THE FINE LINE: RESIGNATION OF EMPLOYEE AFTER GROSS MISCONDUCT – CASE ANALYSIS

 

 

ANALYSIS OF THE JUDGEMENT OF THE COURT OF APPEAL AT NAKURU IN CIVIL APPEAL NO. NAK 29 OF 2020 IN THE CASE OF PETER NJUGUNA CHEGE (APPELLANT) VS TIMSALES LIMITED (RESPONDENT)

(Being an appeal arising from the judgment issued by the Employment and Labour Relations Court of Kenya at Nakuru (Mbaru, J.) in ELRC Cause No. 58 of 2019 dated 27th April 2020  

CORAM: WARSAME, MATIVO & GACHOKA, JJ.A

The Judgement of the court in this case is on the specificity of a decision that an employee cannot avoid disciplinary action by resigning or retiring after being accused of misconduct. The court’s decision addressed the practice of using last-minute resignations to escape accountability for wrongdoing.

Highlights of the court's decision

The case: The courts stand came from an appeal by a former Timsales Limited employee, Peter Chege. Chege had resigned after disciplinary proceedings began against him following an unprotected strike.

Affirmation of trial court: The Court of Appeal upheld a 2020 Employment and Labour Relations Court (ELRC) decision that found Chege's purported retirement was an attempt to evade lawful disciplinary action.

Resignation deemed invalid: The appellate court ruled that the employee's retirement notice was invalid because it was made after the disciplinary process had already started.

Authored own termination: By resigning, the court found the employee had "authored his own termination" and dismissed his claims for benefits and damages. 

Background

The appellant, Peter Njuguna Chege, was employed by the respondent, Timsales Limited. In July 2018, employees, including the appellant, demanded delayed salaries. On 25th July 2018, the respondent locked out the employees alleging participation in an unprotected strike and/or absconding from duty. The appellant’s union challenged this lockout in ELRC Cause No. 1282 of 2018 but the claim was dismissed on 21st June 2019, with a directive to proceed with disciplinary hearings.

Following this, the appellant issued notices on 1st July 2019 requiring the grievants, including himself, to show cause for absconding and malicious damage. The appellant claims he opted to retire under clause 18 of the collective bargaining agreement (CBA) at age 47 and communicated his retirement on 30th June 2019. However, the respondent allegedly refused to accept this notice and denied him access to their premises. The appellant was dismissed on 1st August 2019.

The appellant instituted ELRC Cause No. 58 of 2019 seeking declarations that his employment was continuous, the disciplinary process and dismissal null and void, and that refusal to pay retirement benefits was unfair labour practice violating constitutional rights. He sought payment of retirement benefits, gratuity, leave pay, compensation, a certificate of service, costs, and interest.

The Employment and Labour Relations Court (ELRC) dismissed the appellant’s claims, holding that the retirement notice could not sanitize gross misconduct and that the appellant authored his own termination. The appellant appealed.

Issues under scrutiny and deliberation of the court in the cause were;

   i.      Whether the appellant’s retirement from employment was valid.

 ii.      Whether the disciplinary process and resultant dismissal were lawful.

iii.      Whether the appellant was entitled to retirement benefits and other reliefs claimed.

 

The court relied on and was persuaded by legal provisions and authorities such as;

1. Section 80(1)(a) of the Labour Relations Act (LRA), which speaks on participation in an unprotected strike as a breach of contract subject to disciplinary action. 

2. Section 41 of the Employment Act, 2007, which requires fair disciplinary procedures including notice and opportunity to be heard. 

3. Section 35 of the Employment Act, 2007, which mandates notice periods for termination of employment, including retirement. 

4. ELRC decision in Edwin Beiti Kipchumba v. National Bank of Kenya Limited [2018] eKLR -A resignation or retirement notice is a unilateral act by the employee and does not require employer acceptance to be effective. 

5. Kenya Hotels & Allied Workers Union v. Mara Siria t/a Safari Camps (K) Ltd [2016] eKLR)-An employer’s jurisdiction to discipline depends on the existence of an employment relationship; once employment ceases, disciplinary jurisdiction ends. 

6. Supreme Court of India in Mahanadi Coalfields Ltd. v. Rabindranath Choubey [2020] 18 SCC 71 - Retirement without notice or to evade disciplinary proceedings is invalid and can be disregarded 

7. The Employment Act, 2007, and the CBA govern the terms of retirement and disciplinary procedures. 

 

The Court’s Decision

The Court of Appeal affirmed the ELRC decision dismissing the appellant’s appeal. The Court found the appellant’s purported retirement notice invalid because it was served without the required notice and was an attempt to evade a lawful disciplinary process initiated after a court ruling. The disciplinary process was lawful and backed by the court’s earlier ruling that the strike was unprotected.

