Exemption of Public Educational Institutions from County Land Rates in Kenya

Public educational institutions, including public schools, are generally exempt from county land rates where the land is used for the statutory exempt purpose. The exemption is now expressly provided for under section 38 of the National Rating Act, No. 15 of 2024, which came into force on 24 December 2024.

However, the precise position depends on the nature and use of the land, the period for which rates are being demanded, the ownership of the property and whether any part of the land is being used for profit or residential purposes.

1. The current statutory exemption

The principal provision is section 38 of the National Rating Act, 2024.

Section 38(2) provides that a County Executive Committee Member shall not charge rates for land used exclusively for public purposes.

More specifically, section 38(3)(d) provides that valuation for purposes of rating shall not be conducted in respect of land used for “public educational institutions and libraries.”

This is a significant statutory protection for public schools.

Accordingly, where land is genuinely used as a public educational institution, the County ordinarily has no basis for subjecting that land to valuation for purposes of imposing ordinary land rates under the National Rating Act.

The exemption is, however, subject to the proviso in section 38 that the exemption does not apply to land used for profit or residential purposes.

2. The exemption existed under the previous law

Where a County Revenue Authority is demanding arrears relating to a period before 24 December 2024, the applicable legislation must also be considered.

Before the National Rating Act came into force, the relevant provisions were contained in the Valuation for Rating Act, Cap. 266.

Section 27(1)(d) of that Act provided that no valuation for rating purposes was to be made in respect of land used directly and exclusively for:

“educational institutions (including public schools within the meaning of the Basic Education Act...)”

The provision also extended to residences of students provided directly by educational institutions or forming part of, or ancillary to, educational institutions.

The statutory proviso excluded land used for profit or, subject to specified exceptions, residential purposes.

The former Rating Act, Cap. 267 also operated together with the Valuation for Rating Act in the rating regime.

The Rating Act and Valuation for Rating Act were subsequently repealed by the National Rating Act, 2024, which commenced on 24 December 2024.

Consequently, where a County is demanding historical arrears, it is important to identify the particular years for which the rates are allegedly due rather than treating the entire demand as governed by the current Act.

3. The courts have recognised the exemption for educational institutions

There is a particularly relevant Kenyan decision on this issue.

In Republic v County Government of Machakos ex parte Victory Faith Ministries [2018] eKLR, the Environment and Land Court at Machakos considered a rates demand of approximately Kshs. 58 million in respect of property used for religious and educational purposes.

The County argued, among other things, that the schools operating on the property were commercial institutions because students paid fees.

The court rejected that argument on the evidence before it. Justice Angote held that section 27(1)(d) of the Valuation for Rating Act exempted land used for educational purposes, subject to the statutory exclusion relating to land used for profit.

Importantly, the County had not produced evidence demonstrating that the schools were being operated for profit. The court consequently held that the demand for rates was unlawful and granted the relief sought by the applicant.

The decision is particularly useful because it demonstrates that the mere fact that students pay school fees does not, without more, establish that land is being used for profit for purposes of the statutory rating exemption.

The critical question is the actual character and purpose of the use of the land.

4. “Public school” and “commercial school” should not automatically be treated as the same

The distinction between a public educational institution and a private or commercial educational enterprise is important.

Section 38(3)(d) of the National Rating Act expressly refers to public educational institutions and libraries.

Therefore, where the property is occupied and used by a public school for ordinary educational purposes, the statutory exemption is considerably stronger.

A County Revenue Authority should not simply assume that land is rateable because:

• students pay fees;
• the institution collects money;
• the institution has income;
• the institution operates a school canteen;
• the school has boarding facilities; or
• the school has other incidental revenue-generating activities.

The legal question is whether the land is being used for the exempt educational purpose or whether it is being used for a separate profit-making purpose within the meaning of the statutory proviso.

The decision in Republic v County Government of Machakos ex parte Victory Faith Ministries [2018] eKLR is useful in this respect because the court required evidence establishing that the school was in fact operated for profit before the exemption could be displaced.

5. Incidental commercial use may require separate consideration

The exemption should not, however, be interpreted as an absolute exemption covering every activity conducted on land belonging to a public school.

For example, a school may have land containing:

• classrooms and laboratories;
• administration offices;
• teachers' accommodation;
• boarding facilities;
• playing fields;
• a school library; and
• other facilities directly connected with education.

These uses would ordinarily have a strong connection with the educational purpose.

But suppose part of the school's land is separately leased to a commercial entity for a supermarket, petrol station, commercial office, private residential development or other independent profit-making enterprise.

