https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/1518

Were v Ketepa Sacco Limited (Employment and Labour Relations Cause E012 of 2024) [2026] KEELRC 1518 (KLR) (4 June 2026) (Judgment) Neutral citation: [2026] KEELRC 1518 (KLR) Republic of Kenya In the Employment and Labour Relations Court at Kericho Employment and Labour Relations Cause E012 of 2024 AN Mwaure, J June 4, 2026 Between Stephen Were Claimant and Ketepa Sacco Limited Respondent Judgment Introduction 1.The Claimant had initially commenced suit via a Memorandum of Claim dated 3rd June 2025 and subsequently filed an amended Memorandum of Claim dated 31st October 2025, seeking judgment to be entered against the Respondent as follows:a.A declaration that the Claimant was unlawfully and unfairly summarily dismissed from employment in the disguise of a termination of employment.b.A declaration that the Claimant is entitled to payment of his terminal dues and damages as prayed for in Paragraph 8 of the Amended Memorandum of Claim.c.An order for the Respondent to pay the Claimant his due terminal benefits and compensatory damages totalling Kshs. 2,256,375/= plus interest thereon.d.An order that the Respondent do issue the Claimant with a certificate of service.e.Costs of this suit plus interest thereon. Claimant’s case 2.The Claimant avers that he was employed by the Respondent on 1st March 2022 as its Chief Executive Officer under a three‑year renewable contract, earning a last gross salary of Kshs. 100,785.20/= per month as per the salary review of 23rd November 2022 and the payslip of May 2023. 3.The Claimant avers that on 15th June 2023, he was issued with a termination letter which gave no reasons, no notice to show cause, and no disciplinary hearing, thereby offending the Employment Act, 2007, the Constitution of Kenya, 2010, and principles of natural justice. 4.The Claimant contends that the Respondent relied solely on the termination clause without adhering to the Human Resource Manual, which requires due process and fairness in disciplinary matters. 5.The Claimant therefore seeks payment of terminal dues including one month’s salary in lieu of notice, salary earned to 15th June 2023, three months’ salary in lieu of notice, accrued leave, ex‑gratia, gratuity for the three‑year contract period, and compensatory damages equivalent to twelve months’ gross salary, together with issuance of a certificate of service. Respondent’s amended reply to the amended memorandum of claim 6.The Respondent opposed the amended memorandum of claim via reply to the amended memorandum of claim dated 28th November 2025. 7.The Respondent disputes the allegations of unlawful dismissal and avers that the Claimant’s contract was lawfully terminated on 15th June 2023 in accordance with section 35 of the Employment Act. 8.The Respondent denies that the Claimant performed his duties diligently, denies that due process was breached, and asserts that notice was duly given through payment in lieu. 9.The Respondent maintains that the termination was based on poor performance and misconduct, and that all terminal dues were processed and settled, including preparation of a certificate of service. 10.The Respondent further denies liability for compensatory damages, gratuity, or any additional sums claimed, contending that the suit is baseless, vexatious, and incompetent. 11.The Respondent therefore prays that the Honourable Court dismisses the Amended Memorandum of Claim in its entirety with costs. Claimant’s evidence in court 12.CW1, the Claimant, adopted his written statement and amended witness statement dated 3rd June 2024 and 31st October 2025, respectively, together with the list of documents dated 31st October 2025, which were marked as exhibits 1 to 8, as his evidence‑in‑chief. 13.CW1 testified that although he was served with a warning letter, he was never issued with a notice to show cause letter, nor subjected to any disciplinary hearing on allegations of poor performance or misconduct. He stated that his termination was irregular, as he was issued with a termination letter dated 15th June 2023 without prior notice of the intended dismissal. He further stated that he was not accorded the three months’ notice stipulated under his contract, but was instead directed to hand over, which he duly did before leaving employment. 