Consolata Institute of Philosophy v Gacengechi (Civil Appeal 284 of 2018) [2024] KECA 1395 (KLR) (11 October 2024) (Judgment)
Neutral citation:
[2024] KECA 1395 (KLR)
Republic of Kenya
Civil Appeal 284 of 2018
P Nyamweya, A Ali-Aroni & PM Gachoka, JJA
October 11, 2024
Between
Consolata Institute of Philosophy
Appellant
and
Haron Njoroge Gacengechi
Respondent
(An appeal from the Judgment and Decree of the Employment and Labour Relations Court of Kenya at Nairobi (Wasilwa, J.) delivered on 11th March 2015 in ELRC Cause No. 2428 of 2012
Cause 2428 of 2012
)
Judgment
1.The relationship between the appellant and the respondent dates back to the year 2001, when the appellant engaged the respondent as one of its employees. The employment of the respondent was pegged on various contracts which were renewed and/or reviewed from time to time. Of interest in the context of the matter before us are the contracts dated 1st January 2008 (1st contract) wherein the respondent was engaged as an Assistant Librarian for six years, and the one of 31st January 2011 (2nd contract) as a Library Technical Assistant where the contract was to run for a year.
2.We find it necessary to lay a background to the case in summary to contextualize the matter. The respondent sued the appellant in the Employment and Labour Relations Court in Case No. 2428 of 2012, citing unfair termination of his employment and seeking to be compensated for monies allegedly owed to him by the appellant. It was the respondent’s case that the 1st contract was to end on 1st of January 2014 and was renewable by agreement of the parties. In the said contract the respondent was employed as an Assistant Librarian under terms and conditions spelled therein which included: assisting the Head Librarian in running all operations in the library, taking care of electronic, electrical, and communication equipment provided for use in the library and the hall.
3.The respondent claimed that despite his duties having been spelled out in the contract, the appellant engaged him outside the contract, requiring him to lecture at Consolata Propaedeutic, an independent entity under the appellant's management for every semester from 2002 to 2009; undertake more duties in the institute’s administration; and to work for the Consolata Seminary, another separate entity, all without compensation for the extra work.
4.The respondent further claimed that he was summoned by the appellant’s director in December 2010 and informed that his contract would be changed so that he would take the position of Acting Chief Librarian beginning the year 2011. Following the discussions, the academic calendar of the appellant for the year 2010-2011 was changed to reflect the new arrangement. However, on 7th February 2011, the respondent was summoned to the Administrator’s Office at about 5:20 pm and asked to sign a document that he believed reflected his new position. Upon signing the first copy in good faith, he noticed a clause in the document showing that he was being assigned the position of Library Technical Assistant, and he declined to sign other copies of the document. It is his contention therefore, that he signed the contract of 2nd contract under duress, intimidation, misrepresentation, and not voluntary.
5.Further he claims that on 8th February 2011, when he attempted to report to work, he was barred from accessing work by the security officers; that later the same month the appellant barred the respondent from accessing his workstation; terminated the respondent’s employment in total disregard to the express term of the respondent’s employment; and in effect terminated his services and without paying the respondent his dues. He contended that the actions of the appellant amounted to a breach of contract and unfair labour practice in terms of Article 41 of the Constitution, and that due to same, he suffered loss and damage as a result. In the end the respondent prayed for; -i.A declaration that the respondent’s dismissal was unconstitutional, unprocedural, unfair and unlawful.ii.Damages for unlawful termination.iii.24 days' leave at Kshs. 1,510 per day -Kshs. 42,280iv.Six (6) months’ salary in lieu of notice - Kshs. 271,962v.Kshs. 15,000 per semester for services at Consolata Propaedeutic (2002-2009) - Kshs. 270,000vi.Kshs. 10,000/- per month for other services to Consolata Propaedeutic for 14 months (Jan 2010- March 2011) Kshs. 140,000vii.Kshs. 10,000/- per semester for services at Consolata Seminary (2002-2011 two semesters in a year)- Kshs. 200,000viii.Kshs. 10,000 per month from Consolata Administration(2002-2011)Kshs.1,200,000ix.Medical insurance contribution for 2009, 2010, and 2011 Kshs. 17,500 a year- Kshs. 52,500x.Expected salary for two years and four months (September -December 2011, 2012 and 2013) 32 months’ x 45,327 - Kshs.1,450,464xi.Service pay (15 days per year worked)7 years worked 15 x 1,510 - Kshs. 158,550Total KSHS. 3,785, 756He also sought for a certificate of service.
