[2020] KEELRC 1634 (KLR)

REPUBLIC OF KENYA

IN THE EMPLOYMENT AND LABOUR RELATIONS COURT

AT NAIROBI

CAUSE NO. 2107 OF 2011

(Before Hon. Lady Justice Maureen Onyango)

RAPHAEL KIMATHI KAMUYU.............................. 1ST CLAIMANT

JESSE WANJOHI KAMBUNI.................................. 2ND CLAIMANT

KASYOKA MUTHOKA........................................... 3RD CLAIMANT

ROBINSON IRUNGU MWANGI........................... 4TH CLAIMANT

FELIMONA MULELE INJESHI............................ 5TH CLAIMANT

ALEX MUSEMBI KITHOME............................... 6TH CLAIMANT

VERSUS

AFYA RESTAURANT LIMITED....................... 1ST RESPONDENT

ANTHONY KANINU........................................ 2ND RESPONDENT

JANE MUTHONI NJUGUNA.......................... 3RD RESPONDENT

JUDGMENT

The Claimants in their Statement of Claim dated 16th December 2011 and filed in Court on 20th December 2011 allege wrongful dismissal from their employment by the Respondents herein and subsequent failure by the Respondents to pay their terminal benefits.

The Claimants contend that they were orally employed on diverse dates between May, 2007 and April, 2009 in the 1st Respondent’s premises to serve in the capacities of waiters and cooks earning diverse salaries which was exclusive of house allowance.

The Claimants aver that they performed their duties diligently and to the Respondents’ satisfaction until on or about 31st July, 2010 when the 1st Respondent unlawfully dismissed them from their employment without any valid or justifiable reason.

With regards to each individual Claim the Claimants contended as follows:

1st Claimant, Raphael Kimathi Kamuyu

He contended that he was employed on 14th April 2007 in the position of a waiter, a position he held until his termination on 31st July 2010.

He further contended that at the time of his separation he was earning a monthly salary of Kshs.6,800. His Claim is as follows:

i. One month’s salary in lieu of notice........................ Kshs.6,800

ii. Leave due for three (3) years................................... Kshs.20,400

iii. Service Gratuity at the rate of 15 days

for each completed year of service.............................Kshs.10,200

iv. 12 months’ salary compensation for loss

of employment 6,800 x 12. ...........................................Kshs.81,600

v. House allowance.......................................................Kshs.39,780

vi. Off duty.........................................................................Kshs.25,204

vii. Public Holidays...................................................... Kshs.11,557

viii. Overtime..................................................................Kshs.100,814

ix. Certificate of Service

Total Amount due Kshs.296,355

2nd Claimant, Jesse Wanjohi Kambuni

He contended that he was employed on 4th January 2009 in the position of a cook, a position he held until his termination on 31st July 2010.

He further contended that at the time of his separation he was earning a monthly salary of Kshs.8,400. His Claim is as follows:

i. One month’s salary in lieu of notice...................... Kshs.8,400

ii. Leave due for one (1) year.......................................Kshs.8,400

iii. Service Gratuity at the rate of 15 days

For each completed year of service.......................... Kshs.4,200

iv. 12 months’ salary compensation for loss

of employment 8,400 x 12. ....................................... Kshs. 100,800

v. House allowance.................................................... Kshs. 17,640

vi. Off duty.......................................................................Kshs. 8,401. 20

vii. Public Holidays...................................................... Kshs. 5,776

viii. Overtime...................................................................Kshs. 50,407. 20

ix. Certificate of Service

Total Amount due Kshs.204,024. 40

3rd Claimant, Kasyoka Muthoka

He contended that he was employed on April, 2009 in the position of a cook, a position he held until his termination on 31st July 2010.

He further contended that at the time of his separation he was earning a monthly salary of Kshs.5,670. His Claim is as follows:

i. One month’s salary in lieu of notice...................Kshs.5,670

ii. Leave due for one (1) year.................................. Kshs.5,670

iii. Service Gratuity at the rate of 15 days

for each completed year of service...................... Kshs.2,800

iv. 12 months’ salary compensation for loss

of employment 5,670 x 12. .......................................Kshs.68,040

v. House allowance....................................................Kshs.12,096

vi. Public Holidays (11).............................................. Kshs.12,096

vii. Overtime 96 days x 350. 05. .................................Kshs.3,850. 55

viii. Certificate of Service

Total Amount due Kshs.131,811. 35

4th Claimant, Robinson Irungu Mwangi

He contended that he was employed on 5th February 2008 in the position of a waiter, a position he held until his termination on 31st July 2010.

