Nyandiko v Kenya Commercial Bank Ltd [2017] KECA 798 (KLR)

Nyandiko v Kenya Commercial Bank Ltd (Civil Appeal 305 of 2014) [2017] KECA 798 (KLR) (19 May 2017) (Judgment) Neutral citation: [2017] KECA 798 (KLR) Republic of Kenya In the Court of Appeal at Nairobi Civil Appeal 305 of 2014 PN Waki, RN Nambuye & PO Kiage, JJA May 19, 2017 Between Janet Nyandiko Appellant and Kenya Commercial Bank Limited Respondent (Appeal from the Judgment and Award/Decree of the Industrial Court of Kenya at Nairobi (Makau, J) Dated 8th February, 2013 in Industrial Court Case No. 165 of 2011) Judgment 1.The appellant, Janet Nyandiko moved to the Industrial Court, (now the Employment and Labour Relations Court), vide a claim dated the 28th day of January, 2011 challenging what she claimed was a wrongful and or unlawful termination from her employment with the respondent, Kenya Commercial Bank (the bank). She sought reinstatement to her previous job, without loss of benefits; salary arrears for the entire period she had been out of employment; and damages for wrongful and/or unlawful termination. In the alternative, she sought Kshs. 100,662.00 being pay in lieu of one month’s notice; Kshs. 188,741.25 being pay for forty five (45) leave days not taken; Kshs. 5,393.00 being the amount due and owing as leave travelling allowance, and a total of Kshs. 6,020.00 being overtime for the year 2008/09-85 hours; and 12 months compensation for wrongful dismissal, plus

costs of the suit with interest thereon. 2.The bank resisted the appellant’s claim vide a statement of defence dated the 26th day of August, 2011 contending that the said termination was lawful. 3.Both sides were heard on merit resulting in the impugned judgment of the Hon. Mr. justice Nzioki wa Makau, J, dated the 8th day of February, 2013. 4.In a brief reasoning and conclusion, the learned Judge had this to say:13.The termination was not in contravention of section 46 of the Employment Act. None of the provisions of section 46 were breached. I do not agree with the respondent that the application of section 45 has been mechanical in the decisions cited. More particularly, in this case, the court will not mechanically apply the provisions of section 45. The reasons for the termination of the claimant were valid reasons. The employee had failed to perform, she had failed to improve after the cash differences were pointed out, she was a habitual absentee. The reason for the termination was thus valid, it was for a fair reason and it related to the employees’ conduct, capacity and compatibility. The only sour portion of the termination was the manner of the termination. The claimant’s employment was terminated in a manner that was unfair as the employer did not in all the circumstances of the case act in accordance with justice and equity in terminating the employment of the

employee. Granted she was asked to give explanations which were considered, granted she was aware of the cash balance issues and the absenteeism, she was of necessity to be accorded some degree of natural justice commensurate with the dictates of the law. She should have been called in and advised of the reasons for her termination. To that extent, the claimant’s termination was unfair. It was lawful but unfair. She therefore would be entitled to the following reliefs:-a.One month’s pay in lieu of notice Kshs. 100,662/=b.Leave travelling allowance as she did not go for leave in 2010 Kshs. 5,393/=c.Costs and interests on the above from date of judgment till payment in full.14.The other portions of her claim were unproved. The same are dismissed. 5.The appellant was aggrieved. She is now before us on a first appeal, raising four grounds of appeal, namely, that the learned judge erred:-1.in holding that the termination of the appellant’s contract of employment was lawful but unfair contrary to the evidence adduced before the court and the provisions of section 45 of the Employment Act.2.in awarding the appellant low compensation in the sum of Kshs. 100,662/= being one month’s gross salary instead of 12 months compensation thereby denying the appellant full compensation as envisaged by section 16(c) of the Labour Relations Act 2007, and section 12 (vi) of the Industrial Court Act,

No. 20 of 2011.3.in failing to appreciate the law and evaluate the pleadings and evidence before him and consequently arrived at a wrong conclusion.4.in dismissing the appellant un specified portion of the claim on the basis of not having been proved contrary to the evidence on the record. 6.In brief submissions before us, learned counsel Mrs. Judith Guserwa submitted that the bank was obligated to inform the appellant of the charges leveled against her either orally or in writing, invite her to make a response thereon, and give her an opportunity to be heard on them before any disciplinary action could be taken against her. She contended further that the learned Judge was right when he ruled that the termination of the appellant’s employment with the bank was unfair on account of admitted failure to follow the laid down legal procedures on termination, but fell into error when he failed to award reasonable compensation for the said unfair termination. 7.In response to the appellant’s submissions, M/s Lorraine Oyombe, conceded that the law obligated the bank to state reasons for termination in the letter of termination; that the bank gave reasons for the appellant’s termination both in the letter of termination and in other numerous correspondence sent to the appellant. She also conceded that the appellant did not participate in any disciplinary proceedings; that both the

