REPUBLIC OF KENYA

IN THE EMPLOYMENT AND LABOUR RELATIONS COURT

AT NAROBI

CAUSE NO 2027 OF 2015

STELLA W. MURAGURI.........................................................................CLAIMANT

VERSUS

EDWARD KAMAU MURIU, PETER MUNGE MURAGE,                                       

NJOROGE NANI MUNGAI, ESTHER NJIRU OMULELE,                                     

ISAIAH MUNGAI KAMAU                                                                                           

T/A MURIU MUNGAI & CO. ADVOCATES............................1^ST RESPONDENT

NGORONGORO RAPIDS LIMITED........................................2^ND RESPONDENT

JUDGMENT 

Introduction

1. Stella W. Muraguri, the Claimant in this case, states that she was an employee of the 1^st Respondent, working in the position of Legal Associate. She instituted this claim following her exit on 13^th May 2015.

2. The claim is documented by a Statement of Claim dated 30^th October 2015 and filed in court on 25^th January 2016.  The 1^st and 2^nd Respondents filed their respective Responses on 21^st December 2015 to which the Claimant responded on 8^th September 2016.

3. The matter was initially heard by O.N Makau J, who took the Claimant’s testimony. With concurrence of the parties, I proceeded to hear the case at the defence stage.  The Respondents called two witnesses; Peter Munge, Managing Partner at the 1^st Respondent and a Director of the 2^nd Respondent, and James Mwangi, an employee of the 2^nd Respondent. Both parties further filed written submissions.

The Claimant’s Case

4. The Claimant avers that the 1^st and 2^nd Respondents are one and the same entity, sharing similar directorship, same physical address, postal address and staff members. She adds that the 2^nd Respondent hires employees on behalf of the 1^st Respondent and thereafter seconds them to the 1^st Respondent.  She claims that the 2^nd Respondent is a shell company incorporated for purposes of protecting liability of the 1^st Respondent and that salaries and terminal dues are paid by the 1^st Respondent.

5. The Claimant states that she was employed by the Respondents on 1^st August 2012 and upon confirmation, was issued with a contract on 12^th November 2012 with a monthly salary of Kshs 73,500 plus a transport allowance of Kshs 5,000.   By the time the Claimant left employment, her salary had been reviewed upwards to Kshs 195,000.

6. The Claimant avers that in March 2013, the 1^st Respondent was instructed by the Independent Electoral and Boundaries Commission (IEBC) to handle the presidential election petition and other election petitions and appeals.

7. The Claimant states that, being the only Associate selected to join the team handling the election petitions and appeals, the Respondents convened a meeting where it was agreed that she would be paid a commission of 10% of the legal fees paid by IEBC. The Claimant states that based on this agreement, she was paid Kshs 387,500 as a deposit.  The Claimant claims that the Respondents later received fees amounting to Kshs 19,500,000 but failed to pay her commission amounting to Kshs 1,950,000.

8. The Claimant avers that on 5^th May 2015, the 1^st Respondent conducted a review based on 4 key areas; file management, portfolio management, attitude and financials. According to the Claimant, it was noted that her work was unimpeachable and that clients under her portfolio had increased in number. She adds that she was marked low on the attitude index and was therefore suspended for 2 days.

9. The Claimant further avers that on 12^th May 2015, the Managing Partner, Peter Munge, summoned her to his office and informed her that during her suspension, the 1^st Respondent had decided to terminate her services due to her attitude and sour relationship with her supervisor, Ms. Nancy Karanu.

10. The Claimant claims to have asked whether the termination was due to her pregnancy and the Managing Partner responded that pregnancy had been known to affect work flow in the Law Firm but that he was not at liberty to disclose whether that was a consideration. The Claimant states that the Managing Partner offered her 4 months’ pay plus her leave and commissions on condition that she would tender her resignation. She adds that the Managing Partner asked her to return to the office the next day to collect her cheque, in the event that she agreed to resign.

11. The Claimant avers that after the meeting, she went to her desk and requested for three files that were all personal matters being;

a) Succession Cause 1223/2014: In the matter of the Estate of Simon Ngugi Muraguri (the Claimant’s deceased father);

b) Industrial Cause No 33/2013: Ben Muraguri & 3 others v Corporate Travel Management (a case involving the Claimant’s brother);

c) A file on Ms. Rose Wangari Muraguri: a matter where the Claimant had drafted demands over a commercial matter on behalf of her mother.

