Previous employees of the Teachers Service Commission deployed to a teachers training college taken over by the Kenya Education Staff Institute(KESI) and successfully interviewed and thereafter released to the TSC are employees of KESI

Kenya Education Staff Institute v Kenya Union of Post-Primary Teachers (Kuppet) & 2 others [2020] eKLR

Civil Appeal No. 238 of 2015

Court of Appeal at Nairobi

PN Waki, R Nambuye & MK Koome, JJA

February 7, 2020

Reported by Kakai Toili

Labour Law – employment – employer - employee relationship – factors to consider where the grievants had been employed by the Teachers Service Commission (TSC) and deployed to a teachers training college – where the training college was subsequently taken over by the Kenya Education Staff Institute which successfully interviewed them and deployed them as senior lecturers – where the grievants were subsequently released back to TSC - whether the grievants were employees of the TSC – Employment Act, 2007, sections 2, 7 and 9; Legal Notice No. 565 of 1998, clause 7

Jurisdiction – jurisdiction of the Court of Appeal – jurisdiction to interfere with the findings of fact and exercise of judicial discretion by a trial court - what were the circumstances in which the Court of Appeal could interfere with the findings of fact by a trial court - what were the circumstances in which the Court of Appeal could interfere with the exercise of judicial discretion of a trial court

Labour Law – employment – employment contract – termination of employment contract – unfair termination - factors to consider in determining unfair termination – remedies available for unfair termination – reinstatement – what was the nature of an order for reinstatement - Employment Act, 2007, sections 41, 43, 45 and 49

Brief facts

The grievants were employees of the Teachers Service Commission (TSC) deployed at teachers training college (the college) as senior lecturers. The college was taken over by the appellant through Legal Notice number 565 of 1998 (Legal Notice) and placed under the management of a council comprising permanent secretaries (PS’s) of the 2^nd and 3^rd respondents, Directorate of Personnel Management (DPM), Chief Inspector of Schools and the Secretary to TSC, among others. In April 2006, the appellant advertised job opportunities. It was alleged that the grievants were successfully interviewed by the appellant’s council and subsequently deployed as senior lecturers. It was further alleged that an inter-ministerial committee convened by the PS of the 3^rd respondent advised that the grievants be absorbed fully into the appellant’s establishment. It was further alleged that in March 2007, TSC issued the grievants with GP33, intending to stop paying their salaries effective April, 2007.

It was also alleged that both the appellant’s director and the PS to the 2^nd respondent asked TSC to retain the grievants in its payroll for another three months within which time it was expected they would have been fully absorbed into the appellant’s establishment, TSC obliged. It was claimed that in August 2008, the appellant’s director released the grievants back to TSC. It was also alleged that in November 2008, the appellant notified the grievants to vacate its residential houses, pay rent arrears and other utilities; failing which they would be forcefully evicted. Before the expiry of the said notice the appellant instructed auctioneers to seize the grievants’ goods and sell them to recover rent. The trial court issued orders that the release of the grievants by the appellant to TSC amounted to an unfair termination and ordered the appellant to reinstate the grievants to their jobs among other orders. Aggrieved by trial court’s decision, the appellant filed the instant appeal.

Issues

1. Whether a grievant, who was an employee of the TSC deployed to a teachers training college which was subsequently taken over by the KESI was an employee of the said institute.
2. What were the circumstances in which the Court of Appeal could interfere with the findings of fact by a trial court?
3. What were the factors to consider in determining unfair termination of an employee’s contract of employment?
4. What was the nature of an order of reinstatement?
5. What were the circumstances in which the Court of Appeal could interfere with the exercise of judicial discretion of a trial court?