The County may then have an arguable basis for treating that portion differently.

The wording of section 38 must therefore be applied to the actual use of the particular land or portion of land rather than merely to the identity of the registered proprietor.

6. Payment of fees does not necessarily destroy the exemption

This is an issue likely to arise where the County argues that a school cannot be exempt because it collects fees.

That argument should be approached carefully.

The fact that an educational institution receives fees does not necessarily mean that the land is being used for profit.

In Republic v County Government of Machakos ex parte Victory Faith Ministries [2018] eKLR, the County made substantially that argument. The court nevertheless found that the County had failed to establish that the schools were being operated for profit and held the rates demand unlawful.

The focus should therefore be on the purpose and character of the land use, rather than merely the existence of revenue.

For a public school, this distinction is particularly important because the collection of fees or other statutory charges may form part of the financing of educational services without converting the institution into a profit-making commercial enterprise.

7. Ownership of the land is also important

The legal analysis should also establish who owns the land.

There is an important distinction between:

• land registered in the name of the National Government;
• land held by a county government;
• land vested in another public body;
• land registered in the name of a school or educational trust; and
• privately owned land upon which a public school operates.

The treatment of public land may involve the statutory regime concerning contribution in lieu of rates, rather than ordinary rates imposed on private rateable property.

Under the former regime, for example, section 25 of the Valuation for Rating Act dealt with the basis upon which public land was valued for purposes of contributions in lieu of rates.

The current National Rating Act contains its own provisions concerning public land and contributions in lieu of rates.

Consequently, before responding to a County's demand, the school's title and the legal status of the land should be established.

8. The County cannot rely solely on its valuation records

The fact that a property appears on a County valuation roll or rates account does not necessarily resolve the question of whether the property is legally rateable.

If the property falls within a statutory exemption, the County must apply the exemption.

This principle is particularly relevant where a public school has been incorrectly entered as an ordinary rateable property.

In Republic v County Government of Machakos ex parte Victory Faith Ministries [2018] eKLR, the County sought to justify its demand partly on the basis of its records concerning the property's use. The court nevertheless considered the statutory exemption and the evidence concerning the actual use of the property.

A school receiving a rates demand should therefore ask the County to identify:

1. the statutory provision under which the rates are demanded;
2. the valuation roll in which the property appears;
3. the registered owner;
4. the assessed rateable value;
5. the period to which the demand relates;
6. the basis upon which the County considers the land to be rateable;
7. whether the County alleges that the land is being used for profit; and
8. the evidence supporting that allegation.

9. The constitutional framework

County governments derive their power to impose property rates from Article 209(3)(c) of the Constitution of Kenya, 2010.

That provision gives county governments power to impose property rates.

However, the power to impose rates is not unlimited.

The County must exercise its rating power within the framework established by national legislation, including the National Rating Act and any applicable county legislation.

The principle that a public authority must act within the limits of the power conferred upon it is well established in Kenyan administrative law.

In Samuel Kamau Macharia & another v Kenya Commercial Bank Limited & 2 others [2012] eKLR, the Supreme Court affirmed the fundamental principle that jurisdiction is derived from the Constitution or statute and cannot simply be assumed.

Similarly, in Suchan Investment Limited v Ministry of National Heritage & Culture & 3 others [2016] eKLR, the Court of Appeal emphasised the importance of legality and lawful exercise of statutory powers by public bodies.

A County Revenue Authority therefore cannot impose or recover a charge merely because its internal records indicate that an amount is outstanding. The demand must have a lawful statutory foundation.

10. What should a public school do upon receiving a rates demand?

A public school that receives a rates demand should not simply ignore it.

A formal objection or response should be prepared identifying the statutory exemption and providing evidence of the school's status and use of the property.

The response should ordinarily attach, where available:

• the title or lease;
• evidence establishing that the institution is a public school;
• registration or establishment documents;
• evidence showing the actual use of the property;
• the school's physical development or site plan;
• relevant correspondence with the County;
• previous exemption correspondence, if any; and
• the County's rates demand and relevant valuation records.

The school should expressly invoke section 38(3)(d) of the National Rating Act, 2024 where the demand concerns the current rating regime.

For historical demands, the response should additionally invoke section 27(1)(d) of the former Valuation for Rating Act, Cap. 266, where applicable.

11. The position in summary

The legal position can therefore be summarised as follows:

First, public educational institutions are expressly recognised as exempt from valuation for rating purposes under section 38(3)(d) of the National Rating Act, 2024.

Second, land used exclusively for public purposes is protected under section 38(2).

