requirements of the employer; and(c)that the employment was terminated in accordance with fair procedure.(3)An employee who has been continuously employed by his employer for a period not less than thirteen months immediately before the date of termination shall have the right to complain that he has been unfairly terminated.(4)A termination of employment shall be unfair for the purposes of this Part where—(a)the termination is for one of the reasons specified in section 46; or(b)it is found out that in all the circumstances of the case, the employer did not act in accordance with justice and equity in terminating the employment of the employee.(5)In deciding whether it was just and equitable for an employer to terminate the employment of an employee, for the purposes of this section, a labour Officer, or the Employment and Labour Relations Court shall consider—(a)the procedure adopted by the employer in reaching the decision to dismiss the employee, the communication of that decision to the employee and the handling of any appeal against the decision;(b)the conduct and capability of the employee up to the date of termination;(c)the extent to which the employer has complied with any statutory requirements connected with the termination, including the issuing of a certificate under section 51 and the procedural requirements set out in section 41;(d)the previous practice of the employer in dealing with the type of circumstances which led to the termination; and(e)the existence of any previous warning letters issued to the employee. 21.The Respondent is not shown to have accorded the Claimant the process under sections 41 and 45 of the Employment Act. The dismissal meted out in the email of 10th September 2024 was therefore unfair and unlawful as it did not conform to the law. 22.On the remedies, the Respondent asserts the Claimant received payment of some Kshs. 400,000/- and that therefore his claim before the Court is untenable. In the Employment Act, where a finding is made that there was unfair dismissal, remedies available to the aggrieved employee are set out in section 49 of the Act. These are:49(1)(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;(b)where dismissal terminates the contract before the completion of any service upon which the employee's wages became due, the proportion of the wage due for the period of time for which the employee has worked; and any other loss consequent upon the dismissal and arising between the date of dismissal and the date of expiry of the period of notice referred to in paragraph (a) which the employee would have been entitled(c)the equivalent of a number of months wages or salary not exceeding twelve months based on the gross monthly wage or salary of the employee at the time of dismissal. 23.The Claimant was paid Kshs. 400,000/- after the commencement of the suit. This did not, neither does it, bar the suit from being taken to its logical conclusion save for where the employee agrees to cede his right to recover damages for the unfair dismissal. Such evidence was not led before me. As such, I find and hold that the payment was made in good faith upon realisation that the day of reckoning for the defendant was nigh. 24.The dismissal having taken place without an iota of adherence to the law relating to termination and failing to accord with fair procedure, entitles the Claimant to recover 8 month’s salary as compensation. The sum paid out will be deducted from this sum. In addition, the employer will pay one month’s salary as notice as well as the costs of the suit as the Respondent did not settle the demand prior to institution of the suit. There will be interest at 14% per annum on the sums awarded from the date of judgment till payment in full. 25.In sum, the Court enters judgment for the Claimant against the Respondent for:-a.One month’s salary as notice USD 950;b.8 month’s salary as compensation for unlawful termination USD 7,600 less Kshs. 400,000/- paid to Claimant;c.Interest at 14% on the sums in (a) and (b) above from the date of judgment till payment in full.d.Costs of the suit. It is so ordered. DATED AND DELIVERED AT KISUMU THIS 26TH DAY OF MAY 2026NZIOKI WA MAKAU, MCIARB.JUDGE