https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/1292

Mutai v Simba Chai Savings & Credit Co-operative Society Limited (Employment and Labour Relations Claim E024 of 2024) [2026] KEELRC 1292 (KLR) (15 May 2026) (Judgment) Neutral citation: [2026] KEELRC 1292 (KLR) Republic of Kenya In the Employment and Labour Relations Court at Kericho Employment and Labour Relations Claim E024 of 2024 AN Mwaure, J May 15, 2026 Between Edwin Mutai Claimant and Simba Chai Savings & Credit Co-operative Society Limited Respondent Judgment Introduction 1.The Claimant commenced this suit via a Memorandum of Claim dated 25th September 2024 seeking the following reliefs:a.A declaration that termination of the Claimant’s services by the Respondent was illegal, unfair and against the provisions of the law.b.Damages for unlawful termination and dismissal from employment for Kshs.1,270,680.36/=c.Certificate of serviced.Costs of the suit and intereste.Any other remedy that the court deems just and expedient. Claimant’s case 2.The Claimant avers that he was employed as a Marketing Manager by the Respondent on 2nd January 2020, earning a gross monthly salary of Kshs.105,890.03/=. 3.The Claimant avers that he diligently discharged his duties until 9th July 2023, when he was served with a suspension and a Notice to Show Cause letter alleging gross misconduct, namely that he unlawfully received money from members with promises to delete their loans. He responded on 11th July 2023, denying the allegations and requesting particulars of the members involved, which were never furnished. 4.On 18th July 2023, the Claimant avers that he was summoned to a disciplinary hearing scheduled for 21st July 2023, which he attended. He contends that the complainants were absent, denying him the right to cross-examine them, and that his witness, Gilbert Kipng’eno, was not allowed to testify. Although instructed to resume work on 24th July 2023, he was not assigned duties, and instead, his role had already been allocated to one Aaron Korir by a job description dated 20th July 2023, even before the hearing outcome was communicated. 5.The Claimant avers that the suspension was extended on 26th July 2023 to run until 11th August 2023, after which he reported back but was again left without duties. On 1st September 2023, he was issued with a further Notice to Show Cause alleging that he had reported complainants to the police, causing commotion. He replied on 2nd September 2023, explaining that he only reported false allegations against him and was issued with OB 15/03/06/2023. 6.A subsequent disciplinary hearing was convened on 25th November 2023, where five complainants appeared. Two did not recognize him, while the others admitted giving money to a third party, not the Claimant, and produced no evidence linking him directly. Nevertheless, the Claimant avers that he was served with a final warning letter on 27th December 2023, citing gross misconduct but sparing him dismissal due to his past record. 7.On 19th February 2024, the Claimant avers that he was served with another show cause letter alleging fraud through one Lorna Chesang. He denied involvement in his reply dated 22nd February 2024, stating that he had already reported her misuse of his name to the police under OB 27/25/08/2024. He was summoned again for a hearing on 23rd March 2024, and by his letter of 22nd March 2024, he requested minutes of prior hearings and the presence of accusers, which was ignored. Ultimately, on 22nd April 2024, he was summarily dismissed for allegedly failing to act against Lorna Chesang despite his police report. 8.The Claimant avers that the termination was unlawful, malicious, and procedurally flawed, amounting to a violation of his constitutional rights and the Employment Act. He emphasizes that the disciplinary process was irregular, predetermined, and denied him a fair hearing, exposing him to hardship and stress. Respondent’s reply to Memorandum of Claim 9.The Respondent opposed the Memorandum of claim via reply to the Memorandum of claim dated 7th March 2025. 10.The Respondent admits that the Claimant was employed as Marketing Manager, but disputes his alleged salary of Kshs. 105,890.03/=, contending instead that his basic pay was Kshs. 62,122.03/= as per the salary review letter dated 25th September 2023 and payslips for February to April 2024. 11.The Respondent admits that the Claimant was served with a Notice to Show Cause dated 9th July 2023, citing breaches of section 44(3) and 44(4)(g) of the Employment Act, 2007 and clauses 4.0 and 4.1 of the SACCO Human Resource Policies. The allegations were that he received money from members with promises to delete loans, and processed loan forms contrary to his mandate. The Respondent confirms that the Claimant replied on 11th July 2023 and was invited to a disciplinary hearing on 21st July 2023, where he denied the charges but admitted to being engaged in business dealings with one Lorna Chesang, who was implicated in fraudulent activities against members. 