Third, the exemption is subject to the statutory qualification concerning land used for profit or residential purposes.

Fourth, for periods governed by the previous rating regime, section 27(1)(d) of the Valuation for Rating Act, Cap. 266 expressly exempted land used directly and exclusively for educational institutions, including public schools.

Fifth, the decision in Republic v County Government of Machakos ex parte Victory Faith Ministries [2018] eKLR provides useful judicial authority on the application of the educational-institution exemption and demonstrates that the County must establish the factual basis for alleging that an educational institution is being operated for profit.

Sixth, the ownership and actual use of the land must be examined carefully, particularly where the property is public land or where only part of the property is used for educational purposes.

Conclusion

A County Revenue Authority cannot properly demand ordinary land rates from a public school without considering the statutory exemption applicable to public educational institutions.

Where the land is used for the public educational function, section 38 of the National Rating Act, 2024 provides a clear statutory basis for exemption from valuation and rating.

Where the demand relates to an earlier period, the corresponding exemption under section 27(1)(d) of the Valuation for Rating Act, Cap. 266 should be considered.

The strongest response to a rates demand should therefore not merely state that the school is “government property” or that it is a “public institution.” It should establish the ownership, statutory status and actual use of the land, identify the applicable rating legislation for each period claimed, and expressly invoke the statutory exemption.

Where the County alleges that the property is being used for profit, the school should require the County to identify the factual and legal basis for that allegation. The decision in Republic v County Government of Machakos ex parte Victory Faith Ministries [2018] eKLR demonstrates the importance of evidence on this issue.

Accordingly, where a public school has received a substantial rates demand, the matter should be formally challenged rather than the demand being accepted at face value.

Legal Review: How Is an Intestate Estate Distributed Where the Deceased Leaves No Spouse or Children?

Article By Z.O.G

When a person dies without leaving a valid will, the distribution of their estate is governed by the intestacy provisions of the Law of Succession Act, Cap. 160.

A particularly important question arises where the deceased leaves neither a surviving spouse nor children. In such circumstances, who is entitled to inherit the estate?

Section 39 of the Law of Succession Act provides the statutory framework for determining the beneficiaries of such an estate. However, the provision must now be read alongside the Constitution of Kenya, 2010, particularly the constitutional guarantee of equality and freedom from discrimination.

This is significant following the High Court's decision in Ripples International v Attorney General & another; FIDA (Interested Party) (Constitutional Petition E017 of 2021) [2022] KEHC 13210 (KLR), in which the Court declared sections 39(1)(a) and (b) unconstitutional to the extent that they gave a father priority over a mother in inheriting the estate of an intestate child who died without a spouse or children.

The Statutory Framework Under Section 39

Section 39(1) of the Law of Succession Act provides that where an intestate has left no surviving spouse or children, the net intestate estate devolves upon the deceased's kindred in the prescribed order of priority.

The statutory order is:

1.      The father, or if deceased, the mother;

2.      Brothers and sisters, and any children of deceased brothers and sisters, in equal shares;

3.      Half-brothers and half-sisters, and any children of deceased half-brothers and half-sisters, in equal shares; and

4.      Relatives who are in the nearest degree of consanguinity, up to and including the sixth degree, in equal shares.

Where none of the persons identified under Section 39(1) survives, the estate devolves upon the State and is paid into the Consolidated Fund pursuant to Section 39(2).

The statutory hierarchy has continued to be recognised and applied by the courts in succession proceedings. See, for example, In re Estate of Nyanduga Land (Deceased) (Succession Cause 514 of 2011) [2025] KEHC 2710 (KLR) and In re Estate of Joseph Opondo alias Joseph Aguyo (Deceased) (Succession Cause 208 of 2012) [2023] KEHC 2781 (KLR).

However, the application of the first two categories has been fundamentally affected by constitutional jurisprudence.

The Constitutional Challenge to Section 39

Prior to the constitutional challenge, the wording of Section 39 created a clear hierarchy between the deceased's parents.

Where both parents were alive, the father took priority. The mother could inherit only where the father was deceased.

Thus, on a literal reading of the provision, the sequence was:

Father → Mother → Siblings → Half-siblings → Other relatives.

The constitutional validity of this distinction was challenged in Ripples International v Attorney General & another; FIDA (Interested Party) [2022] KEHC 13210 (KLR).

The petitioner argued that giving a father priority over a mother solely because of sex was discriminatory and inconsistent with the Constitution.

The High Court agreed.

What Did Ripples International Decide?

The High Court considered Sections 35(1)(b), 36(1)(b), 39(1)(a) and 39(1)(b) of the Law of Succession Act against the constitutional guarantees of equality and non-discrimination.