disciplinary and the appeals committees deliberated on matters resulting in the appellant’s termination, while she was away on suspension, and therefore in her absence which, in her view, was an oversight on their part. Leave days not taken should have been catered for in the award, otherwise the compensation granted by the court was proper as the court took into consideration the conduct of the employee in contributing to the termination of her employment. 8.In response to the bank’s submission, Mrs. Guserwa added that the law requires the bank to give valid reasons for the termination; that all the previous complaints by the bank against the appellant had previously been dealt with administratively and none were still outstanding as at the time of termination; details of how the respondent had lost confidence in the appellant were not set out in the letter of termination; the reasons the learned Judge gave for upholding the bank’s termination were not mentioned in the letter of termination. Counsel further submitted that the learned Judge did not also state why he thought those reasons were valid; that the termination of the appellant from her employment was wrongful and she was entitled to compensation; that payment for the 86 leave days not taken which were not contested by the respondent, should have been allowed; and that an award of one month’s salary in lieu of notice

for an unlawful and wrongful termination was too low and merits interference. 9.This being a first appeal, our duty, was appropriately put in the case of Selle versus Associated Motor Boat Co. [1968] EA 123, thus"An appeal to this court from a trial by the High Court is by way of retrial and the principles upon which this court acts in such an appeal well settled. Briefly put they are that this court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that is has neither seen nor heard the witnesses and should make due allowance in this respect. In particular this court is not bound necessarily to follow the trial Judge’s findings of fact if it appears either that he has clearly failed on some point to take account of particular circumstances or probabilities materially to estimate the evidence or if the impression based on the demeanor of a witness is inconsistent with the evidence in the case generally (Abdul Hameed Saif vs. Ali Mohamed Sholan (1955), 22 EACA 270.” 10.This court further stated in Jabane vs. Olenja [1986] KLR 664, thus"More recently, however, this court has held that it will not lightly differ from the findings of fact of a trial Judge who had had the benefit of seeing and hearing all the witnesses and will only interfere with them if they are based on no evidence, or the Judge is shown

demonstrably to have acted on wrong principles in reaching the findings he did – see in particular Ephantus Mwangi vs. Duncan Mwangi Wambugu (1982-88) 1 KAR 278 and Mwanasokoni vs. Kenya Bus Services (1982- 88) 1KAR 870.” 11.We have given due consideration to the totality of the record, in light of the rival submissions set out above and the relevant provisions of the Employment Act No. 11 of 2007 (the Act). Since both parties are in agreement that the bank’s termination of the appellant’s employment was unfair on account of its failure to follow the laid down procedures on termination, the issue that falls for our determination is only one namely:-Whether the remedies awarded by the trial court for unfair termination were too low in the circumstances. 12.Section 45 of the Act makes provision inter alia that no employer shall terminate the employment of an employee unfairly. In terms of the said section, a termination of an employee is deemed to be unfair if the employer fails to prove that the reason for the termination was valid; that the reason for the termination was a fair reason and that the same was related to the employee’s conduct, capacity, compatibility or alternatively that the employer did not act in accordance with justice and equity. 13.The parameters for determining whether the employer acted in accordance with justice and equity in determining the employment of

the employee are inbuilt in the same provision. In determining either way, the adjudicating authority is enjoined to scrutinize 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. Also not to be overlooked is the conduct and capability of the employee up to the date of termination, the extent to which the employer has complied with the procedural requirements under section 41, the previous practice of the employer in dealing with the type of circumstances which led to the termination and the existence of any warning letters issued by the employer to the employee. 14.Section 41 of the Act, enjoins the employer in mandatory terms, before terminating the employment of an employee on grounds of misconduct, poor performance or physical incapacity to explain to the employee in a language that the employee understands the reasons for which the employer is considering to terminate the employee’s employment with them. The employer is also enjoined to ensure that the employee receives the said reasons in the presence of a fellow employee or a shop floor union representative of own choice; and to hear and consider any representations which the employee may advance in response to allegations leveled against him by the employer. 15.It is in the light of

the provisions of the law set out above, that the learned Judge made conclusions already set out above. We have revisited them on our own and considered them in the light of the same provisions and agree with the learned Judge’s finding that to that extent, the appellant’s termination was unfair. In the letter of termination of employment dated 12th February, 2010, the bank made reference to the various correspondence exchanged and the discussion had between the bank and the appellant on the basis of which the bank had lost confidence in the appellant as an employee. As contended by Mrs. Guserwa, and conceded by M/s Oyombe, the reasons the learned Judge acted upon as providing valid reasons for termination were not contained in the said letter of termination. We therefore agree with the appellant’s contention that no valid reasons were given by the bank for loss of confidence in the appellant as an employee. Those identified by the learned Judge did not suffice as these were not contained in the letter of termination. 16.We agree with the findings of the learned Judge and as conceded by both sides that the correct procedure for relieving the appellant of her employment was not followed as the appellant was not given reasons for termination. Neither was she invited to respond to them as required by law both during the initial disciplinary proceedings and the appellate