14.In cross‑examination, CW1 stated that he was shown a cheque which did not reflect the proper termination, but was never issued with the same. He stated that he had never appeared before the Board on account of non‑performance and, in fact, his appointment had been confirmed by a letter dated 1st September 2022. He reiterated that he had previously been served with a warning letter and that his termination occurred on 15th June 2023. He further explained that the warning letter contained nine issues, one of which related to the late renewal of a loan and insurance policy, and that the warning letter dated 3rd April 2023 alleged misrepresentation of the CEO’s work. 15.In re-examination, CW1 clarified that he was indeed issued with a warning letter, but was not invited to respond to its contents; rather, he was only required to sign to acknowledge receipt. He stated that the dismissal letter was dated 15th June 2023, and between April and June 2023 he was not served with any further warning or show cause letter. He further stated that the termination letter indicated that he was to be paid certain dues, yet he never received any payment. He emphasized that he did not agree with the tabulated calculations and insisted on a proper and accurate computation of his entitlements. Respondent’s evidence in court 16.The Respondent relied on its amended reply to the amended memorandum of claim, together with the list of documents, as its evidence in chief. 17.The court directed parties to file their respective written submissions. Claimant’s submissions 18.The Claimant submitted that his dismissal was both unlawful and unfair for want of substantive justification and procedural fairness. The Claimant relied on Section 43(1) of the Employment Act, 2007, which requires valid reasons for termination, and section 41, which mandates due process. The termination letter dated 15th June 2023 gave no reasons, and no disciplinary hearing was convened, rendering the dismissal unlawful. The Claimant relied on Walter Ogal Anuro V Teachers Service Commission [2013] KEELRC 386 (KLR) to emphasize that dismissal must be substantively justified and procedurally fair. The Claimant further relied on Kenya Science Research International Technical and Allied Workers Union v Stanley Kinyanjui & Magnate Ventures Ltd (Cause No. 273 of 2010) and Mukala v Ol Tukai Lodge Ltd [2013] KEIC 634 (KLR), which require employers alleging poor performance to demonstrate objective evaluation systems and afford employees opportunity to improve. The Claimant also invoked Nicholus Muasya Kyula v Farmchem Ltd [2012] KEELRC 125 (KLR), Onyango v Kenya Revenue Authority [2025] KEELRC 167 (KLR), and James Kabengi Mugo v Syngenta East Africa Limited [2013] KEHC 3865 (KLR) to reinforce that employers cannot dismiss employees without valid and proven reasons. 19.The Claimant submitted that the Respondent’s defence is a sham, as no witness was called to controvert his evidence, citing Trust Bank Ltd V Paramount Universal Bank & 2 Others [2012] KEHC 4565 (KLR), and Interchemie E. A. Limited vs Nakuru Veterinary Centre Limited [2001] KEHC 618 (KLR) in support of that proposition. 20.The Claimant prays for relief under sections 49 and 50 of the Employment Act, including one month’s salary in lieu of notice, salary to 15th June 2023, three months’ salary in lieu of notice, payment for outstanding leave, gratuity at 20% of gross salary for the contract period, ex‑gratia, and maximum compensatory damages for unlawful dismissal. The Claimant relied on Allan Pamba v Kenya Hospital Association for anf on Behalf of the Nairobi Hospital [2020] KEELRC 232 (KLR) where maximum compensation was awarded due to callous employer conduct. 21.The Claimant submitted that costs should follow the event, and the Respondent should bear costs for unlawful and malicious termination. 22.The Claimant urged this Honourable Court to find that his dismissal was unlawful and unfair, to award the enumerated dues and maximum compensation, and to order costs against the Respondent. Respondent’s submissions 23.The Respondent submitted that the Claimant’s termination was lawful, procedurally fair, and substantively justified under sections 41, 43, and 45 of the Employment Act, 2007. The Respondent maintains that the Claimant was served with warning letters, his performance was deliberated upon by the Board, and he was accorded opportunity to improve, yet no meaningful change was noted. Reliance is placed on Mary Chemweno Kiptui v Kenya Pipeline Company Limited [2014] KEELRC 905 (KLR), where the Court emphasized strict compliance with statutory provisions in summary dismissal; Kenya Union Of Commercial Food And Allied Workers v Meru North Farmers Sacco Limited [2014] KEELRC 813 (KLR), which held that employees must be taken through the mandatory process under Section 41 of the Employment Act; and Shankar Saklani V DHL Global Forwarding (K) Limited [2012] KEELRC 264 (KLR), which affirmed that notice and hearing are required save for gross misconduct. 