12.The Respondent denies that the Claimant’s witness was barred from testifying, asserting instead that the Claimant himself indicated the witness was irrelevant. It is further averred that although the Claimant was allowed to resume work, subsequent investigations revealed more victims of fraud linked to a syndicate allegedly involving Lorna Chesang, with the Claimant’s implicit support. 13.The Respondent admits that the Claimant was issued with a further Notice to Show Cause dated 1st September 2023 after reporting the complainants to the police without following internal protocol. A disciplinary hearing was held on 25th November 2023, where complainants presented their cases, and the Claimant was granted the opportunity to cross-examine them. Following this, a final warning letter dated 27th December 2023 was issued, citing receipt of money through Lorna, unauthorized loan processing, and intimidation of members via police reports. 14.On 19th February 2024, another Notice to Show Cause was issued, citing specific fraudulent dealings by Lorna Chesang against members Nos. 10388 and 9995, with allegations that she acted in concert with the Claimant. The Respondent avers that the Claimant failed to report her to management or police despite her repeated invocation of his name. Although the Claimant responded on 22nd February 2024**, claiming he had reported Lorna, he failed to provide evidence. 15.The Respondent avers that a disciplinary hearing was held on 23rd March 2024, and ultimately, the Claimant was summarily dismissed by letter dated 22nd April 2024. 16.The Respondent maintains that the dismissal was fair, lawful, and justified, citing the Claimant’s association with Lorna Chesang, her fraud against members, and his failure to take appropriate action. 17.In conclusion, the Respondent prays that the Claimant’s suit be dismissed with costs, contending that the termination was procedurally sound, substantively justified, and in compliance with the Employment Act and SACCO policies. Claimant’s evidence in court 18.CW1, the Claimant, adopted his witness statement dated 20th May 2024 together with his list of documents dated 25th September 2024 marked as exhibits 1 to 18 as his evidence in chief. 19.CW1 testified that he was employed by the Respondent as a Marketing Manager, and that his duties did not extend to the issuance of loans to members of the Sacco. He stated that he was subjected to two disciplinary hearings. Following the first hearing, he was not furnished with any feedback but was directed to resume duty. Upon resumption, however, he was not assigned any responsibilities, and his functions were taken over by other employees, among them one Mr. Korir. 20.CW1 further testified that during the disciplinary proceedings, a witness statement was produced, but no documentary evidence was produced. He stated that at the second disciplinary hearing, the charges preferred against him were identical to those raised in the first. He contended that his employment was unfairly terminated without reasons being communicated to him, and he therefore prays for relief as set out in his claim. 21.In cross-examination, CW1 stated that his salary was Kshs. 105,890/= and not Kshs.62,122/= as alleged. He stated that his remuneration included house allowance and other entitlements, and that his payslip for September 2024 reflected an extra-gratia payment together with backdated earnings arising from reviews. He further stated that in the salary review of September 2023, his payslip indicated Kshs.62,122.03/= as basic salary, with a housing allowance constituting 25% of the basic salary, amounting to Kshs.77,652/=. 22.CW1 reiterated that he was subjected to two disciplinary hearings, the first of which yielded no outcome and no final warning was issued. He confirmed receipt of a notice to show cause dated 19th February 2024, wherein he was accused of colluding with one Lorna to share members’ money. He stated that he filed a response to the said notice but did not attend the disciplinary hearing scheduled for 23rd March 2024, despite receiving summons dated 19th March 2024. He denied ever attending that hearing, signing any minutes, or being served with the documents filed by the Respondent in March 2024. He noted that although the Respondent’s response alleged his attendance, he did not expressly refute that claim. 