He further contended that at the time of his separation he was earning a monthly salary of Kshs.6,800. His Claim is as follows:

i. One month’s salary in lieu of notice...................... Kshs.6,800

ii. Leave due for two (2) years.................................... Kshs.13,600

ii. Service Gratuity at the rate of 15 days

for each completed year of service.............................Kshs.6,800

iv. 12 months’ salary compensation for loss

of employment 6,800 x 12. ............................................Kshs.81,600

v. House allowance........................................................Kshs.26,520

vi. Public Holidays..........................................................Kshs.7,701. 10

vii. Overtime.....................................................................Kshs.81,211. 60

viii. Certificate of Service

Total Amount due Kshs.241,035. 70

5th Claimant, Alex Musembi Kithome

He contended that he was employed on 13th January 2007 in the position of a cook/chef, a position he held until his termination on 31st July 2010.

He further contended that at the time of his separation he was earning a monthly salary of Kshs.8,400. His Claim is as follows:

i. One month’s salary in lieu of notice..................... Kshs.8,400

ii. Leave due for three (3) years................................Kshs.25,200

iii. Service Gratuity at the rate of 15 days

for each completed year of service...........................Kshs.12,600

iv. 12 months’ salary compensation for loss

Of employment 8,400 x 12. .......................................Kshs.100,800

v. House allowance.................................................. Kshs.52,920

vi. off duty......................................................................Kshs.25,204

vii. Public Holidays (11)..............................................Kshs.11,557

viii. Overtime.................................................................Kshs.100,814

ix. Certificate of Service

Total Amount due Kshs.337,495

6th Claimant, Felimona Mulele Injeshi

He contended that he was employed on 5th May 2007 in the position of a cook, a position he held until his termination on 31st July 2010.

He further contended that at the time of his separation he was earning a monthly salary of Kshs.7,500. His Claim is as follows:

i. One month’s salary in lieu of notice...................Kshs.7,500

ii. Leave due for three (3) years............................. Kshs.18,173

iii. Service Gratuity at the rate of 15 days

For each completed year of service........................Kshs.10,924. 50

iv. 12 months’ salary compensation for loss

of employment 7,500 x 12. ........................................Kshs.90,000

v. House allowance....................................................Kshs.26,859. 60

vi. Off duty......................................................................Kshs.25,204

vii. Public Holidays.................................................... Kshs.11,557

viii. Overtime............................................................... Kshs.100,814. 40

ix. Certificate of Service

Total Amount due Kshs.291,023. 50

The Claimants aver that their termination was unfair as the Respondents failed to adhere to the mandatory provisions of Section 41 and 45 of the Employment Act, 2007 while terminating their services. They further contended that as a result of the unfair termination they are entitled to the reliefs as sought by dint of Section 49 of the Employment Act, 2007.

In the instant claim the claimants seek the following reliefs:-

1) The Court do declare that the dismissal of the Claimants from their employment was illegal and unfair.

2) The Claimants be paid their full salary and allowances during the period of dismissal

3) The Claimants be paid their terminal benefits as set out above.

4) The Respondents be ordered to compensate the Claimants for wrongful dismissal at the equivalent of twelve (12) months’ gross salary.

5) The Court do issue such orders and give such directions as it may deem fit to meet the ends of justice.

6) The Respondents to pay the costs of this claim.

7) Interest on the above at Court rates.

8) The Respondent be ordered to give the Claimants certificate of service.

The 2nd Respondent filed his Statement of Defence dated and filed in Court on 2nd March, 2012, in which he denies having employed the Claimants herein as alleged and contends that the Claimants were employees of the 1st Respondent. He further contends that the 1st Respondent hotel is still operational and that he ceased being in the management of the hotel.

The 2nd Respondent further avers that he did inform the Claimants of the changes in management of the 1st Respondent and the said Claimants continued working for the 1st Respondent with the 3rd and 6th Claimants still being under the 1st Respondent’s employment at the time of filing this Claim.

The 2nd Respondent contends that he was also an employee of the 1st Respondent and is therefore not liable for any claim. He however contends that the Claimants were engaged by the 1st Respondent on a casual basis and are therefore not entitled to the reliefs sought in their Statement of Claim.

The 2nd Respondent urges this Court to dismiss the Claim against him with costs.

The 1st and 3rd respondents did not enter appearance or file defence to the claim.

The case was heard on 4th April, 2019 with the Claimants calling one witness to testify on their behalf. The Respondents failed to attend the court for hearing despite proper service.

Evidence

CW1, JESSE WANJOHI KAMBUNI adopted his witness statement dated 22nd January, 2019 as his evidence in chief. In his witness statement, CW1 states that all the claimants were engaged by the respondents as chefs and waiters. That they worked overtime for the entire period they we in employment of the respondents. That they reported to work at 6. 00 am and left at 9. 00 pm delay and there was no overtime pay. That their services were terminated on 31st July 2010 without a hearing and for no valid grounds.

