Cookie Policy
JUDGMENT OF THE COURT
1. Before us is an appeal and a cross appeal by the appellant and respondent respectively against the judgment of the Employment and Labour Relations Court dated 8th February, 2013 wherein a total sum of Kshs. 196,488/= (less loan of Kshs. 231,912.00 due and owing by the respondent) was granted as terminal dues to the respondent. Being a first appeal we are cognizant of our primary role to reassess and re-evaluate the evidence tendered before the trial court and reach our own conclusions bearing in mind that we neither saw nor heard the witnesses. This much was restated by this Court in Musera –vs- Mwechelesi and Another (2007) KLR 159:
“We must at this stage remind ourselves that though this is a first appeal to us and while we are perfectly entitled to make our own findings on the evidence, the trial Judge has in fact made clear and unequivocal findings that:- “as an appellate court we must indeed be very slow to interfere with the trial Judge’s findings unless we are satisfied that either there was absolutely no evidence to support the findings or that the trial Judge must have misunderstood the weight and bearing of the evidence before him and thus arrived at an unsupportable conclusion.”
2. Conscious of our duty above as above we deem it necessary to set out the salient facts of this case. The respondent was employed as a mechanic by the appellant and ultimately rose up the ranks to a foreman. However, the actual date of his employment is an issue in contention between the parties. On the one hand, the respondent claimed he was employed on 4th January, 2000 while on the other hand, the appellant claimed that he was employed on 26th February, 2001. Be that as it may, the appellant vide an internal memo dated 7th October, 2010 notified the respondent that his services would be terminated effective from 9th October, 2010 on account of redundancy and advised him to collect his terminal dues after a few days.
3. The respondent not only disagreed with the calculation of his dues but also with the deduction of an alleged outstanding loan from Wanachuma Co-operative Savings and Credit Society Ltd. (hereinafter referred to as the SACCO). Consequently, he declined to accept the terminal dues offered by the appellant and filed suit. He claimed a sum of Kshs. 1,119,228/= as his dues which were
particularized as follows:-
· 9 days worked in October, 2010
-Kshs.
10,384/=
· 30 days payment in lieu of notice
-Kshs.
30,000/=
· 6 days leave balance from 2000- 2001
Kshs.
6,923/=
·
Severance pay for 10 years of service
Kshs. 173,076/=
·
189 Leave days due from 2000- 2009
Kshs. 218,076/=
- Overtime for working public holidays
from 2000- 2010
Kshs. 126,923/=
· Overtime for working during
resting days from 2000- 2010
Kshs. 553,846/=
Total
Kshs. 1,119,228/=
On its part, the appellant maintained that it had properly calculated the appellant’s dues and argued that the respondent’s calculation was grossly exaggerated.
4. Upon considering the evidence on record, the trial court entered the impugned judgment in favour of the respondent. The appellant complains that the learned Judge erred in law and fact by-
Awarding a sum of Kshs. 165,000/= as leave due to the respondent while the same had already been credited to the respondent.
Awarding a sum of Kshs. 98,400/= as overtime on account of 492 rest days worked by the respondent without any proof.
Failing to appreciate that the respondent had already been credited with severance pay though it had erroneously been indicated as gratuity.
Failing to appreciate that the respondent had already been credited with one month pay in lieu of notice and 9 days worked in October, 2010.
The respondent on the other hand, complains that the learned Judge erred in law and in fact by –
Failing to award overtime for public holidays worked by the appellant.
Deducting a sum of Kshs. 231,912/= allegedly being the outstanding SACCO loan amount from the award without any justification.
5. The matter was disposed by way of written submissions as well as oral highlights. Ms Wanjiku Muriu appeared for the appellant while Mr. W. Mbabu appeared for the respondent.
6. According to Ms Wanjiku, the appeal turns on what an employee is entitled to upon termination on account of redundancy? Learned counsel submitted that the respondent was only entitled to one month salary in lieu of notice, salary for 9 days worked in October, 2010, severance pay and payment for any unutilized leave days. Learned counsel argued that it was evident from the respondent’s pay slip for the month of October, 2010 that the appellant had credited all the terminal dues in favour of the respondent. In so far as the outstanding SACCO loan was concerned learned counsel submitted that the same was deducted in accordance with the SACCO’s bylaws.