With respect to Section 39, the Court found that the provision discriminated between fathers and mothers by giving the father priority in inheriting the property of an intestate child who died unmarried and without children.

The Court held that the differential treatment was inconsistent with Article 27 of the Constitution, which guarantees equality and freedom from discrimination.

The Court consequently declared Sections 39(1)(a) and (b) unconstitutional.

Importantly, the Court did not declare the whole of Section 39 unconstitutional.

The decision specifically concerned the discriminatory preference given to fathers over mothers.

Equal Treatment of Fathers and Mothers

The practical consequence of Ripples International is that a surviving father cannot be accorded automatic priority over a surviving mother solely on account of his sex.

Both parents are entitled to equal constitutional protection.

The constitutional position is therefore materially different from the literal wording of the original Section 39.

Where a deceased person leaves no spouse or children but is survived by both parents, the law must be applied consistently with Article 27 of the Constitution and the declaration made in Ripples International.

This represents an important development in Kenyan succession law because it removes a gender-based distinction that historically placed mothers in a subordinate position to fathers when inheriting from the estate of a deceased child.

Why Article 27 Matters in Succession Matters

Article 27(1) of the Constitution provides that every person is equal before the law and has the right to equal protection and equal benefit of the law.

Article 27(4) further prohibits discrimination on various grounds, including sex and marital status.

The High Court's decision in Ripples International demonstrates that succession legislation cannot be applied independently of these constitutional protections.

The Law of Succession Act predates the Constitution of Kenya, 2010. Where provisions of the Act conflict with constitutional rights, they must be interpreted and applied consistently with the Constitution.

The decision therefore illustrates the broader constitutional transformation of succession law in Kenya.

What Happens After the Parents?

Once the parental category has been addressed, Section 39 proceeds to brothers and sisters and the children of deceased brothers and sisters.

The provision places full siblings ahead of half-siblings.

Where there are surviving brothers and sisters, and children of deceased brothers and sisters, the law provides for distribution in equal shares.

For example, if the deceased leaves two surviving siblings and the children of a third sibling who predeceased the deceased, the estate does not simply pass to the two surviving siblings to the exclusion of the deceased sibling's children. The statutory provision expressly recognises the children of deceased brothers and sisters.

The precise distribution, however, may require consideration of the applicable rules concerning representation and the circumstances of the deceased siblings.

Half-Siblings and Their Children

Where there are no beneficiaries within the preceding category, Section 39(1)(d) provides for inheritance by half-brothers and half-sisters and the children of deceased half-brothers and half-sisters.

They inherit in equal shares subject to the statutory framework.

The distinction between full and half-siblings can therefore become important where a deceased person leaves a relatively complex family structure.

Relatives Within the Sixth Degree of Consanguinity

Where there are no surviving parents, siblings, half-siblings or qualifying children of deceased siblings, Section 39 extends succession to relatives in the nearest degree of consanguinity, up to and including the sixth degree.

This makes the determination of degrees of consanguinity particularly important in estates where the deceased left no immediate family.

The Probate and Administration Rules require succession applications in cases of total or partial intestacy to provide particulars of persons who would succeed under Section 39. The Rules also require reference to the applicable table for determining the degree of consanguinity.

This requirement is designed to ensure that the Court has sufficient information to identify persons who may be entitled to participate in the administration and distribution of the estate.

What If There Are No Surviving Relatives?

Section 39(2) provides a final destination for an estate where no qualifying relatives survive.

In such circumstances, the net intestate estate devolves upon the State and is paid into the Consolidated Fund.

The statutory scheme therefore establishes a complete hierarchy, moving from the closest qualifying relatives to more remote relatives and, ultimately, the State.

Beneficial Entitlement and the Right to Administer the Estate

It is important to distinguish between the right to inherit and the right to administer an estate.

Section 66 of the Law of Succession Act gives the Court final discretion in determining to whom a grant of letters of administration should be made, although it provides a general order of preference.

Persons entitled to the estate under Part V of the Act will ordinarily have priority over more remote persons.

In In re Estate of Mark Waswa Namwoso (Deceased) (Succession Cause 2 of 2020) [2025] KEHC 16083 (KLR), the High Court considered Section 39 alongside Section 66 and recognised the importance of the statutory order of preference in determining who should administer an intestate estate.

Consequently, a person who wishes to administer an estate should not assume that being a relative, by itself, is sufficient. The nature and degree of the relationship remain important.