CW1 further testified that the Claimants were not paid any of their terminal dues at the time of separation. He further testified that their salaries were paid on a monthly basis and that prior to their termination they were not given any notice or any hearing.

CW1 urged this Court to allow the Claim in terms of the reliefs sought therein.

Claimants’ Submissions

The Claimants submitted that their termination was in contravention of the requirements of the mandatory provisions provided under Section 40 of the Employment Act, 2007.

They further submitted that their termination was contrary to the provisions of Sections 35, 41, 43 and 45 of the Employment Act, 2007. The Claimants relied on the cases of Kennedy Maina Mirera v Barclays Bank (K) Limited (2018) eKLRand Kenya Union of Commercial Food and Allied Workers v Meru North Farmers Sacco Limited (2013) eKLR.

The Claimants submitted that they are entitled to the reliefs sought in their Claim and urged this Court to allow the same as pleaded in the Statement of Claim.

Analysis and Determination

Having considered the facts of this cause, evidence, submissions and authorities, the following are the issues for determination:

1) Whether the Claimants have any claim as against the 2nd and 3rd Respondents herein

2) Whether the termination of the Claimants’ employment was valid both procedurally and substantively

3) Whether the Claimant is entitled to the reliefs sought

The 2nd Respondent herein raised a Notice of Preliminary Objection, dated 23rd April, 2012 alleging to have been improperly sued as the Claimants’ employer. The court through its ruling delivered on 11th March 2014 upheld the Preliminary Objection and directed that the 2nd Respondent’s name be expunged from the record and that the Claimants proceed with their Claim as against the 1st Respondent.

The Claimants subsequently filed a Notice of Motion Application dated 24th November, 2017 seeking to enjoin the 2nd and 3rd Respondent herein being directors of the 1st Respondent herein. The said application was allowed by the Court on 16th January, 2018.

The question that then arises is whether the said 2nd and 3rd Respondents are proper parties to this Claim.

The Claimants in the aforementioned Application contended that they sought to enjoin the 2 respondents by the fact that the 1st Respondent had closed down in a bid to ensure that they do not get justice.

Should the corporate veil in this case be lifted?

A corporate entity is capable of suing and being sued in its own name. The House of Lords in Salomon v Salomon (1897) AC 78, recognized that whereas a registered company is a legal person separate from its members, the veil of incorporation may be lifted in certain cases for instance, where it is shown that the company was incorporated with or was carrying on business as no more than a mask or device for enabling the directors to hide themselves from the eyes of equity.

As regards the lifting of the corporate veil, Halsbury’s Laws of England (4th Edition) at Para 90 states that lifting of the corporate veil will be done where, “there is fraud or improper conduct but in all cases where the character of the company, or the nature of the persons who control it, is a relevant feature. In such case the court will go behind the mere status of the company as a separate legal entity distinct from its shareholders ….”

The instant case does not fit the description above. Closing of a business does not necessarily mean that the Company is wound up. Further, the 2nd Respondent in his Response to the Statement of Claim averred that there was a change in the management of the 1st Respondent which is still in operation and in fact he was no longer a Director thereto. Should there be need, the Civil Procedure Rules provide for cross examination of Directors in execution of decree.

In the circumstances I find that the Claim as against the 2nd and 3rd Respondent are not valid and the claim will proceed as against the 1st respondent alone.

The Law

The law relating to fair termination is contained in Section 41, 43 and 45(2) of the Employment Act.

The Claimants submitted that the termination of their employment was unfair as it contravened the provisions of Section 41, 43 and 45 of the Employment Act that provides that an employer must not only prove that the reason for termination is valid and fair but also that the employment was terminated in accordance with fair procedure.

CW1 testified that no notice was issued to them prior to their termination.

The statutory burden for a complaint of unfair termination of employment or wrongful dismissal is contained in Section 47(5) of the Employment Act. The section provides that –

For any complaint of unfair termination of employment or wrongful dismissal the burden of proving that an unfair termination of employment or wrongful dismissal has occurred shall rest on the employee, while the burden of justifying the grounds for the termination of employment or wrongful dismissal shall rest on the employer.

An employee therefore has the burden of proving that an unfair termination of employment has occurred while the employer’s burden is justify the reasons such termination.

In the case of Walter Ogal Anuro v Teachers Service Commission (2013) eKLR the Court held that:

“…. 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 while procedural fairness addresses the procedure adopted by the employer to effect the termination.”

In Francis Mbugua Boro vSmartchip Dynamics Ltd (2017) eKLRit was held:

“…It was mandatory for the respondent to conduct a hearing (either through correspondence or face to face) as part of procedural fairness in terms of Section 41(2) of the Employment Act 2007 AND Missing that essential ingredient and a hearing the court teaches the conclusion that the summary dismissal of the claimant was procedurally unfair.”