Relevant provisions of the law

Employment Act, 2007

Section 2

“contract of service” means an agreement, whether oral or in writing, and whether expressed or implied, to employ or to serve as an employee for a period of time, and includes a contract of apprenticeship and indentured learnership but does not include a foreign contract of service to which Part XI of this Act applies;

“employee” means a person employed for wages or a salary and includes an apprentice and indentured learner;

“employer” means any person, public body, firm, corporation or company who or which has entered into a contract of service to employ any individual and includes the agent, foreman, manager or factor of such person, public body, firm, corporation or company;

Legal Notice No. 565 of 1998

Clause 7

1. The council shall appoint, with the approval of the Minister, appoint a Director of KESI.
2. The Council shall appoint and develop suitable professional and supporting staff.
3. The Council shall appoint education officers in charge of education programmes and district and provincial levels as field agents of KESI.
4. The power of the Council to appoint staff, shall include the power to approve persons seconded to the service of the Council.
5. The Council may by a resolution passed by not less than two thirds of the members present and voting at a special meeting convened for that purpose, request the termination of the secondment of any person seconded to the service of the Council under sub-paragraph (4).
6. No final decision to dismiss a person employed by the Council or to terminate his contract, or to request the termination of the secondment of a person seconded to the service of the Council on grounds of misconduct, grave professional default or inefficiency shall be reached until the person has been given the opportunity to appear and answer to the charges against him in person before the Council.