6.In response the appellant filed a memorandum of defence and counter-claim dated 7th March 2013. It is the appellant's case that at the material time, it had put in place a policy where all employees were to be placed under a one-year contract. Since the respondent was working under different contracts, it was decided that the situation be regularized, and a meeting was held with the appellant on the matter, where it was mutually agreed that the respondent would sign a new contract with improved terms under the new policy. The said discussions were reduced to a one-year contract dated 31st January 2011 which rendered all other pre-existing contracts void. The appellant denied the respondent’s allegation that he was forced to sign the agreement.
7.Further, it is contended that the respondent resigned from employment on 8th February 2011 without giving sufficient notice to the appellant.
8.The appellant further claims that while in the employ of the appellant, the respondent enrolled himself at Strathmore University and it was agreed between them that the appellant would pay half of the school fees for the respondent. The appellant paid a total of Kshs. 608,875/= covering the entire fees and it was to recover half the amount from the respondent; at the time the respondent resigned from work, he still owed the appellant a balance of sum of Kshs. 324,975/= being his half share of fees. Further, the appellant denied having engaged the respondent in extra duties as alleged. It also denied that the July 2011 leave was due and pending.
9.In its counterclaim, the appellant sought to recover:i.Balance of half of the fees paid to Strathmore University for the Master's Degree Program- Kshs. 342, 975.00ii.Money deducted from Joseph Mwangi due to a defaulted loan repayment to Waumini Sacco Society Limited- Kshs. 63,909.23iii.Institutional loan- Kshs. 404,000.00iv.Money due to the staff welfare group - Kshs. 4,500.00v.3 months’ notice - Kshs. 45,327.00Total KSHS. 933,365.23
10.The matter proceeded for hearing by way of viva voce evidence, with the respondent giving evidence as the sole witness, and the appellant’s evidence captured in the testimony of its administrator. The respondent in his testimony informed the court that he is an ICT Consultant with a Master’s Degree from Strathmore University having graduated in 2014. He further testified that he was an employee of the appellant between 2000 and 2011. That from 2004 he was designated as Assistant Librarian and ICT Officer based on various contracts, the last one being the one signed on 1st January 2008 and was to run for 6 years. Further, that sometime in 2010, the administrator informed him that his contract would be amended as he would become an Acting Chief Librarian with effect from January 2011. Indeed, this was captured in the academic calendar for the year 2010-2011. However, on 7th February 2011, he was summoned by the administrator; Brother Benwa Katula, who informed him that he was to sign a new contract, which he signed hurriedly without reading believing it was a contract for the job of Acting Chief Librarian, only to find out that he was given a contract designating him as Library Technical Assistant. He was disappointed and declined to take up the new job as the earlier contract was for 6 years and the new one was for a year. Regarding his complaint, he was asked by the rector to await further instructions. On 9th February 2011 he was denied access to the premises, after which he sought legal advice, his lawyer wrote to the appellant but did not receive a reply. He also sought redress from the Labour Office but did not succeed. Further in his evidence, he highlighted the work he used to do at the institute, and other institutions allied to it, where he alleged that he would raise invoices for the extra work and would not be paid.
11.The respondent claimed not to have signed the 2nd contract voluntarily alleging that he was duped into signing the same, stating that he couldn’t have agreed to sign away benefits of 6 years. Further, he contended that he had declined to honour the bad contract and did not resign as alleged by the appellant. He further asserted that he had paid all loans due to the appellant including the amounts paid to Strathmore University on his behalf as a loan through salary deductions. He admitted owing Waumini Sacco and stated that he had an arrangement with Joseph his guarantor on the same, and that the amount is not owed to the respondent.
12.Father Luciano Zuchetti testified on behalf of the appellant. He informed the court that he was the administrator of the appellant institute at the time. He knew the respondent and was aware that the appellant had served under several contracts and that it had become necessary the said contracts be reduced to one. He informed the court that the respondent was an Assistant Librarian and also did other technical work for the institute. That the respondent had three contracts one ending in 2007, another in 2010, and the third in 2014, and the three contracts were similar. He testified further that in 2011 he met with the respondent and they discussed the issue of the three contracts and agreed to reduce the same into one. The respondent signed the new contract, which rendered all the previous ones null and void. He also contended that the respondent was not coerced into signing the new contract; that upon signing the new contract the respondent returned later complaining; that the respondent went away for a month and returned saying he no longer wanted to work for the appellant and threw the contract on the table of the witness. The respondent then wrote to the appellant through his advocate, claiming unfair termination, which they denied and indicated they still needed his services; the respondent also went to the Labour Office, claiming leave and notice.
