[2013] KEELRC 142 (KLR)

REPUBLIC OF KENYA

IN THE INDUSTRIAL COURT AT NAIROBI

CAUSE NUMBER 1709 OF 2011

BETWEEN

PAUL LITUNYA ABUNDO ………………………………………………………………….. CLAIMANT

VERSUS

UNIVERSITY OFNAIROBI …………………………………………………………………. RESPONDENT

Rika J

CC. Leah Muthaka

Mr.Makokha and Mr. Namada instructed by Namada & Company Advocates for the Claimant

Mr. Njiru instructed by the Federation of Kenya Employers [F.K.E] for the Respondent

ISSUE IN DISPUTE: UNFAIR AND UNLAWFUL TERMINATION

AWARD

1. Mr. Paul Litunya Ambundo filed his Statement of Claim on 6th October 2011. He claims to have been employed by the Respondent as a Junior Technician in the Respondent’s School of Biological Sciences, in the College of Biological and Physical Sciences, from the year 1985. He worked for 26 years until 2nd August 2011 when his contract of employment was terminated by the Respondent. He disputes the legality and fairness of the decision of his former employer and filed this Claim seeking the following Orders-:

A declaration that the Respondent’s termination of the Claimant’s employment is null and void and if left to stand, amounts practically to an illegal, unlawful and unfair summary dismissal from employment and gross breach of the terms of employment terms between the Parties entitling the Claimant to restorative orders being:

An Order for the Claimant to be immediately reinstated back into employment unconditionally without loss of salary and benefits including those that accrued during termination

b) In the Alternative:-

The Respondent to pay to the Claimant 4 months’ salary in lieu of notice as per the CBA provisions being 4x Kshs. 25,920 [post-tax] = Kshs. 103,680.

Damages for the arbitrary, unfair and unlawful termination of employment calculated at 12 months’ gross salary being Kshs. 29,695 x 12 = Kshs. 356,340.

The Claimant is paid all his pension entitlements in both lump sum and monthly sum as per the Rules and Provisions of the University of Nairobi Pension Scheme.

c) The Respondent to issue the Claimant ‘a proper certificate of service showing the

reasons for separation as normal termination’.

d) The Respondent to pay the Claimant costs of the Claim.

2. The University of Nairobi filed its Statement of Reply on 20th April 2012. It also filed a Supplementary Bundle of Documents on 25th February 2013. It admits the Claimant worked as a Junior Technologist at the Respondent’s College of Biological and Physical Sciences. He initially, from 5th February 1985, worked as a Laboratory Attendant in the department of Zoology, College of Biological and Physical Sciences. He was discovered to have set up two companies, Litlab Supplier and Lilam Enterprise, which he used as his business vehicles for irregular supply of materials to the Respondent. An internal investigation into these dealings recommended that the Claimant be disciplined for contravening his Contract of Employment; the Public Officers Ethics Act 2003; and the Code of Conduct and Ethics for Public Universities. He was dismissed fairly and on valid grounds.

3. Mr. Ambundo gave evidence and closed his case on 27th February 2013. The Respondent gave evidence through its Internal Auditor John Thuita Ndegwa, and closed its case on the same date 27th February 2013.

4. The Claimant testified his duties entailed assisting of the Students in Etymology Practical Classes. On 2nd August 2011, the Administrator issued him a termination letter. It was alleged in the letter that the Claimant had involved himself in acts of gross misconduct. He was not aware of any investigation, or given a letter to show cause why he should not be disciplined, before termination. He was not given a chance to defend. His trade union was not involved in any disciplinary hearing. He appealed against the decision, but the Respondent did not communicate the decision on the Appeal.

5. Ambundo testified that he was not the proprietor of the entities known as Litlab Supplier and Lilam Enterprises. His company was known as Litlab Suppliers, and never traded with the University. The Respondent alleged the Claimant was engaged in insider trading. He testified he was not in-charge of the Respondent’s Procurement Office. When he carried out search, he came to learn that Lilam Enterprises was owned by Samuel Ambundo, Claimant’s brother. He was not aware that Lilam was trading with the Respondent.

6. He was a unionisable member of the Kenya Union of Domestic Hotels Educational Institutions [KUDHEIHA], and his terms and conditions of employment contained in the Collective Bargaining Agreement concluded between this Union and the Respondent. The CBA provided for 4 months’ termination notice or 4 months’ pay in lieu of notice, for employees with over 10 years experience. He had worked for 26 years. . He was 46 years on termination, and expected he would work until he was 60 years old. The decision by the University was abrupt. He had an outstanding loan with his Bank and Sacco. He has children in secondary school. He testified that he would work well with the Respondent if reinstated and given a conducive work environment. Alternatively, he prays for terminal benefits and compensation.