12. The Claimant claims to have received a text message from the Human Resource, Manager, Ms. Vundi on 13^th May 2015 stating:

“Mr. Munge…says you can come for the cheque at noon.”

13. The Claimant states that Ms. Vundi called her to her office and asked her to type the resignation letter from Ms. Vundi’s laptop. The Claimant adds that, while at Ms. Vundi’s office, she was accosted by two plain clothes police officers, who stated that they were from Spring Valley Police Station.  The police officers informed the Claimant that the Managing Partner had lodged a complaint against her, to the effect that she had stolen files from the office.

14. The Claimant goes on to state that she accompanied the police officers to the Station, where she requested for an OB number but the officers declined to issue one in the absence of a statement admitting the theft.

15. The Claimant states that the Managing Partner later arrived at the Police Station and gave an undertaking in writing that if the files were returned, he would not pursue the criminal matter. The Claimant returned the files and at the direction of the Inspector did an apology.

16. The Claimant claims that she did a handwritten resignation letter under duress, coercion and undue influence at the Police Station, after which she was released.

17. The Claimant lays a claim for unlawful and unfair dismissal and seeks the following remedies:

a) A declaration that the 1^st and 2^nd Respondents are one and the same entity and are jointly and severally liable for the damages that are to be awarded by the Court;

b) A declaration that the Claimant was unlawfully and unfairly terminated by the Respondents under section 49 of the employment Act and is entitled to Kshs 2,340,000;

c) A declaration that the Claimant was discriminated on the basis of her pregnancy and was unlawfully terminated;

d) A declaration that the Respondents unlawfully withheld the Claimant’s salary for the month of May 2015, Kshs 195,000 and her transport allowance of Kshs 10,000;

e) House allowance under Section 31 of the Employment Act: (29,250 x 34 months= 994,500);

f) Dues for 15 leave days: Kshs 97,500;

g) Commission for handling and successfully concluding IEBC matters: Kshs 1,950,000;

h) Breach of the Claimant’s constitutional rights: Kshs. 1,000,000;

i) An order directing the Respondents to issue the Claimant with a Certificate of Service;

j) Costs of the suit.

The Respondents’ Case

18.  The Respondents filed separate but identical responses, which will therefore be dealt with together.

19. In its Response to the Statement of Claim, the 1^st Respondent denies being the Claimant’s employer and avers that the 1^st and 2^nd Respondents are different and separate entities. The 1^st Respondent maintains that the contract of employment in issue was between the Claimant and the 2^nd Respondent and that the 1^st Respondent is not privy to the said contract.

20. The 1^st Respondent avers that after being seconded from the 2^nd Respondent, the Claimant was posted to the Dispute Resolution Department where she, among others, was involved in handling matters on behalf of the IEBC.

21. The Respondents state that the Claimant was paid a bonus of Kshs. 350,000 for her role in election petitions but deny that this was a commission as claimed by the Claimant.

22.  The Respondents further state that upon review of the Claimant’s performance for the period ending December 2013, her performance on relationship with other staff was found to be below expectation. Her performance in other areas was however satisfactory and hence her salary was reviewed upwards. She was placed under the direct supervision of a senior partner so as to improve on her weak areas.

23. The Respondents also state that they conducted a review of all staff in May 2015, based on four (4) aspects being; people perspective, customer perspective, internal processes and financial perspective. The Respondents assert that the Claimant was found wanting in the people perspective as she was rude to her colleagues. The Respondents add that the Claimant’s superiors discussed her shortcomings with a view to placing her on a Performance Improvement Program. The Respondents deny that the Claimant was suspended and state that it is her who requested for a two-day break to reflect on the emerging developments.

24. The Respondents allege that a follow up meeting was held where the Claimant indicated that she was considering resignation, rather than continuing to work with one of her direct supervisors. The Respondents state that efforts to persuade the Claimant otherwise were in vain and eventually, the Head of Department agreed to accept her resignation once received. The Head of Department is said to have promised to make a proposal to the Partnership Board to pay the Claimant one month’s salary, leave days and another month’s pay on ex gratia basis to enable her open her own Law Firm.

25. The Respondents further state that on 12^th May 2015 at around 8.30 pm, the Head of Department was informed that the Claimant was carrying away files, through the back door, in a suspicious manner.

26. According to the Respondents, it was discovered, on 13^th May 2015, that three (3) files, HCCC No 1377 of 2013, HCCC No 18 of 2014 and HCCC 79 of 2014 were missing and all their information and records had been deleted from the office and/or file management system. The Respondents state that none of the said files were concerned with a client related to the Claimant, as alleged by her.