13.The witness confirmed that the appellant had agreed to pay half of the respondent’s fees for the Master's Programme. That a cheque was made up of Kshs. 608,875/= being the full fees payable and that there was an understanding that the appellant was to recover half the amount which the respondent was yet to refund. Further, the respondent owed Waumini Sacco. On the claim that the respondent worked for allied institutions, it was his evidence that the said institutions were part of the appellant. On whether the respondent was an Acting Chief Librarian, he contended that this was a mere title, as there was no agreement that he would be appointed to that position.
14.In its determination the trial court identified the following issues for consideration; -i.What was the contract in force at the material time?ii.Did the respondent resign or was he terminated;iii.If the respondent was terminated, whether the termination was lawful, what remedies were available to the respondent; andiv.Whether the appellant established the counter- claim against the respondent.
15.On the first issue, the court noted that though the respondent served under several contracts, at the time of severance of the relationship between the parties two contracts come into question namely the 1st contract, running for 6 years to 1st February 2014; and 2nd contract dated 31st January 2011. The court further found that at the time of termination of employment, the contract subsisting between the parties was the 2nd one, and that although the respondent claimed that he had signed it under duress, he was held to it because it bore his signature and the respondent wrote a letter on the 8th of February 2011 terminated the said contract.
16.On the second issue of how the respondent’s contracts were terminated, the court found that the 1st contract was to run for 6 years terminating on 1st January 2014, and required termination by a party giving 6 months’ notice. Therefore, by requiring the respondent to sign the 2nd contract, the appellant terminated the first contract; that the termination was without due process and therefore unlawful and unfair, hence the respondent was entitled to 6 months’ pay in lieu of notice amounting to Kshs. 270,000. The court having found the 1st contract was unlawfully terminated went further to award the respondent damages equivalent to 12 months’ salary of Kshs. 540,000.
17.Further, the court was of the view that the respondent arbitrarily terminated the 2nd contract by his resignation letter dated 8th February 2011, without giving the three-month notice stipulated in the said contract. The court found him liable to pay the appellant three months' pay in lieu of notice amounting to Kshs. 135,000.
18.On the counter-claim, the court observed that the parties were in agreement that the appellant would pay half of the respondent's fees at Strathmore University and that evidence on record indicated that the half fees paid by the appellant had been recovered from the respondent’s salary and that there was an overpayment of the same by the sum of Kshs. 11,473.
19.As for service pay, the court found that the respondent was a member of NSSF and thus not entitled to payment of service pay save for the 7 years for which the appellant did not remit his NSSF contributions awarding the respondent Kshs. 210,000. As for the medical expenses refund, the court noted that this was only payable as a reimbursement and did not make any award. In the end, the total sum awarded to the respondent was Kshs. 896,473 less statutory deductions, with a further order that he be issued with a Certificate of Service.
20.The appellant being aggrieved by the judgment, preferred an appeal to this Court. In its memorandum of appeal dated 15th August 2018, the appellant raised several grounds that the learned judge erred; by holding that the appellant had unlawfully terminated the respondent while at the same time holding that the respondent had terminated his contract on 8th February 2011; by finding that the respondent’s contract was terminated unfairly and awarding him 6 months’ pay; in failing to hold that subsequent contracts had the effect of varying terms of the previous contracts; holding that the respondent was owed 7 years unremitted NSSF contributions without proof; by awarding 12 months compensation yet the respondent had resigned; and failing to consider the appellant’s counterclaim of Kshs. 355,000 being the balance due from the school fees loan.
21.The hearing of the appeal proceeded on the Go To virtual platform on 15th November 2023, after an application for adjournment by Mr. Ouma, learned counsel for the appellant was declined. The parties had been directed to file their written submissions which were to be briefly highlighted at the hearing. On the date of the hearing the appellant had not filed submissions. Learned counsel Mr. Keiro, holding brief for learned counsel Mr. Njomo was present and had filed submissions dated 16th April 2018. This court then ordered the matter to proceed with pleadings and submissions on record.
