MTRH ordered to pay ex-employee after Court rules employers must prove fair termination

The Court of Appeal has ruled that employers bear the legal burden of justifying an employee’s dismissal once termination has been established, declaring the sacking of a former Moi Teaching and Referral Hospital (MTRH) employee unfair after finding that he was dismissed without effective notification of disciplinary proceedings.

In a judgment delivered in Nakuru on October 9, 2026, the court allowed part of an appeal by Hosea Kipkorir Serem, a former billing clerk at the hospital, and ordered the institution to pay him salary and allowances withheld during his suspension, alongside compensation equivalent to 12 months’ gross salary.

The three-judge bench, comprising Justices J. Mativo, Murungi B. Kairaria and Ahmed Issack, also ruled that the hospital’s decision to backdate his termination to May 7, 2012, had no legal effect.

The court set aside the earlier judgment of the Employment and Labour Relations Court, which had found the termination lawful and dismissed Serem’s claims.

Serem joined the hospital in April 2001 and was working as a billing clerk in its amenity wing when he was implicated in the disappearance of hospital cheques in 2012.

One cheque, worth Sh890,222 and payable to Dr Pallavi Mishra, was handed to a woman who was not the named payee at the hospital’s memorial wing cash office in December 2011.

A second cheque worth Sh78,880, payable to Davis & Shirtliff, was also reported to have been misappropriated.

Serem, another hospital employee, Judith Jemeli Kesse, and Kennedy Emoche Sirari were arrested and charged in connection with the matter.

On May 8, 2012, the hospital issued Serem with a letter titled “Suspension/Show Cause”, outlining allegations that included involvement in a corrupt practice, abuse of office and committing or being suspected of committing a criminal offence to the detriment of the employer’s property. He was suspended without pay.

Serem denied involvement in a response dated May 11, 2012, stating that he worked as a billing clerk and did not handle cheques.

The hospital’s disciplinary committee initially recommended in August 2014 that the institution await the outcome of the criminal case.

However, in July 2015, the committee proceeded to consider his case in his absence and recommended termination after he failed to attend a disciplinary meeting.

MTRH maintained that it had invited Serem to appear before the disciplinary committee on July 28, 2015.

It relied on an invitation letter dated July 21, sent by registered post to his last known postal address. The letter was returned uncollected.

The Court of Appeal found that the hospital had not demonstrated that Serem had been notified of earlier disciplinary meetings.

It also found that the final invitation had not reached him before the hearing and that the hospital had made no reasonable further attempt to notify him.

The judges held that an employer cannot rely on a disciplinary process that does not give an employee a genuine opportunity to respond to the allegations.

The ruling stated: “The appeal succeeds in part.” The court subsequently declared the termination unfair under Section 45 of the Employment Act.

The decision reinforces the distinction between an employer alleging misconduct and demonstrating that the resulting dismissal was procedurally and substantively fair.

Serem was acquitted on September 11, 2015, after the criminal court found that the prosecution had not established a case to answer. He was not placed on his defence.

The Court of Appeal noted that the allegations against him had never been resolved on their merits in either forum.

It also considered the hospital’s failure to revisit its decision after the acquittal, despite a note by one of its officers, when assessing the compensation due.

The judges took into account his 14 years of service, the absence of a disciplinary record before the court, more than three years on suspension without pay, and the circumstances in which his employment was terminated.

The court observed that the termination had been decided in his absence, backdated by more than three years and never communicated to him.

In its assessment of compensation, the court stated that it considered “the manner of the termination, decided in his absence, back-dated by more than three years and never communicated to him.”

The court ordered the hospital to pay Serem the salary and allowances withheld between May 7, 2012, and August 27, 2015, as well as compensation equivalent to 12 months’ gross salary at the rate applicable when his suspension began.

The exact amounts are to be calculated using the hospital’s records, subject to lawful statutory deductions.

If the parties fail to agree on the computation within 45 days of the judgment, the matter will return to the Employment and Labour Relations Court for that limited purpose before a different judge.

The withheld salary will attract interest at court rates from January 18, 2016, when Serem filed his claim, while the compensation will attract interest from the date of the Court of Appeal judgment until payment in full.

The hospital was also ordered to issue him with a certificate of service in accordance with Section 51 of the Employment Act and to meet the costs of the appeal and the proceedings before the Employment and Labour Relations Court.

However, the court declined his prayers for reinstatement, Sh6 million in general damages and separate damages for alleged violations of constitutional rights, finding that he had not demonstrated additional loss beyond that covered by the salary award and statutory compensation.