23.CW1 further stated that he was served with a dismissal letter, the reasons therein mirroring those contained in the notice to show cause. He stated that paragraph 3 of the dismissal letter indicated that he had been heard, but he maintained that he had never seen the documents relied upon. He acknowledged that he was accused of colluding with one Lorna Chesang to defraud members of the Sacco. He confirmed knowing Lorna and stated that at the first disciplinary hearing, he was informed that she had used his name to defraud members. He testified that he had taken action against her by reporting the matter to the police, though he did not instruct an advocate to issue a demand letter to her. He confirmed having an OB number relating to the report, but the same was not filed in court. He stated that he orally informed the Respondent’s CEO of the fraudulent activities. 24.CW1 admitted that his statement of claim did not disclose that Lorna had used his name to defraud members. He stated that while the defrauded members did not confront Lorna at the Sacco premises, some members confronted him personally. He stated that upon being confronted, he reported the matter to the police as a criminal case, since members alleged loss of money outside the Sacco premises. He added that although the members had complained to the Respondent’s CEO, no action was taken, prompting him to lodge a report at the police station. 25.In re‑examination, CW1 reiterated that he attended two disciplinary hearings, both of which revolved around allegations of fraud involving one Lorna Chesang. He confirmed that the notice to show-cause letter contained the same allegations. He stated that he attempted to pursue Lorna, who was not an employee of the Sacco but had previously been a member, though no longer so. CW1 testified that he could interact with non‑members of the Sacco and that he reported the allegations to the Respondent’s CEO. He further stated that the complainant featured in the disciplinary hearing and that the final warning letter issued to him arose from the second disciplinary hearing. He explained that although he received a final warning letter, within a week, he was served with a notice to show cause. He concluded by affirming that his salary was Kshs.77,000/= exclusive of additional benefits. Respondent’s evidence in court 26.RW1, Patrick Bett, the Respondent’s Operations Manager, adopted his written statement dated 15th June 2025, together with his list of documents dated 7th March 2025, marked as exhibits 1 to 18, as his evidence in chief. 27.RW1 testified that the termination of the Claimant was fair and procedurally conducted. He stated that the Claimant was served with a notice to show cause, responded thereto, and was subjected to a disciplinary hearing. He stated that the dismissal was occasioned by fraudulent conduct, wherein the Claimant allegedly promised members of the Sacco that they would obtain loans and thereafter share the proceeds with him. RW1 stated that members who had been advanced loans later reported that they had been defrauded, confronted the Claimant, and lodged complaints with the police. 28.RW1 further stated that some of the members who had lodged complaints were witnesses in the present proceedings and had accused the Claimant of fraud. He stated that when asked, the Claimant admitted that one Lorna was his business partner. RW1 explained that the Claimant had initially undergone a disciplinary process, which concluded around December, resulting in a final warning. However, subsequent complaints were received, leading to the issuance of another notice to show cause and the institution of fresh disciplinary proceedings against the Claimant. 29.In cross-examination, RW1 stated that he had been employed by the Respondent from 2018 to 2025 and confirmed that the Claimant served as Marketing Manager, a role that did not involve issuing loans to members. He stated that the Claimant breached the Respondent’s policy by receiving money from members in order to delete their loan obligations, and that the specific provisions violated were captured in the dismissal letter. He affirmed that the policy was produced both in court and during the disciplinary hearing, together with statements from members alleging fraud. 30.RW1 acknowledged that no audit report was tendered to show deletion of loans, but maintained that the Claimant was subjected to one disciplinary hearing, which culminated in a warning, after which he was recalled to work. He explained that subsequent complaints were lodged, leading to another notice to show cause. He emphasized that the Claimant was not charged twice over the same allegations, but that the second notice arose from new complaints, though the charges were similar. He added that there was a nexus between the two notices to show cause, and that the Claimant admitted Lorna was his business partner. RW1 stated that the Claimant did not need to report the matter to the police. 