Dependency May Also Be Relevant

Succession under Section 39 should also be considered alongside the provisions of the Law of Succession Act relating to dependants.

In appropriate circumstances, a person who does not fall neatly within the categories of Section 39 may seek relief based on dependency where the statutory requirements are satisfied.

However, dependency is a question of fact and must be established by evidence.

The courts have repeatedly emphasised that a person asserting dependency bears the evidential burden of demonstrating the basis of the claim.

This was recently reiterated in In re Estate of Joconia Opiyo alias Oyombi (Deceased) (Family Appeal E003 of 2024) [2025] KEHC 13264 (KLR).

Accordingly, the analysis of an intestate estate should not stop at identifying blood relatives. The particular circumstances of persons claiming an interest in the estate must also be examined.

The Significance of Ripples International for Women

The importance of Ripples International extends beyond the immediate wording of Section 39.

The decision forms part of the broader constitutional movement towards eliminating discriminatory provisions in succession law.

The Court also declared unconstitutional the provisions in Sections 35(1)(b) and 36(1)(b) concerning the termination of a widow's life interest upon remarriage, finding that the provisions treated widows differently from widowers.

Although those provisions concern different circumstances from Section 39, the underlying constitutional principle is the same: succession rights must comply with the constitutional guarantee of equality.

The decision therefore represents an important affirmation that customary or statutory assumptions concerning gender cannot override constitutional rights.

Practical Implications for Families

Where a person dies intestate without a spouse or children, the family should carefully establish the deceased's family tree before applying for a grant.

The following questions should ordinarily be addressed:

• Did the deceased leave a surviving spouse?
• Did the deceased leave biological or legally recognised children?
• Are either or both parents alive?
• Did the deceased leave full siblings?
• Are there children of any deceased siblings?
• Are there half-siblings or children of deceased half-siblings?
• Are there other relatives within the sixth degree of consanguinity?
• Are there persons who can establish dependency?
• Are there existing succession proceedings concerning the estate?
• Has any person already obtained a grant without disclosing all persons with an interest in the estate?

Proper identification of beneficiaries is critical.

Failure to disclose persons who are entitled to benefit from an estate may expose a grant to challenge and possible revocation under Section 76 of the Law of Succession Act.

The Importance of Full Disclosure

Succession proceedings are proceedings in which the Court expects candour from those seeking grants of representation.

An applicant should not deliberately omit persons who rank equally or higher in the statutory order of succession.

The importance of disclosure is reinforced by the Probate and Administration Rules, which require an applicant to provide particulars of persons who would succeed under Section 39 where the deceased left no spouse or children.

The objective is to enable the Court to make an informed decision regarding administration and eventual distribution of the estate.

Conclusion

Where a person dies intestate without a surviving spouse or children, Section 39 of the Law of Succession Act provides the starting point for determining who is entitled to the deceased's net intestate estate.

The statutory order proceeds through the deceased's parents, siblings and their children, half-siblings and their children, and other relatives within the sixth degree of consanguinity before ultimately providing for the estate to devolve upon the State where no qualifying relative survives.

However, the original wording of Section 39 cannot now be applied mechanically.

The decision in Ripples International v Attorney General & another; FIDA (Interested Party) [2022] KEHC 13210 (KLR) fundamentally altered the application of Sections 39(1)(a) and (b) by declaring unconstitutional the statutory preference given to fathers over mothers.

The broader principle is clear: succession rights must be interpreted and applied consistently with the Constitution, particularly the right to equality and freedom from discrimination.

For families dealing with intestate estates, the practical lesson is equally important. Establishing the correct beneficiaries requires more than simply identifying the closest male relative. The deceased's entire family structure, potential dependants and the constitutional rights of all beneficiaries must be considered.

In succession matters, therefore, the family tree remains important—but it must be read through the lens of the Constitution.

Key Authorities

• Ripples International v Attorney General & another; FIDA (Interested Party) (Constitutional Petition E017 of 2021) [2022] KEHC 13210 (KLR).
• In re Estate of Nyanduga Land (Deceased) (Succession Cause 514 of 2011) [2025] KEHC 2710 (KLR).
• In re Estate of Joseph Opondo alias Joseph Aguyo (Deceased) (Succession Cause 208 of 2012) [2023] KEHC 2781 (KLR).
• In re Estate of Mark Waswa Namwoso (Deceased) (Succession Cause 2 of 2020) [2025] KEHC 16083 (KLR).
• In re Estate of Joconia Opiyo alias Oyombi (Deceased) (Family Appeal E003 of 2024) [2025] KEHC 13264 (KLR).

