alexa Wrongful firing costs firms big in court cases - Daily Nation

Wrongful firing costs firms big in court cases

Tuesday November 20 2018


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Wrongful termination of senior executive jobs is coming back to hound major Kenyan companies with millions of shillings at stake. One former CEO’s demand even exceeds what the institution made in net profit for the whole of last year.

Among those who have successfully sued for being shown the door illegally are former executives of companies and corporations in which the government has high stake, exposing taxpayers’ money.

Former National Bank of Kenya (NBK) chief executive Munir Sheikh Ahmed move to claim seek Sh453 million is the latest in the rising number of those seeking multimillion shilling awards for wrongful termination.

Mr Ahmed now joins former Kenya Airways finance director Alex Mbugua and Kenya Re managing director Jadiah Mwarania, as well as former National Gender and Equality Commission executive Rose Odhiambo who successfully sued for being illegally fired.

Kenya Airways and Kenya Re have, however, appealed against respective court awards for plaintiffs.

Despite the facts of the case being different, all have similar grounds-that of failure by the respective disciplinary committee to give employees involved fair hearing.

For instance, while ordering reinstatement and Sh64.9 million as salary for the 22 months that Mbugua was out of job, Employment and Labour Relations court Judge Monicah Mbaru said he was not given a fair hearing in the disciplinary proceedings.

The judge gave the airline an alternative of terminating Mbugua’s contract but part with compensation of Sh141.6 million.

Kenya Airways moved to the Court of Appeal and managed to secure an order suspending the reinstatement directive, giving the cash-strapped national carrier some temporary reprieve.

KQ fired Mr Mbugua on grounds of poor performance, but he denies the assertion, noting that he was competent and qualified for the job.

Mwarania, on his part, has successfully regained his job, at least now even as Kenya Re board fights the employment and labour relations court order reinstating him at the Court of Appeal.

While giving him back the job Justice Byram Ongaya noted that Mr Mwarania's termination was unfair as he was not given a chance to be heard.

Justice Ongaya said he should also get full payment for the period he was away, and the board should not interfere or sabotage his job.

The judge said the alternative remedy to reinstatement is award of compensation to Mr Mwarania, which he said will be Sh22.3 million being his gross salary for one year.

He said awarding such a substantial amount to a person who is ready and willing to go back to his job is oppressive and punitive since the firm is a State corporation.

Mr Mwarania was appointed to the helm of Kenya Re on April 11, 2011, but has served the corporation for more than 20 years, including as general manager for reinsurance operations.

His exit was announced in March through a Nairobi Securities Exchange (NSE) notice which indicated that Michael Mbeshi, the reinsurer’s property management general manager, would take over as acting managing director.

Mr Mwarania moved to court alleging unfair termination and obtained orders restraining the board from filling the MD’s position pending determination of the suit.

But Kenya Re Board chairman David Kemei claimed Mr Mwarania lost his job over non-performance.

Mr Kemei claimed that the firm’s performance in the past three years had deteriorated, forcing the board to intervene. Mr Mwarania sought Sh82 million compensation from Kenya Re for wrongful termination of contract.

Ms Rose Odhiambo was awarded Sh11 million by the court for the same reason.

Employment and Labour Relations Court Judge Mathews Nduma ruled that Prof Odhiambo’s sacking by the commission’s board in October 2014, three years to the end of her term was unlawful.

The board fired Prof Odhiambo alleging that she interfered with the tendering process of the staff medical cover, which she denied.

The judge ruled that no evidence of malpractice was produced.

The judge noted that Odhiambo is a high- ranking professor and a former director of the Institute of Equality and Gender Studies at Egerton University who suffered immense indignity at the hands of her new employer, a commission meant to protect the rights of women.

The board, while sacking her, said she allowed alteration of tender documents to show that Resolution Health was the successful bidder when well aware that Britam was the successful firm awarded by the tender committee.

Prof Odhiambo was appointed on October 1, 2012 as chief executive of NGEC for a five-year term but was fired with three years remaining on her contract.

Mr Munir’s claim, however, stands out as the single largest by an individual.

Mr Munir, who was removed from his position for alleged cooking of books, wants the bank to reinstate him to the position of managing director on the terms he enjoyed before his termination or be paid salary and allowances for the 76 months that were remaining on his contract.

He says his termination was un-procedural, unfair, unlawful and wrongful and contrary to the provisions of the Constitution, Employment Act and the Fair Administrative of Actions Act.

Should Mr Munir get the money he is asking for, it will be more than the Sh410.78 million net profit that NBK made in 2017.

The Sh453 million demand includes Sh198.3 million in salary for the remaining period, Sh49.58 million gratuity in lieu of pension, Sh9.5 million for utilities, Sh1.14 million servant allowance and a Sh3.8 million entertainment allowance.

Mr Munir is also asking for Sh2.53 million medical insurance, Sh7.6 million car benefit and Sh126 million in damages for the rest his active career to 60 years.

He further wants NBK to retract the notice it put up linking him to misconduct and governance issues that rocked the lender in 2015.

Mr Munir, who had worked at Standard Chartered Bank in various capacities before joining NBK, alleges that he was given only one day to prepare before facing the bank’s disciplinary hearing held in March ­2016 and had no access to his office.

In April 2018, the Capital Markets Authority (CMA) fined Mr Munir Sh5 million, saying he led the board and other senior managers to overstate profits of NBK for second and third quarters of 2015 in addition to siphoning about Sh1 billion from the bank’s coffers.

It also disqualified him from holding a board position in any publicly listed company or working for a licensed person for a period of three years.

However, in July, the High Court temporarily restrained CMA from demanding the fine after Mr Munir challenged the authority’s decision.

The Director of public Prosecution has already cleared him of any criminal culpability and instead recommended he should be adopted as witness against former officials found to be liable, a decision he is banking on to support his innocence in the case before labour court.