Unfair Termination in Employment: Case Brief (Chara v Hantex Garments (EPZ) Limited 2024] KEELRC 1778 (KLR)

Facts

The Claimants’ Position: Amina Nyandzua Chara (lead Claimant) was employed by Hantex Garments (EPZ) Limited, allegedly starting on March 11, 2007, as a Production Controller. Her salary was Kshs. 5,828 at the time of termination, which she claimed was below the statutory minimum wage. Her employment, along with the co-claimants, was terminated on January 9, 2016, without warning, a termination letter, or being given a fair hearing or a valid reason. The Claimants asserted that they had not participated in a strike or been absent from work on January 5, 6, and 9, 2016. On January 9, 2016, they found the company gate closed with a notice, and police were present. On January 11, 2016, they were told to return their gate passes and were paid salary for the days worked in January, which they viewed as termination. They sought declarations that the termination was unlawful and that they were underpaid, along with claims for notice pay, unpaid annual leave for up to 9 years, salary arrears due to underpayments, and 12 months’ salary compensation for unlawful termination.

The Respondent’s Position: The Respondent denied the claims. They maintained that Chara was employed on January 3, 2012, as a Helper. The Respondent asserted that they complied with employment laws and wage regulations. They claimed the Claimants were lawfully terminated for gross misconduct resulting from habitual absenteeism due to their engagement in an unprotected strike on January 5, 6, and 9, 2016. The Respondent stated that employees were warned that participating in the strike amounted to gross misconduct. The Respondent’s witness (RW-1) testified that about 1,500 employees refused to report for duty on those dates, leading to chaotic behavior . The Respondent shut the gates, posted a general notice on January 14, 2016, inviting employees to collect individual invitations for disciplinary hearings scheduled to start on January 16, 2016 . RW-1 stated that the Claimant did not collect her letter, and no individual notices were issued to those who failed to turn up .

Issues

The Court identified the two issues for determination as:

1. Whether termination of the Claimants’ employment was unfair.

1. Whether the Claimants are entitled to the reliefs sought.

Analysis

Unfair Termination (Substantive and Procedural Fairness): The Court examined whether the termination met the fairness test, requiring both substantive justification (valid reason) and procedural fairness .

1. Procedural Unfairness: The Court found that the Respondent failed to comply with the mandatory provisions of Section 41 of the Employment Act .
   • The Respondent admitted that no individual show cause letters were issued or sent/posted to the Claimants .
   • The general notice regarding disciplinary hearings was dated January 14, 2016, but the Claimants had already handed back their gate passes (and thus lost access to the premises) on January 11, 2016 .
   • The Respondent failed to produce any minutes of disciplinary proceedings regarding any of the Claimants .
2. Substantive Unfairness: The Court found the termination was also substantively unfair because the Respondent failed to demonstrate a valid reason for the termination, as required by Sections 43(1) and 45(2)(a) of the Employment Act .
   • Although the Respondent alleged gross misconduct via absenteeism on January 5, 6, and 9, 2016, they failed to produce attendance registers or clocking-in records to prove the absenteeism .

The Court therefore found and held that termination of the claimants’ employment was procedurally and substantively unfair .

Entitlement to Reliefs

1. Compensation for Unfair Termination: The Court awarded each of the Claimants the equivalent of seven months’ salary as compensation for unfair termination, based on the manner and circumstances of their termination .
2. One Month Salary in Lieu of Notice: This claim was allowed pursuant to Section 35(1)(c) of the Employment Act, as the Respondent failed to avail evidence demonstrating payment of notice pay .
3. Unpaid Annual Leave: This claim was allowed. The Claimants testified they had not taken leave, and the Respondent failed to provide evidence (pursuant to Section 74(g) of the Employment Act) showing the leave had been taken or paid for . The Court noted that unpaid leave constituted a continuing injury under Section 90 of the Employment Act, and the suit was filed within the statutory period .
4. Salary Arrears/Underpayments: These claims were declined. The Claimants failed to specify or plead with precision the particular years’ Minimum Wage Orders or Wage Guidelines upon which their allegations of underpayment were based .

Conclusion

The Court entered judgment for the Claimants against the Respondent. The termination of employment was declared procedurally and substantively unfair .

For the lead Claimant, Amina Nyandzua Chara (Cause No. 773 of 2016), the specific awards were:

• One month salary in lieu of notice: Kshs. 5,828.
• Unpaid annual leave for 4 years (2012-2015): Kshs. 16,296.
• Compensation for unfair termination (7 months’ salary): Kshs. 40,796.
• Total: Kshs. 62,920.

The Claimants were awarded the costs of the consolidated suit, and interest on the total awarded sum is to be calculated at court rates from the date of the judgment (July 4, 2024). The awarded sums are subject to statutory deductions pursuant to Section 49(2) of the Employment Act.