7. In cross-examination, the Claimant conceded he has a business that operates in the name of Litlab Suppliers. His company was housed at Uniafric House 3rd Floor, Nairobi. His company’s postal address was 391 Nairobi, but is now 3039 Nairobi. He got the present address 3 or 4 years ago. He was not aware of the address of Lilam Enterprises. He agreed the address was shown in the certificate of search carried out by himself at the Registrar of Companies, as P.O. Box 3039 Nairobi. After termination of his contract of employment, the Claimant had come to learn that Lilam was registered by his brother. Registration was made on 4th April 2003, while termination was in 2011. He did not belong to a Pensionable Scheme. He was a member of a Sacco and a Benevolent Fund. He has not received any payments from the University on termination. He has not cleared with the University. He appealed against the employer’s decision in August 2011.

8. Ambundo told the Court he is not familiar with the Requisition Notes issued by the Respondent in procurement of goods. The Note dated 26th June 2011, indicated Litlam Enterprises would supply the Respondent an assortment of goods valued at Kshs. 39,823. The company’s postal address is 3039 Nairobi. The Stamp on the Note reads Lilam Enterprises. The Requisition Note predated the termination of the Claimant’s contract of employment. The Claimant agreed there was a Memo circulated by the Respondent to its employees dated 18th October 2004, prohibiting Respondent’s employees from trading with the Respondent. He was not aware his brother traded with the Respondent. The Claimant was not involved in the tendering process. He clarified on redirection that 3039 is his entire family’s postal address. He came to learn of Lilam’s dealings with the University after the Claimant’s contract of employment was terminated. The Claimant’s company was Litlab Suppliers, dealing exclusively with the supply of laboratory materials; the Requisition Note from the University included supply of furniture materials. The Claimant prays the Court to allow the Claim.

9. John Thuita Ndegwa told the Court he received instructions to investigate whether the Claimant was engaged in business with the Respondent. He was to find out if there was a company attached to the Claimant, which traded with the Respondent. He found out that there were two companies Litlab Supplier and Lilam Enterprises with the same postal and physical addresses. The first company was registered in 1998, and is owned by Paul Litunya Ambundo. The second was registered on 4th April 2003, and is owned by Samwel Litechi Ambundo. He came across a Requisition Note where an entity named Litlam Enterprises, was to supply an assortment of goods to the University at the cost of Kshs. 39,823.

10. Ndegwa explained that a department puts forward a request for materials. Request is made to the Principal. The Quotations are analyzed and presented to the Procurement Committee chaired by the Principal. The documents are prepared by the Procurement Officer. In the Requisition Note, Lilam quoted for the goods, while Litlam was the Supplier. The stamp showed Lilam as the supplier. Litlam was unregistered, while Lilam was registered by Samwel Ambundo. The addresses of these entities are the same. Ndegwa joined the University in 1978, and was aware of the circular issued to staff in 2004, prohibiting insider trading.

11. In cross-examination, the witness testified that the Principal, Professor Aduda, approved the Suppliers. Ambundo had no role in procurement. Litlam was awarded tender to supply the items shown in the Requisition, but is not a registered company. The Procurement Officer had the discretion to rectify the anomaly. This Officer would take responsibility for such anomaly. The Officer was investigated. Litlab was a registered company. Ndegwa confirmed on redirection that the circular of 2004 was circulated to all employees. They were warned against conflict of interest. The Respondent urges the Court to dismiss the Claim.

The Court Finds and Awards-:

12. The Claimant was employed by the Respondent on 5th February 1985 as a Laboratory Attendant. He later became a Junior Technologist at the Respondent’s College of Biological and Physical Sciences, a position he held as of 2nd August 2011, when his contract of employment was terminated by the Respondent. His exit gross salary was Kshs. 29,695 per month. It is agreed his pay slip indicates his salary was subject to a deduction of Kshs. 150 per month, as agency fees payable to KUDHEIHA. His terms and conditions of employment were contained the CBA concluded between KUDHEIHA and the University. Was the Claimant’s contract of employment terminated for valid reason or reasons, and was it carried out fairly? Is he entitled to reinstatement, or the alternative prayers for terminal benefits and compensation?

