DOES THE EMPLOYMENT COURT RULE IN FAVOUR OF GUILTY EMPLOYEES AGAINST THE EMPLOYER?
James WaNjeri - Employment Law
A common complaint that I get from clients is, “why does the Employment Court reward employees who are guilty of misconduct by giving them favorable judgments?” This is a common misconception and one that makes employers believe that they cannot win cases before the employment court.
Employee discipline is an internal mechanism that the Court will rarely interfere with. While someone is still an employee, the Employer has the exclusive right to take him/her through its disciplinary processes. Courts have held that an employee cannot frustrate the internal disciplinary process and then claim they were unfairly terminated. So why do Employers still end up losing cases at the Employment and Labour Relations Court?
In my experience, we still have a long way to go in inculcating a culture of the rule of law in our workplaces. Some employers are quick to disregard laid-down legal processes when dealing with employees who have been involved in misconduct. In other instances, a lack of training and awareness for key personnel means that their actions are usually fueled by ignorance and unfortunately, the law does not recognize ignorance as a valid defense. Often, unfair terminations can be characterized by hastiness on the employer's part, who is eager to get rid of the offending employee as fast as possible.
In Employment CAUSE NUMBER 1566 OF 2016 KITHEKA vs TAMARIND MANAGEMENT LIMITED and CAUSE NUMBER 1565 OF 2016 MWAKUJA vs TAMARIND MANAGEMENT LIMITED the employees worked for the same establishment as Bartender and Assistant Head Bartender respectively. They were summarily dismissed for gross misconduct as a result of engaging in activities that led to loss of funds.
According to the employer, it had a MICROS point of sale system in its establishment. Each employee had a card with a unique PIN number. The MICROS system was used to punch the order into the system, and the order would be settled by M-Pesa, cash or card. The cards and PIN numbers were not shared. Cash bills were posted by the employees but there were disparities between the bills settlement and the M-Pesa statements. Each of the employees was found to have a discrepancy running into thousands of shillings.
When an employment matter goes to court, the employee claims unfair termination. The judge will apply a two-part test to determine whether the employee has a proper legal claim or not. The two-part test consists of:
1. Was there a Valid Reason for the employer’s action?
2. Did the employer follow the proper Procedure?
For a disciplinary action resulting in termination or dismissal to stand, the employer has to satisfy the two elements.
Valid Reason
In Cause 1565/2016 , the court found that the employee did not deny that there was a discrepancy of Kshs. 84,250 traced back to his unique MICROS card. The sales had been made but the employer did not receive the money. The employee argued that his card was with the bartenders, who were authorized by management to use it in his absence. The court found that he did not establish that this was the practice or policy of the employer. Furthermore, each bartender had his/her own card so why would they use his card? The Court was persuaded that the employer lost money through the employee’s card and had a valid reason to justify termination, under section 43 of the Employment Act.
In Cause 1566/2016 the court began by noting that the Employee did not deny that the employer lost money, attributable to the use of his MICROS card. The card had unique features and it was not shared with other employees. The PIN number was known to only the employee. M-pesa postings through MICROS did not match with the entries shown in the M-pesa statements. The employee did not explain where the money he allegedly paid to M-pesa, in settling bills from customers he had served, was deposited. It was not available to the employer, through kopokopo agent. The employer had a valid reason to justify termination, under Section 43 of the Employment Act.
The employer had satisfied the first test by establishing that it had good reason to take disciplinary action against the employees and terminate their contracts. However, there was still another test to pass, on procedure.
Procedure
In Cause 1565/2016, the employee told the Court that he was called to a meeting attended by the Internal Auditor, Restaurant Manager and the Human Resource Manager. He was handed a printout and told to explain. He wrote an explanation. He admitted that there were M-pesa deals which took place due to his negligence. He agreed he could have been negligent, by leaving his card behind. Others were using the card. His colleagues were called separately to the meeting. Their boss- the head barman, was, alongside others, charged with the offence of stealing by servant. He confirmed that the card was unique to its holder.
He told the Court that he was called to the meeting on Friday evening. There were 2 Police Officers also present. He was told money was missing. He was handed printouts at the meeting. He had not seen these documents previously. He was not given adequate time to study the documents and respond. He was just given a foolscap and told to write his explanation. He was not given an opportunity to call any witnesses. He was arrested on the same day and locked at Gigiri Police Station. IT gave his card code to bartenders. They were allowed to use his card, while he was away. Management authorized this. The criminal case was pending.
