Court slashes award to supermarket employee sacked over cake business

The High Court in Nakuru has ordered Naivas Supermarket to pay Sh122,706 for sacking its employee who was selling cakes and cookies in breach of the conflict-of-interest clause in his contract.

Naivas terminated Peter Muthoka after it accused him of selling cakes and cookies, which posed competition to the supermarket.

Muthoka was awarded Sh904,654 by Chief Magistrate Christine Menya as compensation for unfair termination and terminal benefits.

However, upon appeal by Naivas, Justice James Rika set aside the award and ordered the supermarket to pay Muthoka Sh122,706, being terminal benefits.

Naivas told Justice Rika that Muthoka had allegedly admitted to selling cakes to Pastor Ben, in breach of his employment contract.

The supermarket chain said that clause 2 of Muthoka’s contract barred him from engaging in any other business, either directly or indirectly, while clause 5 warned that his interest, should not conflict with that of Naivas.

In their appeal, Naivas said that the magistrate failed to appreciate that the M-Pesa messages and WhatsApp screenshots corroborated transactions involving purchase of cakes.

Muthoka argued that although he conceded to selling cookies, it did not affect his work.

He said that the alleged evidence of M-Pesa receipts from colleagues and 3rd parties was money received from Naivas welfare contributions where he was a treasurer.

Muthoka told court that he was also being paid money through his M-Pesa account by persons who were not members of the unregistered welfare group, because such persons were engaged in various transactions with him.

He cited Nicholas among persons who sent him money saying he was his father’s business partner. 

The magistrate ruled that Naivas failed to call a witness to prove that the money sent to Muthoka’s M-Pesa was for purchase of cakes.

Menya said that Naivas ought to have called other persons and employees Muthoka was communicating and colluding with over the cake business.

The magistrate said that the WhatsApp pictures produced showing Muthoka might have been in cake business were insufficient to establish valid reason justifying his termination.

“The Employer, Naivas Limited, could not prove beyond reasonable doubt, that the two cake photos extracted from the Claimant’s WhatsApp account and the Claimant’s communication with his pastor, correspond to running a bakery at Whitehouse Nakuru, and the cake sales thereof,” said Menya.

She said Naivas was expected to establish the purpose for which Muthoka received M-Pesa payments and avail a witness to testify that the money received was specifically for sale of cakes.

The magistrate also said that Naivas should have called persons including implicated colleagues with whom Muthoka was communicating with over cake business.

The Magistrate noted that Naivas Internal Auditor had explained to court that implicated employees were taken through individual disciplinary hearings but were not called to show that Muthoka was involved in cake business.

However, Justice Rika said that Naivas was not required to prove that Muthoka was actually doing cake business but he could have been doing the business.

“The court is satisfied that there were valid reasons to justify termination, and that the trial court, erred, by imposing a higher standard of proof of these reasons upon the Appellant, than is prescribed under Section

43 of the Employment Act,” said Justice Rika.

The judge further said that Muthoka’s admission to selling cookies was in contravention of clause two of his contract that required his devoted time to the supermarket.

“This in the view of the court was sufficient, to justify that the respondent (Muthoka) was engaged in his own business, while clause 2 of his contract required him, to devote his time and attention to the appellant (Naivas),” said Justice Rika.