22.Learned counsel for the respondent deduced the issues for determination to be; whether the learned judge erred by finding that the appellant had unlawfully terminated the respondent while holding that the respondent had terminated his contract on 8th February 2011; by finding that the previous contracts applicable to the respondent were terminated unfairly and awarding the respondent six (6) months' salary in lieu of notice while holding that the respondent had signed the contract of 31st January 2011 rendering all others nugatory; by failing to uphold the principle in contract law that provides that any subsequent contract or agreement has the effect of varying the terms of the previous contract; by finding that the respondent was owed seven (7) years unremitted NSSF contributions without proof of the same; by awarding the maximum compensation of 12 months' salary to the respondent who had voluntarily resigned from employment and by disregarding the evidence adduced in court and thereby failing to consider the appellant’s counterclaim amounting to Kshs. 355,000.
23.On the first issue, learned counsel submitted that the court opined that the issue for determination was not whether or not the respondent was coerced into signing a new contract, but how the previous contract ended and that the court found that the contract was terminated without due process, as the requirement for notice was not followed; further that the judge did not err in finding that the contract provided for a notice period of 6 months before either party could terminate the same.
24.On the second issue, learned counsel submitted that the appellant failed to provide the respondent with sufficient notice prior to the termination of his previous contract, which was an express obligation imposed on the appellant and the failure to issue sufficient notice prior to the termination of the contract amounted to a breach. He contended that the respondent was therefore entitled to exercise his rights for breach of the contract, which included payment in lieu of notice for the breach of the notice period, which in this case was six (6) months.
25.On whether the learned judge erred by failing to uphold the principle in contract law that provides that any subsequent contract or agreement has the effect of varying the terms of the previous contract, the respondent submits that the new contract was not an amendment or variation of the previous contract but a fresh independent contract as the previous one had already been terminated.
26.On whether the learned judge erred in finding that the respondent was owed 7 years of unremitted NSSF contributions without proof of the same, learned counsel submitted that the failure to remit the respondent’s contribution was contrary to the provisions of section 5(3) (b) of the Employment Act, (“the Act”) therefore the burden of proving that this discrimination did not take place was borne by the appellant as the employer in accordance section 5(7) of the Act.
27.On whether the learned judge erred by awarding 12 months' salary to the respondent who had voluntarily resigned from employment, learned counsel submitted that having established that the termination of the respondent’s 1st contract was unfair, the learned judge exercised his discretion under section 49 of the Act in awarding the respondent twelve (12) months' salary for failure by the appellant to follow due process by issuing the respondent with the required notice before terminating the said contract.
28.On whether the learned judge erred by disregarding the evidence adduced in court and thereby failing to consider the appellant's counterclaim of Kshs. 355,000, being the balance due from the school fees paid and other sums due, learned counsel submitted that the loans were repaid in full and that the appellant’s claim that the learned judge disregarded evidence adduced in court is baseless. Learned counsel further submitted that there was sufficient evidence that the loans were duly deducted and settled.
29.On whether the appellant is entitled to the prayers sought, learned counsel submitted that the appeal was filed out of time, the appellant having failed to file the appeal for more than 3 years since the stay orders were granted; yet typed proceedings were ready as early as 2nd October 2017. In support learned counsel relied on the case of Kenya Shoe & Leather Workers Union vs. HR Strategic Partners Limited, to buttress his argument that failure to appeal within the prescribed time rendered the notice of appeal withdrawn.
30.This being a first appeal, it is our duty in addition to considering submissions by the appellant and the respondent, to analyze and re-assess the evidence on record and reach our independent conclusions in the matter. This approach was adopted in Arthi Highway Developers Limited vs. West End Butchery Limited & 6 Others [2015] eKLR where the court cited the case of Selle vs. Associated Motor Boat Co. [1968] EA 123 and held as follows; -
31.We have considered the record, submissions by the respondent, authorities cited, and the law and we form the view that the issues before us for consideration are; -i.Whether the respondent was unfairly terminated from his employment;ii.If (i) above is in the affirmative what are the available remedies?iii.Whether the respondent unlawfully left his employment.iv.If (iii) is in the affirmative what is the available remedy?v.Whether the appellant is owed any money by the respondent.
32.From the record it appears to us that before the controversial contract between the parties came into being, all other contracts had expired save the contract signed by the parties on the 1st of January 2008 and which was to run for 6 years, up to 2014, so that when the appellant reviewed its policy in 2010, the 1st contract was still in force. It appears to us further that though discussions were held between the parties, there was no consensus on the acting position that the respondent thought he had been elevated to, and how the parties were to transition from a 6-year contract to a one-year contract.