Disclaimer: This article is intended for general information only and does not constitute legal advice. Succession rights are dependent on the facts of each estate, and persons dealing with an intestate estate should obtain appropriate legal advice before taking steps to administer or distribute the estate.

 

When Trust Is the Job Description: What Kenyan Employment Decisions Mean for Employees and Employers

Article By Z.O.G

When trust is the job description, accountability is part of the legal standard.

Employees entrusted with an employer's financial resources, sensitive information, supervisory authority or operational controls occupy a particularly important position within an organisation. Their responsibilities often extend beyond the ordinary performance of contractual duties. They are expected to exercise judgment, diligence and fidelity commensurate with the trust placed in them.

But there is an equally important legal principle on the other side of the employment relationship: the seriousness of an allegation does not dispense with the employer's obligation to conduct a fair disciplinary process.

Recent Kenyan employment jurisprudence illustrates this balance. The courts have recognised the legitimate expectations placed upon employees occupying positions of responsibility while simultaneously insisting that employers establish the factual basis for alleged misconduct and provide employees with a genuine opportunity to respond.

Three themes emerge with particular clarity.

1. Employees in Positions of Financial or Supervisory Trust Are Held to a Higher Standard

An employee's responsibilities matter when assessing alleged misconduct.

Where an employee is entrusted with financial resources, transaction approvals, supervision of other employees, institutional assets or sensitive operational functions, the consequences of a failure to exercise appropriate care may be significantly more serious than an equivalent lapse by an employee with limited responsibility.

This is particularly apparent in banking and other financial institutions, where employees operate within systems of authorisation, verification, segregation of duties, audit controls and compliance requirements.

The law does not, however, impose an abstract or unlimited duty of perfection. The relevant question is whether the employee failed to discharge duties that actually formed part of their role and whether the alleged failure was sufficiently serious to constitute a valid ground for disciplinary action.

The role of the employee matters

In assessing alleged negligence or misconduct, employers should therefore identify precisely:

• what responsibilities were assigned to the employee;
• what level of authority the employee possessed;
• what financial or supervisory responsibilities accompanied that authority;
• what policies or controls governed the employee's functions;
• whether the employee was aware of those requirements; and
• how the alleged conduct departed from the standard reasonably expected of someone in that position.

The distinction is important.

An employee who merely processes information may not bear the same responsibility as an employee authorised to approve a transaction. Similarly, a supervisor may have obligations to detect, prevent or report irregularities that would not ordinarily fall upon a junior employee.

Accordingly, the employee's position is relevant to determining the standard against which the conduct should be assessed.

2. Negligence Does Not Automatically Equal Gross Misconduct

Employers should also be careful not to equate every failure to follow procedure with gross misconduct.

A disciplinary allegation must be supported by evidence and assessed in context.

Section 44 of the Employment Act, 2007 recognises circumstances in which an employee's conduct may justify summary dismissal, including certain forms of wilful neglect or careless and improper performance of duties.

But whether conduct crosses that threshold is a question of fact.

For an employee occupying a position of financial trust, the Court may reasonably take into account the seriousness of the responsibility entrusted to that employee. A negligent failure affecting a critical financial control may be substantially more serious than an isolated administrative error.

The employer should nevertheless establish the connection between:

the employee's responsibility → the applicable safeguard → the alleged breach → and the resulting risk or consequence.

A disciplinary case becomes considerably stronger when that chain is supported by contemporaneous documentation.

3. Employers Must Establish the Reason for Termination

The fact that an employer genuinely suspects misconduct is not, by itself, sufficient.

Section 43 of the Employment Act places the burden upon the employer to prove the reason or reasons for termination.

The Court of Appeal in Kenfreight (E.A.) Limited v Benson K. Nguti [2016] eKLR emphasised the distinction between the employer's right to terminate employment and the statutory requirement that termination be substantively and procedurally fair. The subsequent Supreme Court proceedings in Kenfreight (E.A.) Limited v Benson K. Nguti [2019] eKLR further demonstrate the importance of the statutory framework governing termination. Kenya Law+1

The practical lesson is significant.

An employer should not proceed from the allegation:

"The employee was responsible, therefore the employee must be at fault."

Instead, the employer should be able to demonstrate, through evidence, why the employee's conduct constituted a breach of the applicable standard.

This is especially important in cases involving negligence, because negligence often turns upon what the employee knew, what the employee was required to do, what the employee actually did and whether the omission or conduct was reasonably attributable to the employee.

4. Meaningful Disclosure Is Part of a Fair Disciplinary Process

Perhaps one of the most important lessons from Postal Corporation of Kenya v Andrew K. Tanui [2019] eKLR concerns disclosure.