24.The Respondent further submitted that terminal dues were tabulated and paid, including notice pay, gratuity, ex‑gratia, and leave allowance, but remained uncollected due to the Claimant’s failure to clear and hand over. The Respondent invoked the principle in National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & another [2001] KECA 362 (KLR), that courts cannot rewrite contracts between parties who are bound by their terms unless coercion, fraud, or undue influence is pleaded. Similarly, Cooperative Bank of Kenya Limited v Banking Insurance & Finance Union (K) [2017] KECA 136 (KLR) underscores that courts must examine the validity and justifiability of reasons for termination, while British Leyland UK Ltd v Swift [1981] IRLR 91 held that dismissal is fair if a reasonable employer might reasonably have dismissed the employee. Finally, Walter Ogal Anuro v Teachers Service Commission (supra) is cited to reinforce that termination must meet both substantive justification and procedural fairness. 25.On this basis, the Respondent prays that the Claimant’s demands be dismissed in their entirety with costs. Analysis and determination 26.The court has considered the pleadings together with submissions; the issues for determination are as follows:a.Whether the Respondent accorded the Claimant a fair hearing in accordance with section 41 of the Employment Act;b.If (a) above is in the affirmative, whether the Claimant is entitled to the relief sought; andc.Who should bear the costs of the suit 27.For fair termination to take place, there must be substantive justification and procedural fairness as set out in sections 41, 43 and 45(2) of the Employment Act. In Walter Ogal Anuro V Teachers Service Commission [2013] KEELRC 386 (KLR), the court held as follows:“However, for a termination to pass the fairness test, it must be shown that there was not only substantive justification for the termination but also procedural fairness”. 28.In Benson K Nguti v Kenfreight [E.A] Limited [2014] eKLR the Court of Appeal held that;“Section 41 of the Employment Act provides that before an employer terminates the employment of an employee on ground of misconduct, poor performance or incapacity, the employer must explain to the employee the reason for the intended termination. The said explanation must be in a language of the claimant's understanding, and the claimant must be given the option of being accompanied by a fellow worker or shop floor union representative of his choice. The said provision further requires, in mandatory terms, that the employee and his companion must be accorded an opportunity to air their case in defence before a final decision is made to terminate the employment......In addition, Section 45(2) (a) and (b) of the Employment Act provides that an employer shall not terminate the employment of an employee except on ground of a fair and valid reason. A fair reason is defined by the said Section 45(2) (a) and (b) as one that relates to the employee's conduct, capacity and compatibility, or based on the operational requirements of the employer. Section 43 (a) and 47(5) of the Employment Act puts on the employer the burden of proving the reason for termination in a claim arising out of the termination of employment as it is herein” 29.In Mary Chemweno Kiptui v Kenya Pipeline Company Limited (Supra) the court held as follows:“Invariably therefore, before an employer can exercise their right to terminate the contract of an employee, there must be valid reason or reasons that touch on grounds of misconduct, poor performance or physical incapacity. Once this is established the employee must be issued with a notice, given a chance to be heard and then a sanction decided by the respondent based on the representation made by the affected employee. It is now established best practice to allow for an appeal to such an employee within the internal disputes resolution mechanism and with due application of the provisions of section 5(7) (c) of the Employment Act. Where this procedure is followed an employer would have addressed the procedural requirements outlined under section 41 and any challenge that an employee may have would be with regard to substantive issues only.Summary dismissal on the other hand is largely at the instance of an employer. The standard applicable therefore are of a higher nature as this process is prone to abuse as the employer is in a more superior position than an employee. Summary dismissal can take place when an employer terminates the employment of an employee without notice or with less notice than that which the employee is entitled by any statutory provision or contractual term. However, even in cases of serious breach of a contract as under section 44(3) or on committing acts as outlined under section 44(4) of an employee being absent from work, being intoxicated, negligence, abusive, failure to obey lawful orders, criminal arrest or charges, suspect in a criminal case, all these serious acts, such an employee is subject to be treated as under section 41 of the Employment Act with regard to being accorded a hearing.Under subsection 43 (2) of the Employment Act, 2007, the reason or reasons for termination of a contract are the matters that the employer at the time of termination of the contract genuinely believed to exist and which caused the employer to terminate the services of the