In its analysis, the Court found that there was no letter to show cause, and no charges communicated to the Claimant. There was no disciplinary hearing. A meeting involving the Internal Auditor, the Restaurant Manager, the Human Resource Manager and the Claimant was called. There were 2 Police Officers in attendance. This was an investigation process, calling in the attendance of Police Officers. The letter of summary dismissal indicated that investigations were ongoing. The Claimant was shown MICR0S printouts and the M-pesa statements, at the hearing. There was no time to prepare his response. He was arrested on the same day, and arraigned in Court on 6th July 2015, suggesting that he was still in custody on the effective date of termination- 3rd July 2015. The procedure did not meet the minimum standards of fairness, under Sections 41 and 45 of the Employment Act.
The Judge held that
“He worked for 6 years and 5 months. He contributed to the circumstances leading to termination. He was entrusted funds belonging to his Employer, and was unable to explain the circumstances of the loss of those funds. No previous disciplinary lapses were noted in his record. Performance was not in issue. His contract dated 16th February 2009, was open-ended. He is granted compensation for unfair termination, equivalent of 6½ months’ gross salary, at Kshs. 274,696.”
In Cause 1566/2016, he told the Court that he was called to a meeting attended by the Human Resource Manager, the Restaurant Manager, and the Internal Auditor. He was shown some documents alleging the Employer had lost money. He was told to comment on the printouts. He wrote something saying he knew nothing. He was arrested and charged. He had a card which was unique to him. It could not be used by anyone else. The Managers explained to him about the missing money. He did not have the report, prior to the meeting. He did not have time to read it. He was given a piece of paper and told to write his response. He was given about 5 minutes to write his response. The meeting was attended by 2 Police Officers. The Claimant was charged, in a criminal case which was still pending, as of the date he gave evidence in the court proceedings.
The Court found that there was no letter to show cause issued to the employee. There were no specific charges. There was no disciplinary hearing, as contemplated by Section 41 of the Employment Act. What was held was an investigatory meeting, complete with 2 Police Officers, invited by the Employer. The letter of summary dismissal characterized investigations as ongoing. The MICROS report, and M-pesa statements, were not shared out with the employee, before he attended the meeting. The documents were availed to the employee on the floor of the meeting. He did not have adequate time to study the documents. He was not advised on his right to be accompanied by a colleague, or a trade union representative of his choice. The procedure was unfair.
The Judge held that
“He worked for 4 years and 6 months. His record was untainted. His contract was open-ended. He contributed to premature termination of his contract. He was unable to account for his Employer’s funds, paid through him by his Employer’s customers. He undermined faith, trust and confidence, the cornerstones of the employer-employee relationship. He is granted compensation equivalent of 4 ½ months’ gross salary for unfair termination, at Kshs. 143, 491.”
Conclusion
This is one example in which an employer may feel that the court rewarded employees who were obviously guilty. However, Kenya is a country where the rule of law reigns supreme and the rules of natural justice must be adhered to. One cannot be condemned unheard and they must be given an opportunity to understand the charges against them in order to respond adequately. The Employment Act, which governs all relationships between employers and employees, has a very clear procedure that the employer needs to follow when disciplining employees.
One key question that employer disciplining employees need to ask themselves is, “Does the procedure we have used meet the test of fairness?” If not, then the right thing needs to be done while the matter is still within the employer’s control and jurisdiction.
Clearly, in the two cases, the employer had valid reasons to terminate the employees since they had engaged in gross misconduct. If the employer had been a little more patient and taken the employees through the proper termination procedure, he would not have had to pay the more than 400,000 in damages plus attendant legal costs for defending the suit.
This is why, as part of our services, we train employers and Human Capital teams on how to handle employment matters from a legal point of view. Good training could be the thing that makes all the difference for your organization.
So, do you still think that the Employment Court rules in favour of guilty employees against the employer? To consult us on employment matters, send us an email on legal@jnadvocates.com
The contents of this newsletter do not constitute legal advice and are provided for general information purposes only.
James Njeri and Company Advocates
Landmark Plaza, 13th Floor,
Argwings Kodhek Rd. Nairobi, Kenya
Tel: 0719494083
Email: legal@jnadvocates.com