process. 17.The process of termination having been faulted, determination of appropriate remedies in favour of the appellant if any was inevitable. The learned Judge rightly observed that the appellant’s plea for a remedy had two limbs to it. The first one dealing with special damages that required specific pleading and proof. These are set out in paragraph 10 of the claim. These were discounted by the learned judge among them the appellant’s pleading for payment for 45 leave days not taken at Kshs. 188,741.25. There is however traced on the record a document generated by the bank dated February 21, 2011 at 9.27 am, indicating leave days not taken balance as eighty six (86). Mrs. Guserwa has urged us to allow payment for the 86 now admitted as owing. What the learned Judge discounted was the claim for fourty five (45) leave days not taken, quantified at Kshs. 188,741.25. Although M/s Oyombe was unable to show proof of payment for either the 86 now admitted or the 45 pleaded, the appellant is bound by her pleadings on this item of her claim. 18.She can only get what she pleaded for as we are enjoined by law to consider only that which was laid before the learned judge, and as reviewed by us from the record before us. See Gandy versus Gaspar Air Charters Limited [1956] 23 EACA, 139 for the holding inter alia that:-"The object of pleadings is of course to secure that both parties

shall know what are the points in issue between them; so that each may have full information of the case he had to meet and prepare his evidence to support his own case or to meet that of his opponent. As a rule relief not founded on the pleadings will not be given.” 19.See also the case of Odd Jobs versus Mubia [1970] EA 476, for the observation by law, JA, that:"Courts may allow evidence to be called, and may base its decision, on an unpleaded issue if it appears from the course followed at the trial that the unpleaded issue had in fact been left to the court for decision” 20.And, Galaxy Paints Co. Ltd versus Falcon Guards Ltd [2000] 2EA 385, wherein, the court reiterated that issues for determination in a suit generally flowed from the pleadings and that a trial court could only pronounce judgment on the issues arising from the pleadings and such issue as the parties framed for the court’s determination and that unless pleadings were amended, parties were confined to their pleadings. 21.In light of the above, we agree with Mrs. Guserwa that the appellant is entitled to be paid for the leave days not taken. We do not however agree that the leave days not taken ought to be paid for should be eighty six (86). We can only allow this claim to the extent of the forty five (45) leave days not taken as pleaded and quantified at Kshs. 188,741.25. 22.As for general damages, section 49

makes provision for a wide range of remedies for unfair termination. The learned Judge settled for only one month’s salary in lieu of notice. In deciding whether to interfere with the said award or not, we have to bear in mind the principles that guide the court in deciding whether to interfere or otherwise with the learned Judge’s award of damages. We take it from the holding in Butt versus Khan [1981] KLR 349 that:-"The appellate court cannot interfere with the decision of a trial court unless it is shown that the judge proceeded on the wrong principle of law and arrived at misconceived estimates.” 23.See also the case of Kimatu Mbuvi t/a Kimatu Mbuvi & Bros versus Augustine Munyao Kioko [2006] eKLR in which the court approved the holding in Kitavi versus Coastal Bottlers [1985] KLR 470 where in Kneller, JA stated at page 477 thus:-"an appellate court will not disturb an award of damages unless it is so inordinately high or low as to represent an entirely erroneous estimate. It must be shown that the judge proceeded on wrong principles; or that he misapprehended the evidence in some material respect, and so arrived at a figure which was either inordinately high or low.” 24.In light of the above principles, and taking the totality of the record into consideration, it is our view that the award arrived at by the learned Judge was too low and merits interference which we hereby

do. In our view, appropriate remedies in the circumstances would be as follows:a.Payment of Kshs. 188,741.25 for the forty five leave days entitlement not taken.b.One month’s salary in lieu of notice as awarded by the learned Judge which is affirmed; and, in additionc.Three months salary as compensation for unfair termination. 25.In the result, we allow the appeal, set aside the learned Judge’s award and substitute it with the above awards. The appellant will have costs both on appeal and the court below. DATED AND DELIVERED AT NAIROBI THIS 19TH DAY OF MAY, 2017.P. N. WAKI...............................JUDGE OF APPEALR. N. NAMBUYE...............................JUDGE OF APPEALP. O. KIAGE...............................JUDGE OF APPEALI certify that this is a true copy of the original.Signed. DEPUTY REGISTRAR