33.In its determination the trial court found that before entering the new contract the old contract had to be terminated. We entirely agree with that position since there was no mutual agreement between the parties on how the two parties would transition to the 2nd contract. The 1st contract provided that the contract would be terminated by either party giving the other 6 months' notice. Since there appears to have been no consensus and bearing in mind that the termination was desired by the appellant, then it fell on the appellant to pay the six months’ pay in lieu of notice as was stipulated in the 1st contract. We also are of the view that the only compensation due to the respondent was the payment of the notice period and no more, it is not for the court to re-write the contract by awarding any further compensation to the respondent. Compensation under section 49 of the Employment Act is not mandatory but can be applied only in deserving circumstances. We therefore fault the trial court for awarding a further 12 months' pay to the respondent without explaining why it would award such sums as this would be punitive in the circumstances of this case.
34.Further, the respondent did not claim loss or place before the court any loss that would endear the award of damages. This court in the case of Cooperative Bank of Kenya Limited vs. Yator [2021] KECA 95 (KLR) stated that:
35.The court went further to refer to the case of Co-operative Bank of Kenya Ltd vs. Banking Insurance & Finance Union CA No 188 of 2014 stated as follows:
36.As for the service fee payable to NSSF, the appellant remitted deductions to NSSF but failed to produce the record for the entire duration. The record missed remittances to NSSF for 7 years and the court awarded Kshs. 210,000. We think that the sum is justified and we shall not interfere with the finding and award by the court.
37.On the counterclaim the court rightly found that the records produced in court were indicative of school fee loan repayment and repayment of other loans. As for the loan to Waumini Sacco, the appellant could not purport to recover the same on behalf of another entity, which indeed has its mechanisms of debt recovery and which it had already employed. As for the money owed to the guarantor, in as much as the appellant was out to protect its employee, that debt is not its concern. The guarantor has to pursue the same for himself outside this case.
38.On the 2nd contract, the respondent informed the court that he was hurriedly called to sign the same at 5:30 pm, and he did so believing that the same was to elevate him to his new position of an Acting Chief Librarian, and noticed later that the designation assigned to him an inferior position and his 6 years’ contract had been reduced to a 1-year contract terminable by 3 months’ notice. He contacted the rector who asked for time to consider the matter. The next day he was denied access to the premises and thereafter he decided to tender a resignation letter.
39.The appellant’s witness frowned upon the respondent's assertion that he occupied the position of Acting Chief Librarian in 2010, and was very casual about the 2010-2011 academic calendar that was printed and distributed showing that the respondent was the Acting Chief Librarian. We tend to believe the evidence of the respondent that he was promised the job of Acting Chief Librarian and the academic calendar changed accordingly. That on the 7th of February 2011 he was hurried called by the administrator at 5.20 p.m. and asked to sign a contract, which on further reading, he found had reduced the term of the 1st contract to one year and the notice period to three months, and had given him a different designation. He consequently contacted the rector the following day, and was asked to wait for a response on his query. No answer came forth and instead what followed was his being locked out of the premises, forcing him to resign.
40.We find that the evidence supports the respondent’s assertion that he signed the contract in good faith, but was duped into signing a bad contract, which he refused to comply with. In this regard we fault the trial court’s finding that the respondent was in breach of the 2nd contract on two fronts; firstly, because the appellant frustrated the 1st contract. Secondly, because the appellant unilaterally came up with the 2nd contract that impacted negatively on the respondent. We also believe that the respondent could not have agreed to the reduction of his terms of employment. The action of the appellant certainly reduced the 2nd contract to an illegal contract that cannot be enforceable. Needless to add the respondent was frustrated and mistreated by not only the contents of the 2nd contract but the behavior of those in charge at the appellant, who failed to answer the respondent’s question and locked him away from his workplace. The termination was therefore as a result of the appellant’s conduct.
41.We are in this respect persuaded by the following holding by Lord Denning MR in Western Excavating (ECC) Ltd. vs. Sharp [1978] ICR 222 or [1978] QB 761:
42.In the end we affirm the respondent was owed 6 months' notice being Kshs. 210,000 and Kshs. 270,000 being service pay for 7 years. For the reasons stated above we set aside the award of 12 months' pay for breach of contract awarded to the respondent and the award of Kshs. 135,000 to the appellant for the alleged breach of contract. Each party will bear the costs of the appeal.Orders accordingly.
DATED AND DELIVERED AT NAIROBI THIS 11TH DAY OF OCTOBER, 2024.P. NYAMWEYA............................................JUDGE OF APPEAL ALI-ARONI...........................................JUDGE OF APPEALM. GACHOKA C.Arb, FCIArb...........................................JUDGE OF APPEALI certify that this is a true copy of the original.SignedDEPUTY REGISTRAR