The case arose from allegations surrounding the PostaPay product and financial losses suffered by the Postal Corporation. A forensic audit had identified issues relating to the product and the conduct of senior management.

The Court of Appeal considered the requirements of procedural fairness under Section 41 of the Employment Act.

The significance of the decision extends beyond its particular facts.

An employee cannot reasonably be expected to answer allegations where the material facts underlying those allegations are withheld from them.

This is particularly important where an employer relies upon:

• an audit report;
• an investigation report;
• transaction records;
• emails or correspondence;
• customer complaints;
• system-generated records;
• witness statements;
• financial reconciliations; or
• other documentary evidence.

If the employer intends to rely materially upon such evidence in reaching a disciplinary decision, fairness requires the employee to be given sufficient information about the case they are required to answer.

The Court of Appeal's approach is therefore better understood as requiring meaningful disclosure rather than a merely formal invitation to attend a disciplinary hearing. Kenya Law+1

5. A Disciplinary Hearing Must Be Meaningful, Not Merely Formal

There is a crucial distinction between giving an employee a hearing and giving an employee a meaningful opportunity to be heard.

An employer may technically invite an employee to a disciplinary meeting, but if the employee has not been given adequate information about the allegations or material relied upon, the opportunity to respond may be illusory.

This is consistent with the Court of Appeal's treatment of Section 41 in Postal Corporation of Kenya v Andrew K. Tanui [2019] eKLR.

The disciplinary process is not required to replicate a court trial. Nevertheless, procedural fairness requires that an employee understand the allegations and be afforded a reasonable opportunity to respond to them.

The principle was subsequently reiterated in Kenyan employment jurisprudence. The courts have continued to treat disclosure of the case to be answered and a genuine opportunity to respond as central elements of procedural fairness. Cliffe Dekker Hofmeyr+1

6. Internal Investigations Should Precede Disciplinary Action

The importance of investigation is equally significant.

An employer should ordinarily establish the factual basis of an allegation before deciding that an employee is culpable.

In Ruth Mungai v Kache Limited [2018] KEELRC 419 (KLR), the Court emphasised that it is not sufficient merely to make allegations of misconduct. The employer should have internal systems and processes for investigating and verifying the alleged misconduct before arriving at the decision to terminate. Kenya Law

This principle has particular relevance to financial misconduct cases.

Where a transaction has gone wrong, for example, the employer should establish:

• who initiated the transaction;
• who reviewed it;
• who authorised it;
• what controls applied;
• whether those controls were followed;
• whether the employee had authority to act;
• whether another employee was involved;
• whether the employee raised any concerns;
• whether the system itself contributed to the error; and
• whether there is evidence of negligence, recklessness or deliberate misconduct.

The purpose of an investigation is not simply to build a case for dismissal. It is to establish what actually happened.

7. Documentation Is the Employer's Best Defence

A recurring practical lesson from these decisions is the importance of documentation.

In a subsequent claim before the Employment and Labour Relations Court, the employer will ordinarily need to demonstrate both the substantive basis for the decision and the fairness of the procedure followed.

That makes the disciplinary record critically important.

For an employer, the record should ideally demonstrate a clear chronology:

complaint/allegation → investigation → evidence gathered → employee notified → disclosure → employee's response → consideration of response → disciplinary decision → reasons for decision.

The absence of this documentary trail can create significant difficulty.

For example, if an employer asserts that an employee ignored a particular financial control, the employer should ideally be able to produce the policy or procedure establishing the control, evidence that the employee was aware of it, evidence of the relevant transaction and evidence connecting the employee to the alleged breach.

A general statement that an employee "failed in their responsibilities" may be considerably weaker than a properly documented evidentiary record.

8. The Employer's Belief Must Have an Evidentiary Foundation

The decision in Kenya Revenue Authority v Reuwel Waithaka Gitahi & 2 Others [2019] eKLR is also important when considering the employer's state of mind in termination decisions.

The courts recognise that an employer does not necessarily have to prove misconduct to the criminal standard. Employment disputes operate within the statutory framework governing fairness and the applicable civil standard.

However, the employer's belief that misconduct occurred must have a proper factual foundation.

The employer should therefore be able to demonstrate the material that informed its decision.

This is particularly important where the allegation is based on suspicion.

Suspicion may trigger an investigation. It should not ordinarily substitute for one.

9. Positions of Trust Do Not Create Automatic Liability

The phrase "position of trust" should therefore be used carefully.

It does not mean that an employee holding a senior or sensitive position is automatically liable whenever something goes wrong.