Other than the 2nd respondent, the other respondents did not file any response to the claim and the averments of the claimants remain uncontroverted, the 2nd respondent having confirmed that the claimants were indeed in the employment of the respondent. The termination was thus unfair for want of both procedure and valid reason.

Having found that the Claimants’ termination was unfair both procedurally and substantively and in the absence of any evidence from the 1st Respondent to rebut the position, the Claimants are entitled to the following remedies against the 1st Respondent:

One Month’s Salary in lieu of notice.

The Claimants are entitled to this relief by dint of Section 36 and 49(1) of the Employment Act, 2007 at one month’s salary for each claimant.

Compensation for unfair termination

Having found that the termination of the claimants was unfair they

are entitled to compensation. Given the length of service and the circumstances leading to their termination I award each of the Claimants 4 months’ salary compensation.

Leave due to each Claimant

In the absence of any evidence in rebuttal from the Respondents the Claimants are entitled to pay in lieu of annual leave as prayed.

Service gratuity

In the absence of any evidence in rebuttal from the Respondents the Claimants are entitled to service pay at 15 days’ salary per year worked.

House allowance

The Claimants averred that they were not provided with any housing by the Respondent and that they did not receive any payment in lieu thereof. The Claimants are entitled to the same as provided under Section 31 of the Employment Act, 2007.

Certificate of Service

Each Claimant is entitled to be issued with a certificate of service as per the provisions of Section 51 of the Employment Act, 2007.

The Claims for off duty unpaid Public Holidays and Overtime have not been proved and are dismissed.

Judgment is therefore entitled for each of the claimants against the 1st respondent as follows –

1st Claimant, Raphael Kimathi Kamuyu

1. One month’s salary in lieu of notice....................... Kshs.6,800

2. Leave due for three (3) years....................................Kshs.20,400

3. Service Gratuity at the rate of 15 days

for each completed year of service...............................Kshs.10,200

4. 4 months’ salary compensation 6,800 x 4. ........... Kshs.27,200

5. House allowance....................................................... Kshs.39,780

6. Certificate of Service

Total Amount due Kshs.104,380

2nd Claimant, Jesse Wanjohi Kambuni

1. One month’s salary in lieu of notice...................... Kshs.8,400

2. Leave due for one (1) year........................................ Kshs.8,400

3. Service Gratuity at the rate of 15 days

for each completed year of service...............................Kshs.4,200

4. 4 months’ salary compensation 8,400 x 4. ........... Kshs.33,600

5. House allowance.........................................................Kshs.17,640

6. Certificate of Service

Total Amount due Kshs.72,240

3rd Claimant, Kasyoka Muthoka

1. One month’s salary in lieu of notice....................... Kshs.5,670

2. Leave due for one (1) year..........................................Kshs.5,670

3. Service Gratuity at the rate of 15 days

for each completed year of service................................Kshs.2,800

4. 4 months’ salary compensation 5,670 x 4. ..............Kshs.22,680

5. Certificate of Service

Total Amount due Kshs.48,916

4th Claimant, Robinson Irungu Mwangi

1. One month’s salary in lieu of notice............................Kshs.6,800

2. Leave due for two (2) years...........................................Kshs.13,600

3. Service Gratuity at the rate of 15 days

for each completed year of service...................................Kshs.6,800

4. 4 months’ salary compensation 6,800 x 4. ................Kshs.27,200

5. House allowance...........................................................Kshs.26,520

6. Certificate of Service

Total Amount due Kshs.80,920

5th Claimant, Alex Musembi Kithome

1. One month’s salary in lieu of notice...........................Kshs.8,400

2. Leave due for three (3) years.......................................Kshs.25,200

3. Service Gratuity at the rate of 15 days

for each completed year of service..................................Kshs.12,600

4. 4 months’ salary compensation 8,400 x 4. ................Kshs.33,600

5. House allowance............................................................Kshs.52,920

6. Certificate of Service

Total Amount due Kshs.132,720. 00

6th Claimant, Felimona Mulele Injeshi

1. One month’s salary in lieu of notice.........................Kshs.7,500. 00

2. Leave due for three (3) years.....................................Kshs.18,173. 00

3. Service Gratuity at the rate of 15 days

for each completed year of service...............................Kshs.10,924. 50

4. 4 months’ salary compensation 7,500 x 4. .............Kshs.30,000. 00

5. House allowance.........................................................Kshs.26,859. 60

6. Certificate of Service

Total Amount due Kshs.93,457. 10

The Claimants are awarded costs of this suit and interest shall accrue from the date of the Judgment until payment in full.

DATED, SIGNED AND DELIVERED AT NAIROBI ON THIS 13TH DAY OF FEBRUARY 2020

MAUREEN ONYANGO

JUDGE