The Court held that the appellant remained an employee subject to disciplinary proceedings until valid retirement. The appellant failed to attend the disciplinary hearing and thus lost the opportunity to defend himself. The Court rejected the claim for retirement benefits and other reliefs, finding no violation of constitutional or employment rights.

The appeal was dismissed with costs, and the trial court’s judgment was affirmed.

Ratio Decidendi

The binding principle is that an employee cannot evade a lawful disciplinary process by purporting to retire without giving the required notice as stipulated by law or the collective bargaining agreement. Retirement or resignation is a unilateral act that must comply with notice requirements, and a retirement notice served to circumvent disciplinary proceedings is invalid and can be disregarded. The employer retains jurisdiction to discipline an employee until the employment relationship lawfully ceases.

Obiter Dicta

The Court noted that had the appellant submitted a valid retirement notice in accordance with the law and CBA, the disciplinary proceedings would not have been applicable. The Court also observed that the existing legal framework does not limit an employee’s right to terminate employment but requires compliance with notice provisions.

The Court emphasized the importance of upholding due process in disciplinary matters and avoiding sanctioning gross misconduct by allowing retirement notices served in bad faith.

 

---

DIGEST

Implications for employees and employers

The decision as analysed above has significant implications for both parties in the employment relationship:

Employees cannot therefore use resignation or retirement to outsmart the disciplinary process. If you are accused of misconduct, you must face the lawful outcome, which may include clearing your name or having the incident on your record.

Employers now have greater power to manage the workplace and reinforces the validity of their internal disciplinary processes. It protects employers from having their disciplinary authority manipulated through tactical resignations. 

Distinctions between immediate and notice resignations

The court's decision hinges on when the resignation or retirement was submitted in relation to the disciplinary process. For example, some legal analysis points to a distinction in other jurisdictions: 

Immediate resignation: In certain contexts, if an employee resigns with immediate effect before a disciplinary process is fully concluded, some courts have ruled that the employer loses jurisdiction to continue the proceedings because the employment contract is terminated. 

Resignation with notice: However, if the employee resigns with notice, the employer can generally proceed with the disciplinary process during the notice period. A finding of gross misconduct during this time can override the resignation. 

Related Cases and Legal Precedents

Edwin Beiti Kipchumba v. National Bank of Kenya Limited [2018] eKLR

This case supports the principle that a notice of termination by an employee (resignation or retirement) does not require acceptance by the employer to be effective. It was cited by the appellant to argue that his retirement notice was valid despite the respondent’s refusal to accept it.

 

Kenya Hotels & Allied Workers Union v. Mara Siria t/a Safari Camps (K) Ltd [2016] eKLR
This case establishes that an employer’s jurisdiction to discipline an employee depends on the existence of an employment relationship. Once employment ends, the employer cannot discipline the former employee. The appellant cited this to argue that the respondent lacked jurisdiction to discipline him after retirement.

 

Kennedy Obala Oaga v. Kenya Ports Authority [2018] eKLR

This judgment clarifies that employees can terminate their contracts by resignation, placing themselves beyond disciplinary authority, provided they comply with notice requirements. It rejects the notion that employees must await disciplinary outcomes before resigning. The Court in the main case relied on this to affirm that the appellant’s retirement without notice was invalid.

Mahanadi Coalfields Ltd. v. Rabindranath Choubey [2020] 18 SCC 71 (Supreme Court of India)
Although a foreign case, it was cited for the principle that retirement or resignation notices served to evade disciplinary proceedings are unacceptable and can be disregarded. This principle was adopted by the Court to reject the appellant’s retirement notice as a tactic to avoid discipline.

Jasbir Singh Rai & 3 others v. Tarlochan Singh Rai & 4 Others [2014] eKLR

This Supreme Court decision was cited regarding the awarding of costs following the event, supporting the Court’s decision to award costs to the respondent.

---

This analysis highlights the critical legal principles governing retirement, disciplinary jurisdiction, and fair labour practices under Kenyan law as applied in the appeal. The Court’s emphasis on procedural fairness and adherence to contractual and statutory notice requirements is consistent with established Kenyan jurisprudence.

Analysis by;