27. The Law Firm reported theft of the said files at Spring Valley Police Station and the Claimant was arrested. The Respondents aver that the Claimant offered to return the aforementioned files and gave a written apology. They add that the Claimant stated that due to the issue at hand, she was resigning from the Law Firm.

28. The Respondents contend that the Claimant’s resignation was on her own initiative and volition, as in her view, her employment was no longer tenable. They state that the Claimant opted to write the resignation letter immediately, without coercion.

29. The Respondents maintain that the Claimant’s claim is frivolous and malicious and actuated by ulterior motive and should be dismissed with costs.

Findings and Determination

30. There are three (3) issues for determination in this case:

a) Whether the Claimant was an employee of the 1^st or 2^nd Respondent;

b) Whether the actions of the Respondents amounted to constructive dismissal;

c) Whether the Claimant is entitled to the remedies sought.

Who was the Claimant’s Employer?

31. The Claimant’s case is that she was an employee of the 1^st Respondent, who intentionally made her execute a contract with the 2^nd Respondent, in order to escape future liability and submits that both entities should be held jointly liable for the actions taken against her.

32. On their part, the 1^st and 2^nd Respondents maintain that the Claimant was an employee of the 2^nd Respondent and that the two entities are separate. They further maintain that the 1^st Respondent was not privy to the Claimant’s employment contract and that the Claimant was on secondment with the 1^st Respondent.

33. Section 2 of the Employment Act defines an employer as:

“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.”

34. Black’s Law Dictionary (Tenth Edition) defines an employer as:

“A person, company or organization for whom someone works; esp., one who controls and directs a worker under an express or implied contract of hire and who pays the worker’s salary or wages.”

35. In its decision in Kenya Methodist University v Kaungania & another (Civil Appeal 61 of 2017) [2022] KECA 90 (KLR) the Court of Appeal addressed the issue of secondment in the following terms:

“…. while employment involves doing work for which one has been hired and is being paid by an employer, secondment is defined in Oxford Dictionary as the act of transferring a worker temporarily to another employment or position, and therefore under another employer. In effect, the employee does not undertake any work for the original employer during the period of secondment. Therefore, in a situation where a person is employed on secondment, the substantive and principal employer in our view is the person or entity that has assigned the employee specific duties which are remunerated by a salary or wages during that period of employment. The person or entity that seconds such a person is the nominal employer whose powers and duties are reinstated once the secondment ends and are residual during the period of secondment…”

36. It is not in dispute that the Claimant and the 2^nd Respondent executed a contract on 12^th November 2012, whose terms were to the effect that the Claimant would be seconded to the Law Firm of Muriu Mungai and Company Advocates, the 1^st Respondent herein. Thereafter, the 1^st Respondent took over and was responsible for payment of the Claimant’s salary and all the statutory dues. From the pleadings and evidence before the Court, it is evident that the 1^st Respondent was in charge and full control of the Claimant. There was no inkling that the Claimant would ever work for the 2^nd Respondent. 

37. By its conduct, the 1^st Respondent fully recognized the Claimant as its employee, including holding her out as such to 3^rd parties. On 26th August 2013, the 1^st Respondent wrote to ECO Bank as follows:

“Dear Sirs,

RE: STELLA WANGUI MURAGURI

We refer to the above named person who has been an employee with our Firm since 1^st August, 2012…

We confirm that we have instructions from the above named employee to be remitting her monthly installments by check off as per the memorandum of understanding with the bank. We will also inform Eco Bank of her resignation from employment with ourselves, prior to settlement of any outstanding payments. In event of such an occurrence, we confirm that we have instructions from the employee to transfer any final settlement to the account held with yourselves.

Please give her the necessary support on her loan application process.

Yours Faithfully

(signed)

P Munge Murage

Managing Partner

MURIU, MUNGAI & COMPANY ADVOCATES.”

38. I do not need to say more on this issue; the 1^st Respondent was evidently the Claimant’s employer and I so find.

Constructive Dismissal?

39. The Claimant claims to have been coerced to resign by her employer’s conduct and the employer states that the Claimant herself voluntarily resigned from employment.

