An Employment and Labour Relations Court has ruled that employees who are unfairly dismissed cannot automatically claim the salaries, benefits, and allowances they would have earned until retirement.
The decision came in a case involving an accounts clerk at a private mission hospital and is expected to guide how similar employment disputes are handled in the future.
The dispute began after the hospital accused the employee of irregularities involving transport reimbursements for a paediatric clinic programme.
According to the hospital, transport allowances had been paid to 70 participants even though only 34 people were said to have attended the event. The employee denied being responsible for the alleged loss but was subjected to disciplinary action that eventually led to his dismissal.
He later challenged the decision in court, where a lower court found that he had been unfairly dismissed.
The court ordered the hospital to compensate him, including projected earnings and benefits that would have extended to his retirement age.
The hospital appealed the decision, arguing that both the finding of unfair termination and the amount awarded were incorrect. When the matter reached the Employment and Labour Relations Court in Kericho, Justice Anna Ngibuini Mwaure agreed that the dismissal had been unfair because the hospital failed to prove the allegations against the employee.
The judge noted that conflicting evidence from the hospital’s own witnesses weakened its case and left the court unconvinced that the accounts clerk was responsible for the financial irregularities.
Although the court found that the employer had largely followed the required disciplinary procedures, it ruled that there was insufficient evidence to justify the dismissal.
However, the judge also found that the lower court had gone too far in awarding compensation based on future earnings up to retirement.
She explained that employment relationships are not guaranteed to continue until retirement and that such awards have no legal basis under the Employment Act.
As a result, the employee was awarded one month’s salary in lieu of notice, seven months’ compensation for unfair termination instead of the 12 months previously granted, and limited accrued benefits. The total award came to KSh577,775.70.
The ruling sends an important message to employers that accusations of gross misconduct must be supported by credible evidence before dismissing an employee.
At the same time, it makes clear that courts are unlikely to award damages based on speculative future salaries and retirement benefits when determining compensation for unfair termination.