13. He conceded he owns a registered company known as Litlab Supplier. His company is involved in supply of laboratory materials. It was registered on 16th December 1998. Its address is P.O. Box 3039 Nairobi. Its registered Office is Plot No. 209/1212/2 Uniafric House Nairobi. There is no disagreement that his brother Samwel Litechi Ambundo also owns a company called Lilam Enterprises. This company shares postal and physical address with the former company. It was registered on 4th April 2003.

14. On 26th June 2011, the Respondent requisitioned for supply of an assortment of goods. The Supplier was named as Litlam Enterprises of P.O. Box 3029 Nairobi. This entity is unregistered. The user department is indicated as Biochemistry. The stamp acknowledging request for quotation is in the name of Lilam Enterprises, the entity belonging to Samwel Ambundo. The University had as early as 2004, issued circular to its staff advising against insider trading. There was suspicion that the Claimant was involved in this form of trading.

15. Investigations carried out by the Internal Audit Office of the Respondent confirmed that the Claimant colluded with the Procurement Officer Mr. Dickson Otieno, to win tenders from the Respondent irregularly. The Court finds no fault in the conclusion made by the Internal Audit Office. The Claimant cannot have been in darkness about his brother’s involvement in the procurement process. The two brothers’ companies shared postal and physical addresses. They are relatively old companies, Lilam Enterprises having been registered in 2003. The companies’ names are deliberately made similar, to confuse any person involved in the awarding of the tenders or tasked with unearthing tendering irregularities. It is not surprising that even an unregistered entity described as Litlam Enterprises was given by the brothers as a Supplier in the Requisition Note of 26th June 2011. The Claimant and his brother just set about to circumvent the circular of 2004 by engaging family entities variously named Litlab, Litlam or Lilam. The Respondent had a valid reason in terminating the Claimant’s contract of employment. Insider trading is a corrosive employment offence, which has the potential to bankrupt businesses. In the light of the express circular issued by the University against such an activity, the Claimant was correctly adjudged to have engaged in an act of gross misconduct. He clearly defied lawful instructions of his employer, and brought the whole procurement process into disrepute.

16. Was termination procedure fair? The Respondent demonstrated to the Court that the allegations against the Claimant were meticulously investigated. The Investigator recommended the Claimant be disciplined. The Court has not been availed records of any disciplinary process. The Investigation Report is dated 27th July 2011. The Claimant was dismissed on 2nd August 2011, just 5 days later. What disciplinary process unfolded during these 5 days? The Respondent’s Statement of Reply paragraphs 13 and 14 confirm there was no letter written to the Claimant requiring him to show cause why disciplinary action should not be taken against him; there are no formal charges; and no hearing as prescribed under Section 41 of the Employment Act 2007. After the dismissal, the Claimant lodged an Appeal immediately on the following day, 3rd August 2011. He was not heard on Appeal, and the Respondent did not as much as write the customary employers’ letter declining the Appeal against dismissal. The CBA clause on termination required that employees are given the opportunity to explain themselves, and where they have to appear before a disciplinary committee, they had the right to be accompanied by a shop steward and an officer described by the CBA as ‘chairman.’ The Respondent did not give any evidence to show that a disciplinary committee was convened. The clause that relates to warnings shows the opportunity to make verbal presentations and the right to be accompanied by accredited trade union representative during such hearing, were inherent in the Parties’ own disciplinary mechanisms. Termination was procedurally unfair.

17. The Claimant was dismissed on substantive ground, and would not be entitled to notice pay. Employees with at least 10 years continuous experience would be entitled to 4 months’ notice or 4 months’ salary in lieu of notice. This would apply to the Claimant if he left employment under regular termination. He left on gross misconduct, and is not entitled to notice pay. The Claim for pension entitlements should be pursued against the Scheme Trustees. The Respondent is a separate legal entity from the Trustees. There is no employment record called ‘proper certificate of service’. There is no employer who can be compelled to issue such a document, ‘showing reasons for separation as normal termination’, as demanded by the Claimant. The Court rejects the prayer. The Claim for compensation at 12 months’ salary is disproportionate to the nature of the procedural wrong occasioned to the Claimant by the Respondent. Termination was based on solid and valid reason, but the decision was executed improperly. The Claimant is granted 3 months’ gross salary at Kshs. 77,760. No order on the costs. In sum-:

[a] Termination was procedurally unfair.

[b] The Respondent shall pay to the Claimant 3 months’ gross salary computed at Kshs.

77,760 in compensation.

[c] No order on the costs.

Dated and delivered at Nairobi this 30th day of September 2013

James Rika

Judge