7. Ms Wanjiku faulted the learned Judge for awarding the respondent overtime yet it was clear from the evidence on record that since his promotion to a senior employee he was not entitled to overtime. Furthermore, there was no basis for the learned Judge to grant payment for rest days allegedly worked by the respondent. She submitted that despite the appellant erroneously indicating severance pay as gratuity in the pay slip, the payment related to severance. She urged us to allow the appeal.
8. On his part, Mr. Mbabu submitted that the respondent had been employed on 4th January, 2000 on a casual basis and later confirmed on a permanent basis on 26th February, 2001, hence the respondent had worked for 10 years prior to his termination and severance pay ought to have been calculated on that basis. According to him, the trial court erred in deducting the SACCO loan from his dues yet the same had been secured by his SACCO shares. He also faulted the learned judge for not making an award for public holidays worked by the respondent. He urged the Court to allow the cross appeal.
9. We have considered the record, submissions by counsel and the law. Section 2 of the Employment Act defines redundancy as follows:-
“ ....... the loss of employment, occupation, job or career by involuntary means through no fault of an employee, involving termination of employment at the initiative of the employer, where the services of an employee are superfluous and the practices commonly known as abolition of office, job or occupation and loss of employment.”
Thus, redundancy is a legitimate ground for terminating a contract of employment provided that there is a valid and fair reason based on operational requirements of the employer and the termination is in accordance with a fair procedure. However, from the record the respondent’s concern was not with the fairness or otherwise of the whole redundancy process but on the terminal benefits he was entitled to. Consequently, we like the trial court will focus on the issue of his terminal dues.
10. Section 40 (1) of the Employment Act sets out some of the entitlements of an employee whose services have been terminated on account of redundancy. They include-
“.........................
(e) the employer has where leave is due to an employee who is declared redundant, paid off the leave in cash;
(f) the employer has paid an employee declared redundant not less than one month’s notice or one month’s wages in lieu of notice; and
(g) the employer has paid to an employee declared redundant severance pay at the rate of not less than fifteen days pay for each completed year of service.”
11. There is no dispute with regard to the payment in lieu of notice and 9 days worked in October, 2010. On the issue of accumulated leave, the respondent’s case was that he had accrued a total of 189 leave days; he had never gone on leave for a period of nine years. The appellant’s position was that the appellant had accumulated 164.62 leave days. In this regard the trial court expressed itself as follows;
“ Though the claimant (respondent herein) stated that he never went on leave for the 9 years he worked for the respondent (appellant herein), I note that annexure 76 to 83 outline days taken for leave, some were sold and cash received and others were broken down to facilitate him to take his child to school. He was not honest in this regard and I take the computation of the respondent that indeed leave days were taken and a balance of 164.62 were outstanding and award the same......... I will therefore grant the amount of Kshs. 165,000/= as leave days balance.”
12. It is trite that an appellate court will not interfere with a trial court’s findings of fact based on assessment of the credibility and demeanour of witnesses who gave evidence before it, unless it was wrong in principle. See Tayab - v. - Kinanu (1983) KLR 114. In Hahn - vs- Singh (1985) KLR 716, wherein it was held that before an appellate court can come to a different conclusion from that reached by the High Court Judge, it had to be satisfied that the advantage enjoyed by the judge of seeing and hearing the witnesses was not sufficient to explain or justify his conclusion. It was further held that where there is a conflict of primary facts between witnesses and where the credibility of the witnesses is crucial, the appellate court will hardly interfere with a conclusion made by the trial judge after weighing the credibility of witnesses. See Whitehouse - vs- Jordan (1981) 1 WLR 246,269).
In this case, we see no reason to interfere with the trial court’s finding on the respondent’s demeanor. Equally, we see no reason to interfere with the award for accrued leave.
13. This Court in Central Bank of Kenya –vs- Davies Kivieko Muteti [2009] eKLR emphasized that there is a difference between severance pay and gratuity. Gratuity as correctly enunciated by this Court in Bamburi Cement Ltd –vs-Farid Aboud Mohammed [2016] eKLR denotes a gratis payment by an employer in appreciation of service. There is no express provision for gratuity in the Employment Act. It is usually payable under terms set out in a contract of service or collective bargaining agreement. Severance pay on the other hand, is only payable under Section 40 (g) of the Employment Act where an employee is terminated on account of redundancy. See Hema Hospital –vs- Wilson Makongo Marwa [2015] eKLR. In the current appeal before us the respondent was entitled to severance pay at the rate of not less than fifteen days’ pay for each completed year of service.