31.In re-examination, RW1 confirmed that the Human Resource Policy was expressly cited in the Claimant’s show cause letter dated 19th February 2024, specifically clause 4.0 as referenced under paragraph 12 of the said letter. He testified that no loans were, in fact, deleted, which led to members discovering the irregularities and lodging complaints with the Sacco. RW1 further stated that the Claimant was subjected to two separate disciplinary hearings, both of which revolved around allegations of fraud raised by different members. 32.Parties were directed to put in their written submissions. Claimant’s submissions 33.The Claimant submitted that his employment with the Respondent as Marketing Manager was duly established by his letter of appointment and payslip, both of which were not disputed. He argued that the Respondent’s decision to summarily dismiss him was based on alleged breaches of clauses 4.0 and 4.1 of the Human Resource Manual, purportedly linking him to fraudulent dealings through one Lorna Chesang. However, no credible evidence was adduced to show that the Claimant materially benefited from such transactions, nor was a valid reason for termination established. The Claimant relied on section 44 of the Employment Act, which provides that summary dismissal is lawful only where an employee has fundamentally breached obligations under the contract of service, and on section 45(2) of the Employment Act, which provides that termination is unfair unless the employer proves a valid reason and adherence to fair procedure. The Respondent failed both tests, subjecting the Claimant to repeated disciplinary hearings on the same charges, thereby violating the rules of natural justice and amounting to double jeopardy. The Claimant placed reliance on Walter Ogal Anuro V Teachers Service Commission [2013] KEELRC 386 (KLR), which underscores that termination must meet both substantive justification and procedural fairness. The Claimant submitted that his dismissal was unlawful, unfair, and unprocedural. 34.The Claimant therefore prays for compensation equivalent to twelve months’ salary, issuance of a certificate of service, and costs of the suit. Respondent’s submissions 35.The Respondent submitted that the Claimant’s dismissal was both procedurally and substantively fair, in accordance with the law and therefore was lawful and fair. The Respondent relied on the case of Felix Mbolonzi Kioko v The Director of Public Prosecution [2018] eKLR where the court cited the case of Walter Ogal Anuro v Teachers Service Commission (Supra) where the court held as follows:“……For a termination of employment to pass the fairness test, there must be both substantive justification and procedural fairness. Substantive justification has to do with establishment of a valid reason for the termination....” 36.The Respondent relied on section 45(2)(c) of the Employment Act which provides as follows:“(2). A termination of employment by an employer is unfair if the employer fails to prove—(c)that the employment was terminated in accordance with fair procedure.” 37.The Respondent also relied on the case of David Nzomo Kikuvi v Uzuri Foods Limited (2017) eKLR where, the Honourable Justice Ocharo Kebira in addressing the issue of fair procedure stated that:-“the fair procedure contemplated in Section 41 of the Employment Act therefore entails three components; information, hearing, and consideration.” 38.The Respondent submitted that the Claimant was duly subjected to a fair disciplinary process. It is uncontested that he was issued with a Notice to Show Cause dated 19th February 2024, to which he responded on 22nd February 2024, and thereafter attended the disciplinary hearing of 23rd March 2024, as evidenced by the minutes produced as Defence Exhibit 14. Despite having requested certain documents, the Claimant elected to proceed without them after the Committee offered to supply the same. The Respondent further submitted that the Claimant’s assertion of being subjected to two hearings with a predetermined outcome is unfounded. The first disciplinary hearing arose from complaints by members alleging that the Claimant, together with one Lorna Chesang, promised to delete loans in exchange for money, but no direct link was established, and he was let off with a final written warning dated 27th December 2023. The subsequent disciplinary hearing concerned distinct allegations involving different members who were approached by Lorna Chesang, who withdrew funds unlawfully and referred the members to the Claimant, claiming to have shared the proceeds with him. The tenor of the Notice to Show Cause dated 19th February 2024, particularly paragraph 3, clearly distinguishes these breaches, citing violations of clauses 4.0 and 4.1 of the Human Resource Manual. In these circumstances, the Respondent contended that the Claimant cannot be heard to allege procedural unfairness or predetermined outcomes, as the disciplinary proceedings were lawfully and fairly conducted. 