40. In her final submissions, the Claimant referred to the decision in Coca Cola East & Central Africa Limited v Maria Kagai Ligaga [2015] eKLR where the Court of Appeal established the principles of determining constructive dismissal as follows:

a) What are the fundamental or essential terms of the contract of employment?

b) Is there a repudiatory breach of the fundamental terms of the contract through conduct of the employer?

c) The conduct of the employer must be a fundamental or significant breach going to the root of the contract of employment or which shows that the employer no longer intends to be bound by one or more of the essential terms of the contract.

d) An objective test is to be applied in evaluating the employer’s conduct.

e) There must be a causal link between the employer’s conduct and the reason for the employee terminating the contract i.e. causation must be proved.

f) An employee may leave with or without notice so long as the employer’s conduct is the effective reason for termination.

g) The employee must not have accepted, waived, acquiesced or conducted himself to be estopped from asserting the repudiatory breach; the employee must within a reasonable time terminate the employment relationship pursuant to the breach.

h) The burden to prove repudiatory breach or constructive dismissal is on the employee.

i) Facts giving rise to repudiatory breach or constructive dismissal are varied.

41. There is no doubt that the events leading to the Claimant’s exit from employment were not ordinary. There appears to have been a performance review that did not go well and there was a serious allegation about the Claimant taking away client files, without authority. There is also the striking detail of the Claimant handing in her resignation at a police station.  The question to ask is whether the employer’s conduct in handling the grievance amounted to constructive dismissal.

42. In Milton M. Isanya v Aga Khan Hospital [2017] eKLR the Court stated:

“In constructive dismissal the desire to resign is from the employee as a result of hostile working environment or treatment by the employer. A constructive dismissal occurs where the employer does not express the threat or desire to terminate employment but frustrates the employee to the extent that the employee tenders resignation.”

43. In their written submissions, the Respondents relied on the decision in Sophie Muthoni Njagi v Rift Valley Railways (Kenya) Limited [2020] eKLR where the Court cited the earlier decision in Nathan Ogada Atiagaga v David Engineering Limited (Cause No 419 of 2014) where constructive dismissal was defined thus:

“Constructive dismissal occurs when an employee resigns because their employer’s behavior has become so intolerable or made life so difficult that the employee has no choice but to resign. Since the resignation was not truly voluntary, it is in effect a termination. For example, when an employer makes life extremely difficult for an employee to force the employee to resign rather than outright firing the employee, the employer is trying to effect a constructive discharge.”

44. To my mind, not every involuntary resignation amounts to constructive dismissal. The threshold for constructive dismissal is achieved where the involuntary resignation has a direct causal link with the employer’s conduct, which may reasonably be described as intolerable. It cannot be said to be constructive dismissal, when an employee resigns to get out of a tight spot.

45.  The Claimant admitted, in writing, that she had taken some client files without authority and this is the reason she and her superior were at the Police Station. The Claimant, who was evidently not an innocent employee, took the easy option and tendered her resignation. She cannot now turn around and allege constructive dismissal.     

46. This dispenses with the claims for compensation for wrongful dismissal, which are disallowed. 

Other Claims

47. The Respondents submit that the salary due to the Claimant for the month of May 2015 plus pay in lieu of unutilised leave days were applied towards offsetting salary in lieu of notice, as the Claimant resigned without giving the requisite notice, as provided in her contract of employment. The Claimant did not lead any evidence to counter this position and the claims for salary for May 2015 and leave pay, therefore fail and are dismissed.

48. The Claimant also claims house allowance. However, according to her contract of employment, she was paid a consolidated salary, which would ordinarily be inclusive of house allowance. This claim therefore also fails and is disallowed.

49. The Claimant made a general complaint that she was discriminated against on account of pregnancy but did not provide any particulars of discrimination. It is now well established that for a claim of discrimination on account of pregnancy to succeed, the complaining employee must at the very least, establish a nexus between an adverse employment decision and her pregnancy (see GMV v Bank of Africa Kenya Limited [2013] eKLR). This was not done in this case and the claim for discrimination therefore fails and is disallowed.

50. From the conduct of the parties, the terms and conditions of service were to be agreed upon in writing and as held in Ahmed Salim Bahannan v Foton East Africa [2016] eKLR a written contract cannot be varied by a subsequent oral agreement, unless that variation is implemented by the parties. The Court did not find any agreement on payment of commission to the Claimant and the claim thereon must therefore fail.

51. Finally, the only order I will make is that the Claimant be issued with a Certificate of Service.

52. Each party will bear their own costs.

53. Orders accordingly.

DELIVERED VIRTUALLY AT NAIROBI THIS 17^TH DAY OF MARCH 2022

LINNET NDOLO

JUDGE

Appearance:

Mr. Change for the Claimant

Miss Rotich for the Respondents