Held

1. Being a first appeal, the court would not lightly differ with the trial court on findings of fact because that court had the distinct advantage of hearing and seeing the witnesses as they testified and was therefore in a better position to assess the extent to which their evidence was credible and believable. Should the court however, be satisfied that the conclusions of the trial court were based on no evidence or on a misapprehension of the evidence on record or that the trial court demonstrably acted on wrong principles, the court was enjoined to interfere with those conclusions.
2. Clause 7(2) of the Legal Notice donated power to the appellant to appoint and develop suitable professional and supporting staff. The power donated in that sub-clause was absolute going by the use of the word shall. Clause 7(4) of the Legal Notice on the other hand provided explicitly that the power of the appellant’s council to appoint staff included the power to approve persons seconded to the service of the council. Vide sub-clause 5 and 6 of the Legal Notice, the appellant enjoyed power to terminate the services of both seconded as well as hired employees through sanctioning by its council. All that was expected of the appellant was for the appellant to convene its council to deliberate and pass a resolution terminating the grievants’ employment with them if they no longer required their services. There appeared to be no provision for a seconded employee to be given a hearing. There was however a mandatory requirement for the council to comply with the prerequisite in sub-clause 6 where there was intention to terminate the services of an employee.
3. No residual power was reserved in clauses 7(2), (4), (5) and (6)  of the Legal Notice for the Public Service Commission (PSC) or the DPM to sanction the appellant’s councils’ employment exercise executed pursuant to the above sub-clauses, before being actioned or given effect to. There was no basis for faulting the trial court’s rejection of the appellant, 2^nd and 3^rd respondents’ reliance on lack of sanctioning of the grievants employment by the PSC or DPM as basis for terminating the grievants employment with them.
4. Section 7 of the Employment Act (the Act) prohibited employment of a person under a contract of service outside the ambit of the provisions of the Act. Section 8 of the Act provided that the Act applied both to oral and written contracts. Section 9 of the Act on the other hand made provision that a contract for the performance of any task by an employee as assigned by an employer in excess of three continuous months had to be in writing. The responsibility of ensuring existence of a written contract for service in excess of three months was cast upon the employer in terms of section 9(2) of the Act.  There was no error in the conclusions arrived at by the trial court finding the grievants were employees of the appellant based on the background information for the following reasons:
   1. Clause 7(2) and (4) of the Legal Notice donating the power to employ in the appellant, made no reservation for the PSC or the DPM to sanction the appellant’s exercise of its mandate under the said clause either to employ or sanction secondment of an officer into its establishment.
   2. No other rule or regulations was pointed out either to the trial court or on appeal as mandating the PSC or the DPM to sanction the appellant’s exercise of its mandate under the said sub-clauses.
   3. Secondment would be evidenced by a communication to that effect from the sending employer to the receiving employer. None was exhibited before the trial court nor pointed out to the court on appeal.
   4. There were clear requests from both the appellant’s own director and the PS for the 2^nd respondent which were never recanted by the said personalities, requesting TSC to continue payment of the grievants’ salaries after they had been successfully interviewed for job placements within the appellant’s establishment, assigned and commenced execution of duties assigned them within the appellant’s establishment as the appellant organized itself. That was sufficient basis for the trial court to find that TSC’s delay in severing employment ties with the grievants was occasioned by the unequivocal requests.
   5. The trial court’s finding that the grievants not only held themselves out but also discharged their duties within the appellant’s establishment as employees of the appellant was well founded on the evidence on the record especially when it was not denied by the appellant. Likewise, the appellant held them out as its employees, that was why it assigned them duties to perform within its establishment and also supervised the performance of those duties.
   6. If the grievants remained employees of the TSC throughout the period they were in the service of the appellant, TSC would not have issued the GP33’s to them nor shifted datelines for stoppage of payment of salaries to the grievants.
   7. The purported rerouting of the grievants to the TSC through direct positing’s by the TSC with penal consequences contrary to the TSC acquiescing to an earlier move for similar reasons was well founded as in terms of the provisions of section 9 of the Act, the grievants were employees of the appellant. Interference with their service with the appellant could only have been sustained if there had been demonstration that the appellant’s council complied with clause 7(5) and (6) of the Legal Notice when relieving the grievants of their employment with the appellant which was not the case in the appeal.
   8. Lack of a formal contract of employment between the appellant and the grievants was not perse evidence of lack of existence of an employer/employee relationship between them, as the obligation to provide a written contract lay with the appellant as the employer in terms of section 9(2) of the Act.
   9. The definition for an employment contract included an implied contract. The fact of the grievants holding themselves out as employees of the appellant by reason of their accepting and diligently performing duties assigned to them by the appellant after their successful employment interviews with the appellant on the one hand; and the appellant likewise holding them out as such, was sufficient basis for implying existence of an employer/employee contract as between the disposing parties.
   10. The reason given for releasing the grievants back to TSC was in contradiction with the reasons given at the trial court by the appellant, 2^nd and 3^rd respondents as reason for the failure to concretize the grievants’ employment with the appellant. It was therefore rightly rejected by the trial court.
5. The employer/employee relationship was also governed by the Act; the appellant ought to have complied with the provisions of the Act with regard to the procedure the appellant ought to have followed when terminating the grievants’ employment with them which was what was set out in sections 41, 43 and 45 of the Act. Sections 45 of the Act made provision inter alia that no employer should terminate the employment of an employee unfairly. In terms of the said section, a termination of an employee was deemed to be unfair if the employer failed to prove that the reason for the termination was valid; that the reason for the termination was a fair reason and that the same was related to the employee’s conduct, capacity, compatibility or alternatively that the employer did not act in accordance with justice and equity.
6. The remedy of reinstatement was pleaded for and therefore lay for consideration by the trial court. It was provided for in section 49(3)(a) of the Act. Factors to be considered by a court when considering reinstatement as an appropriate remedy for an aggrieved employee were set out in section 49(4)(a) to (m) of the Act. The remedy of reinstatement was not an automatic remedy. It was discretionary as each case depended on its own set of circumstances, notwithstanding, that those were not limited to practicability of reinstatement or reengagement of the aggrieved employees and the common law principle that specific performance in a contract of employment should not be ordered except in very exceptional circumstances, which in the appellant’s view, were absent in the appeal. Being a discretionary remedy, the trial court was obligated to exercise the discretion to grant the same within the principles that guided the exercise of judicial discretion when granting a discretionary remedy that was; with reason, and not on whim, caprice or sympathy.
7. The appellant was in breach of the procedure it was obligated to follow when terminating an employee’s employment with them as provided for in clause 7(5) and (6) of the Leal Notice. Lack of sanctioning of the grievants’ absorption into the appellant’s establishment was not the reason advanced for their release back to the TSC which amounted to lack of good faith and good will on the part of the appellant in its dealings with the grievants.
8. Whenever the court was called upon to interfere with the exercise of judicial discretion, on appeal, the court ought not to interfere with the exercise of such discretion unless it was satisfied that the trial court misdirected itself in some matter and as a result arrived at a wrong decision, or that it was manifest from the case as a whole that the trial court was wrong in the exercise of discretion and therefore occasioned an injustice. There was no fault on the reasons the trial court advanced for granting the remedy reinstatement. The variance in the reasons given in the release letters, and the trial and on appeal was a clear demonstration of lack of good faith and good will in the appellant’s dealings with the grievants.
9. With the exception of the award for payment of twelve (12) months’ salary compensation for unlawful termination and top up salaries in difference of salaries as paid by TSC and the equivalent earned by the appellant’s staff of the same rank, the rest were remedies attendant to the order for reinstatement because, in law, an employee restored to his former position was entitled to all the benefits attendant to such reinstatement.
10. Section 49 of the Act made provision for a wide range of remedies. The exercise of jurisdiction under section 49 of the Act was discretionary. The award of twelve (12) months’ salary compensation was not sustainable because of the following:
    1. It was not pleaded for.
    2. There was nothing in the findings of the trial court set out to demonstrate that the trial court was addressed by the parties on that award so as to infer that parties by their conduct of addressing the trial court on that issue thereby invited the court to rule on it.
    3. In the manner framed, it could easily pass in law as an alternative remedy. There was no jurisdiction to award an alternative remedy in instances where consideration for the main remedy awarded preceded consideration for the award of the alternative remedy. The award of 12 months’ salary compensation was unsustainable.
11. As for the top up salaries, that was neither pleaded for nor proved going by the fact that nowhere in the trial court’s assessment of the record was it highlighted that, the grievants raised any complaint of being under paid. They accepted salaries as paid for by TSC awaiting absorption into the appellants’ establishment.