39.The Respondent relied on section 44(4)(g) of the Employment Act which provides as follows:“Any of the following matters may amount to gross misconduct so as to justify the summary dismissal of an employee for lawful cause, but the enumeration ofsuch matters or the decision of an employer to dismiss an employee summarily under subsection (3) shall not preclude an employer or an employee from respectively alleging or disputing whether the facts giving rise to the same, or whether any other matters not mentioned in this section, constitute justifiable or lawful grounds for the dismissal if—…………………….(g)an employee commits, or on reasonable and sufficient grounds is suspected of having committed, a criminal offence against or to the substantial detriment of his employer or his employer’s property. 40.Section 45(2) of the Employment Act provides as follows:“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” 41.The Respondent submitted that the Claimant’s dismissal was lawful and justified under clauses 4.0 and 4.1 of the Human Resource Manual, which prohibit employees from negotiating with members for personal gain. Evidence showed that members were defrauded by one Lorna Chesang, a business associate of the Claimant, who invoked his name and referred members to him, alleging he shared in the proceeds. The Claimant admitted that members confronted him and that he reported them to the police rather than using internal mechanisms, while taking no action against Chesang. This conduct amounted to gross misconduct under section 44(4)(g) of the Employment Act, and the Respondent demonstrated a valid and fair reason for termination as required by section 45(2) of the Employment Act. The Respondent relied on the Court of Appeal’s case of Kenyatta University & Another v Fred Obare [2017] KECA 227 (KLR), where the court held as follows:“From our reading of the Employment Act, 2007, there cannot be any doubt that the law imposes expressly in employment contracts the need for mutual trust and confidence in such a relationship. This means that employers and employees must not conduct themselves in a way that is likely to undermine, damage or destroy the employment relationship and the trust and confidence between the parties to that relationship.” 42.The Respondent therefore prays that the Claimant’s suit be dismissed with costs, as the threshold for unfair termination has not been met. Analysis and determination 43.The court has considered the pleadings together with rival submissions by both parties; the issues for determination are as follows:a.Whether the Respondent unfairly terminated the Claimant;b.If (a) above is in the negative, whether the Claimant is entitled to the reliefs sought; andc.Who should bear the costs of the suit 44.The court reiterates the case of Walter Ogal Anuro v Teachers Service Commission(supra) where the court stated that for termination to pass the fairness test, there must be procedural fairness and substantive justification, and substantive justification deals with a valid reason. 45.In Naima Khamis v Oxford University Press (E.A) Ltd [2017] KECA 480 (KLR) where the Court of Appeal stated as follows:“From the foregoing, termination of employment may be substantively and/or procedurally unfair. A termination is also deemed substantively unfair where the employer fails to give valid reasons to support the termination. On the other hand, procedural unfairness arises where the employer fails to follow the laid down procedure as per contract or fails to accord an employee an opportunity to be heard as by required law.” 46.In Unilever Tea Kenya Limited v Kenya Plantation & Agricultural Workers Union [2025] KECA 830 (KLR) the Court of Appeal held that summary dismissal is open to an employer for gross misconduct of the employee. 