employee. However, these reason or reasons must be addressed before the termination notice is issued and subjected to a hearing to establish if the employee has a defence that is worth consideration. The reasons should never be given after the termination has taken effect. This would be an outright negation of the purpose, intent and validity of any reason or reasons an employer may have against the affected employee.A suspension therefore is ultimately a right due to an employer who on reasonable grounds suspects an employee to have been involved in misconduct, of poor performance or physical incapacity and wishes to remove such an employee from the work place to enable further investigation without subjecting the employee to further commission of more acts of misconduct, underperformance or the conditions leading to incapacity. The suspension period is a time available to an employer to control as the employee can be summoned back to work any time to undertake disciplinary proceedings or upon terms and given by an employer.” 30.In this instant case, the Claimant was employed by the Respondent to be its CEO from 1st March 2022 until 15th June 2023, when he was terminated without any proper procedure in accordance with sections 41, 43 and 45(2) of the Employment Act 2007. The Respondent maintains that it fairly and lawfully terminated the Claimant. 31The court has not been furnished with evidence of the reasons that necessitated the Claimant to be terminated without any notice. This was in contravention of Section 45 of the Employment Act section 45(1) of the Employment Act states as follows: -“No employer shall terminate the employment of an employee unfairly.” 32.Further, the requisite procedure in terminating an employee is well provided in Section 41 of the Employment Act. There are numerous case laws that also provide that in terminating an employee, it is mandatory for the employer to comply with Section 41 of the Employment Act. Section 41 of the Employment Act 2007 states as follows -“Subject to section 42 (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.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.” 33.The termination letter issued to the Claimant dated 15th June 2023 gives no reason(s) for the termination. The case of WALTER OGAL ONURO -VS- TEACHERS SERVICE COMMISSION 2013 eKLR states: -“For termination to pass the fairness test it ought to be shown that there was not only substantive justification for the termination but also procedural fairness.” 34.The reason given by the Respondent in the submissions in terminating the Claimant was poor performance and contravention of company’s policies. However, the Respondent even if he found the Claimant culpable of poor performance should have followed the right procedure set out in employment case laws.In the case of Jane Samba Mkala -vs- Ol Tukai Lodge Limited 2013 eKLR the court held “An employer alleging poor performance by an employee must demonstrate the existence of an objective performance evaluation system as a benchmark for assessing the performance and providing support for improvement.” 35.The court is satisfied that the Claimant was not accorded a fair hearing as required under Section 41 of the Employment Act, and therefore contravening the Fair Administrative Action Act provisions. The court emphasizes that the twin requirements under sections 41, 43 and 45 must operate together, as one cannot stand without the other. While the Respondent alleged misconduct and poor performance against the Claimant, it was incumbent upon the Respondent to issue a notice to show cause letter, allow the Claimant to respond, and thereafter convene a disciplinary hearing to determine his fate. Being a Sacco, the court is of the view that the Respondent had a Human Resource Policy outlining the procedure for summary dismissal, which was not adhered to. Accordingly, the Court finds and holds that the Claimant’s termination was unlawful and unfair. 36For the remedies, the court has thoroughly gone through the documentation and has confirmed that the Claimant was not paid his terminal dues. He is entitled therefore to the following reliefs: -1.Three months salary in lieu of Notice Kshs.95,000 X 3 - Kshs.285,000/=.2.Salary earned upto date of termination 15th June 2023 - Kshs.47,500/=(3)Gratuity - Kshs.314,151/=(4)Compensation will be awarded for 2 months as he only worked for about one year - Kshs.190,000/=(5)Outstanding leave days - Kshs.9,580/=Total Award - Kshs.846,231/=(6)Costs to be awarded to the Claimant.(7)Interest will be at 14% per annum from date of Judgment till full payment.8.For the certificate of service, the court directs the Respondent to issue the Claimant in accordance with section 51 of the Employment Act within 30 days hereof.Orders accordingly. DATED, SIGNED AND DELIVERED VIRTUALLY AT NAKURU THIS 4TH DAY OF JUNE, 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.