Appeal partly allowed; each party to bear own costs.

Orders

1. Orders  affirmed were as follows:

1. That the appellant’s termination of the grievants’ employment with them was unfair.
2. That the grievants were entitled to an order for reinstatement into the appellant’s employment together with all attendant benefits for an employee reinstated back to his/her employment.

2. The reliefs disallowed were as follows:

1. Payment of salary compensation for 12 months.
2. Payment of the difference in salary if any earned by the grievants as paid by the TSC and the equivalent earned by their counterparts then in the appellant’s employment at the material time.

Editorial Note

The judgment was signed under rule 32(3) of the Court of Appeal Rules since PN Waki, JA ceased to hold office of judge of appeal upon retirement from service.

Whether the making of determinations about issues that were allegedly not in the pleadings is an error in the judgment which warrants a review.

Bank of Baroda (Kenya) Limited v Margaret Njeri Muiruri

Civil Appeal (Application) 282 of 2004

Court of Appeal at Nairobi

P N Waki, D K Musinga & S Gatembu Kairu, JJA

October 25, 2019

Reported by Beryl Ikamari

Civil Practice and Procedure – review - grounds for review – errors - whether the making of determinations, with respect to issues that were alleged not to part of the pleadings, was an error warranting the exercise of review jurisdiction by the Court.

Brief facts

The applicant sought a review of the Court of Appeal's judgment delivered on October 10, 2014. It related to the question of variation of interest rates without seeking the relevant minister's approval under section 44 of the Banking Act. The Court of Appeal made determinations, inter alia, that there was no evidence that the interest rates charged by the applicant were in accordance with section 44 of the Banking Act and it was manifestly excessive and morally wrong. The court issued orders for the preparation of statements of account, by the appellant in that appeal, which included interest rates charged at different times and any amount claimed by the bank to be outstanding in each account. The orders issued also required remission of the matter back to the High Court for a determination relating to the indebtedness of the deceased's estate to the bank and whether the interest rate charged was legal. 

The grounds for review were that there were errors in the judgment. The first one was that there were determinations relating to section 44 of the Banking Act and yet the issue on the import of that provision was not pleaded by the parties or before the court for determination. The second error was that the court relied on excerpts supposedly of the applicant’s witness’ testimony given in the High Court  but those excerpts were not reflected in the proceedings on record.

Issues

1. Whether the court made determinations with respect to an issue that was not in the pleadings or before it for determination.
2. Whether the making of determinations in a judgment, with respect to issues that were allegedly not in the pleadings, was an error in the judgment which would allow the court to exercise its review jurisdiction.

Held

1. The issue concerning the interest rate chargeable by the bank arose in the pleadings. Issue number 8 of the list of agreed issues for determination was on the applicable interest rate. The issue was also canvassed during the proceedings. PW1 said that the interest rate chargeable was unimaginable and like robbery and DW1 stated that he was unaware if the approval of the minister was sought with respect to the interest rate.
2. The apparent intention behind the application was to have another bite at the cherry. A review application was not an opportunity for the applicant to re-litigate his or her case. The applicant had to lay a basis that would satisfy the court and cause it to exercise its discretion.
3. The application did not meet the applicable legal principles and it was not appropriate for the court to exercise its residual jurisdiction of review.

Application dismissed with costs to the respondent.