47.In this instance case, it is not in dispute that the Claimant was employed as a Marketing Manager and was initially suspended on allegations of defrauding members of the Sacco through one Miss Lorna Chesang. He was subjected to a disciplinary hearing on 21st July 2023, after which he was directed to resume duty, though his functions had already been reassigned to one Mr. Korir. Subsequently, the Claimant was taken through another disciplinary process on 25th July 2023 which culminated in the termination of his employment. The Respondent, on its part, maintains that the dismissal was carried out both substantively and procedurally in accordance with the law, and was therefore lawful and fair. 48.The Claimant was dismissed apparently for negotiating with Sacco customers to pay some money to one Lorna Chesang in order to have their interest of their loans written off. The Respondent said their customers said negotiations were conducted by one Lorna Chesang who claimed to be sharing the money with the Claimant. The Respondent relied on the fact that Claimant claimed that Lorna was his business partner. That is not proof of misconduct. 49.There is indeed no evidence in court to demonstrate that the Claimant worked in cohort with the said Lorna Chesang to demand money from customers. There is no evidence of how the Claimant was involved in such transactions and how he got such money through illegal means. The court agrees with the Claimant that these allegations are unsubstantiated and there were no witnesses who claimed they dealt with the Claimant to defraud them. 50.If at all such transactions happened, the Sacco members would only have themselves to blame for participating in illegal transactions where it is claimed the interest on their loans was to be written off. 51.The Claimant even if he was a silent participant in such transaction however, there is no evidence presented against him. No wonder the Respondents kept calling the Claimant to disciplinary hearings and then clearing him until they finally served him with the summary dismissal letter on 22nd April 2024. The said summary dismissal letter refers to allegations of defrauding members by one Lorna Chesang. 52.The allegations of defrauding members of the Sacco of their savings is a serious offence and is tantamount to a criminal offence. In fact, deeper investigations should have been conducted to confirm and affirm these grave allegations. As it is, the court finds the Respondent acted casually to very serious allegations amounting to criminal misdeeds. 53.The Claimant may and did participate in the disciplinary hearing but he denied the allegations of demanding money from Sacco members. The court therefore finds there was no substantiated, clear and valid grounds given by the Respondent to justify dismissing the Claimant summarily. 54.The court being persuaded by various case laws among them, Walter Ogal Onuro -vs- Teachers Service Commission (2013) Eklr And Ngugi & 3 Others -vs- Board Of Management Kenya Hospital Association t/a Nairobi Hospital 2024 & KEELRC 279 where it was held that for termination of employment to pass the fairness test it must be both substantially justified and procedurally fair. 55.The court has analysed the pleadings and submission of the rival parties and is satisfied the Claimant has proved a case for unfair and wrongful dismissal of employment by the Respondent for lack of proof of verified grounds of gross misconduct. 56.In view of the above, the Claimant is awarded the following: -a.4 months equivalent of his salary for wrongful and unfair dismissal at his consented salary of Kshs.77,000/= per month totalling Kshs.308,000/=.b.He is to receive his certificate of service within 30 days from today’s date.c)He is also awarded costs.d)Interest will be at 14% per annum from date of judgment till final payment.It Is So Ordered. DATED, SIGNED AND DELIVERED VIRTUALLY AT NAKURU THIS 15TH DAY OF MAY, 2026.ANNA NGIBUINI MWAUREJUDGEOrderIn view of the declaration of measures restricting Court operations due to the COVID-19 pandemic and in light of the directions issued by His Lordship, the Chief Justice on 15th March 2020 and subsequent directions of 21st April 2020 that judgments and rulings shall be delivered through video conferencing or via email. They have waived compliance with Order 21 Rule 1 of the Civil Procedure Rules, which requires that all judgments and rulings be pronounced in open Court. In permitting this course, this Court has been guided by Article 159(2)(d) of the Constitution which requires the Court to eschew undue technicalities in delivering justice, the right of access to justice guaranteed to every person under Article 48 of the Constitution and the provisions of Section 1B of the Civil Procedure Act (Chapter 21 of the Laws of Kenya) which impose on this Court the duty of the Court, inter alia, to use suitable technology to enhance the overriding objective which is to facilitate just, expeditious, proportionate and affordable resolution of civil disputes.A signed copy will be availed to each party upon payment of Court fees.