14. The next issue that arises is what was the number of completed years of service by the respondent? Like the trial court, we disagree with the respondent on this issue. It is quite clear from the respondent’s own evidence, to wit, his employment identification card which he produced in court, that he was employed on 26th February, 2001. Consequently, he had completed 9 years of service by the time his services were terminated on 9th October, 2010. As such we see no reason to interfere with the trial court’s calculation and award of Kshs. 135,000/= as severance pay.
15. In addition, Section 27 (2) of the Employment Act entitles an employee to at least one rest day in every period of seven days. It is on that basis that the respondent claimed that he was never granted any rest day during his period of service and the trial court awarded a total amount of Kshs. 98,400/=. In doing so, the trial court held that the respondent had worked during a total of 492 rest days entitling him to payment of twice the daily rate, that is Kshs. 2,000/= per day.
16. In our view there wasn’t any clear evidence that the respondent had indeed worked during his rest days. It was not enough for the respondent to just plead the same but the onus was on him to prove this claim which he failed to do so. In
Kenya Airways Limited –vs-Aviation and Allied Workers Union Kenya and 3 others [2014] eKLR, Githinji, J.A stated as follows:-
“By section 20(1) of the Industrial Court Act, the Industrial Court is required to act without undue regard to technicalities and is not strictly bound by the rules of evidence except in criminal cases. That however does not warrant the court to act on conjecture and misapplication of the law...”
We find that the trial court’s findings and award with respect to the rest days worked were unsubstantiated.
17. As far as the claim in relation to public holidays allegedly worked by the respondent was concerned, we concur with the following sentiments of the trial court;
“The claim for work on official public holidays though pleaded the same were not confirmed as to how they arise. This court will decline to make an order in this regard. These must be particularized as to how they arise since each year came with a different set of public and official holidays. The court is cognizant of these differences and it was the claimant’s duty to prove which days he worked that fell under this head.”
Furthermore, upon the respondent’s promotion one of the terms of his service as evidenced in a letter dated 10th March, 2007 was to the effect that he was not entitled to payment for working during public holidays. We set out herein under the relevant extract;
“WORKING HOURS
Working hours shall be as required. You may be required to work at odd hours, public holidays...... etc. at no extra pay.”
Githinji, J.A in Kenya Airways Limited –vs-Aviation and Allied Workers Union
Kenya and 3 others (supra) expressed himself thus:-
“The function of the Industrial Court is limited to interpreting and enforcing only those obligations which the parties to employment relationship have agreed to assume. There is no legal obligation express or implied for the implication into the employment contract of terms that the parties have not agreed to be binding conditions for the mere reason that the court considers it reasonable to do so.”
18. Last but not least, it is not in dispute that firstly, the respondent was a member of the SACCO; secondly, membership of the SACCO exclusively comprised of the appellant’s employees; thirdly, the respondent took out a loan of Kshs. 200,000/= which he had not cleared by the time his services were terminated. DW1, Lilian Muthoni the then chief accountant of the appellant and treasurer of the SACCO, gave uncontroverted evidence that the appellant and the SACCO had an agreement that once an employee is terminated or leaves employment, the appellant should inform the SACCO for purposes of recovering any monies due and thus the deduction of the loan amount by the appellant from the respondent’s terminal dues was in accordance with the SACCO’s bylaws. Having perused the record, we cannot help but note that the respondent did expressly agree in his loan application which was tendered in evidence to be bound by the SACCO’s bylaw hence he cannot at this juncture turn around and allege otherwise. Therefore, we find no fault on the part of the trial court in deducting the loan amount of Kshs. 231,912/= which was inclusive of accrued interest from the respondent’s terminal dues.
19. The upshot of the foregoing is that we find that the appeal has merit and we hereby set aside the award of Kshs. 98,400/= by the trial judge for alleged rest days worked by the respondent. The cross appeal on the other hand, lacks merit and is hereby dismissed. The appellant shall have costs for both the appeal and cross-
appeal.
Dated and delivered at Nairobi this 25th day of November, 2016.
R. N. NAMBUYE
........................
JUDGE OF APPEAL
F. SICHALE
........................
JUDGE OF APPEAL
S. ole KANTAI
..........................
JUDGE OF APPEAL
I certify that this is a true copy of the original.
DEPUTY REGISTRAR