Nor does it mean that the employer can dispense with procedural fairness.

Instead, the employee's position helps determine the standard of responsibility reasonably expected of them.

For example, where an employee has express responsibility for verifying a transaction before authorisation, evidence that the employee failed to conduct the required verification may be highly relevant.

But if the employee's role did not include the relevant verification, or if the employer's own systems permitted the transaction without the employee's intervention, the analysis becomes different.

The employer must therefore establish responsibility rather than simply infer it from seniority.

10. What This Means for Employees

Employees occupying positions of financial or supervisory trust should recognise that their responsibilities may expose them to heightened scrutiny.

They should:

• understand the policies governing their functions;
• comply with approval and verification requirements;
• maintain records of decisions and instructions;
• raise concerns where procedures cannot reasonably be followed;
• avoid informal workarounds to established controls;
• report suspected irregularities promptly; and
• preserve relevant correspondence and documentation.

Where disciplinary proceedings are commenced, the employee should also insist upon clarity regarding the allegations and the material relied upon, particularly where the allegations are based upon an audit or investigation.

A meaningful defence requires knowledge of the case being answered.

11. What This Means for Employers

For employers, particularly banks and other regulated institutions, the lesson is equally clear.

A robust disciplinary process should be capable of surviving scrutiny after the event.

Employers should therefore consider adopting a process that ensures:

1. Clear expectations

Employees should have written job descriptions and clearly communicated policies.

2. Proper investigation

Allegations should be investigated before disciplinary conclusions are reached.

3. Meaningful disclosure

The employee should receive sufficient information and relevant material to understand and answer the allegations.

4. A genuine hearing

The employee's representations should actually be considered.

5. Evidence-based decision-making

The disciplinary decision should identify the evidence supporting the finding.

6. Proportionality

The sanction should be considered against the seriousness and circumstances of the misconduct.

7. A complete record

The employer should maintain a coherent documentary trail demonstrating both substantive justification and procedural fairness.

12. The Broader Legal Lesson

The Kenyan jurisprudence demonstrates that employment disputes involving positions of trust are not determined by choosing between two simplistic propositions:

"Employees in positions of trust must be accountable."

or

"Employees must always be protected from dismissal."

Both propositions are incomplete.

The law requires a balance.

An employee entrusted with substantial responsibility may properly be held to a high standard of performance, care and compliance. At the same time, the employer must establish the factual basis for disciplinary action and comply with the statutory requirements governing fair termination.

The stronger the allegation, the more important the quality of the investigation and documentation.

This is particularly true where an employer alleges negligence rather than deliberate misconduct. Negligence requires a careful examination of the employee's actual responsibilities, the applicable standard, the circumstances of the alleged failure and the evidence connecting the employee to it.

Conclusion

The recent Kenyan employment jurisprudence sends a clear message to both sides of the employment relationship.

For employees occupying positions of financial or supervisory trust, trust carries responsibility. The more sensitive the role, the greater the expectation that the employee will observe the controls and safeguards entrusted to them.

For employers, however, responsibility does not eliminate due process.

A disciplinary hearing must be more than a procedural formality. An employee must know the substance of the allegations and be afforded a genuine opportunity to answer them. Where an employer relies upon an audit, investigation or other material evidence, meaningful disclosure becomes particularly important.

And for both sides, documentation matters.

The best disciplinary process is one in which the record tells a coherent story:

What was the employee required to do? What allegedly went wrong? What evidence established that? Was the employee told the case against them? What was their response? Was that response considered? And why was the final decision reached?

Where those questions can be answered clearly and contemporaneously, the employer is in a substantially stronger position to demonstrate fairness. Where they cannot, even an allegation involving a position of significant trust may become difficult to sustain.

Key Applicable Kenyan Authorities

• Postal Corporation of Kenya v Andrew K. Tanui [2019] eKLR.
• Kenfreight (E.A.) Limited v Benson K. Nguti [2016] eKLR; Kenfreight (E.A.) Limited v Benson K. Nguti [2019] eKLR.
• Kenya Revenue Authority v Reuwel Waithaka Gitahi & 2 Others [2019] eKLR.
• Ruth Mungai v Kache Limited [2018] KEELRC 419 (KLR).
• Coca Cola East & Central Africa Limited v Maria Kagai Ligaga [2015] eKLR.
• Walter Ogal Anuro v Teachers Service Commission [2013] eKLR.

Disclaimer: This article is intended for general information only and does not constitute legal advice. The applicable law and outcome will depend on the facts and circumstances of each individual matter.