Court Slams Kingsway Tyres for Causing Employee’s Arrest Over KSh 46,000 Cheque

A bounced cheque sent a Mombasa tyre dealer’s long-time employee to Makupa Police Station. A judge found the company initiated the police report, then later unfairly dismissed him, awarding KSh 1.27 million.

A bounced cheque worth KSh 46,000 triggered a dispute that followed a Kingsway Tyres employee for years.

It ended with an arrest, a salary cut and, eventually, his dismissal.

But the Employment and Labour Relations Court has now delivered a sharp rebuke to the tyre dealer.

Justice Ocharo Kebira found that Kingsway subjected Noorani Yakoub Masoud Esmail to unfair labour practices.

The company also failed to establish that his dismissal was justified.

The judge awarded Esmail KSh1,268,833.33 for unfair termination and outstanding leave. He further ordered Kingsway to pay legal costs and interest.

The judgement’s strongest finding concerned the company’s handling of a customer’s dishonoured cheque.

The judge said employers cannot turn police stations into debt-collection offices.

The Cheque Dispute

The incident dates back to October 20, 2020, when a customer bought tyres worth KSh 46,000.

The customer paid by cheque drawn in favour of Kingsway, which accepted it and released the tyres.

The cheque was subsequently dishonoured.

Kingsway then demanded that Esmail recover the money from the customer. He eventually paid the company KSh 46,000 through MPesa on December 3, 2020.

Three months later, a report was recorded against him at Makupa Police Station.

The March 4, 2021, occurrence-book entry described the complaint as a “bouncing cheque” matter.

Kingsway denied reporting Esmail, claiming he had independently approached the police.

Justice Kebira rejected that explanation as improbable.

The judge accepted, on a balance of probabilities, that Kingsway initiated the report.

He also accepted Esmail’s evidence that the employee was arrested.

Crucially, the judgement identifies Esmail as a manager at Kingsway’s Lumumba Road branch in Mombasa.

However, it does not expressly establish that the disputed tyre transaction occurred at that outlet.

The judge found no evidence that Kingsway prohibited cheque payments. Neither did the company prove that Esmail colluded with the customer.

“The criminal process is not a debt-collection tool,” Justice Kebira declared.

He added that making an employee answer for a customer’s liability could amount to an unfair labour practice.

The judge said such conduct undermined the trust and confidence expected in employment relationships.

Secret Targets

Esmail joined Kingsway on November 9, 2011, as a sales and marketing executive.

He later took additional responsibilities managing the company’s Mombasa retread factory and Lumumba Road branch.

His employment ended on October 3, 2024, following a termination letter dated September 3. The company cited unsatisfactory performance as its sole reason.

Yet Kingsway produced no convincing evidence of agreed targets or documented performance reviews.

It also failed to show warnings, improvement plans or a disciplinary hearing.

A January 2021 email discussed proposed sales and retread targets. Another communication referred to a confidential performance template, which the company never produced.

The judge found that Kingsway had not demonstrated how it measured Esmail’s performance.

Nor had it shown that he received support or a genuine opportunity to improve.

The company later alleged that Esmail ran a competing tyre business and diverted customers.

Justice Kebira dismissed those claims as unsupported assertions.

He stressed that employers cannot introduce fresh reasons during litigation. The termination letter had cited poor performance, not the additional allegations.

The court consequently found the dismissal both procedurally and substantively unfair.

 The Salary Cut

The dispute had another damaging chapter in January 2021. After an earlier termination notice was withdrawn, Kingsway reinstated Esmail on reduced remuneration.

His gross monthly salary fell from KSh 231,800 to KSh 115,000. The company argued that he accepted the revised terms and could earn additional incentives.

But the judge found that the salary reduction was imposed unilaterally. The contractual addendum lacked Esmail’s acceptance, despite requiring written agreement.

The reduction therefore breached the Employment Act’s requirements governing changes to employment terms.

However, Esmail continued working under the reduced salary for more than three years.

He did not formally challenge the reduction until after his employment ended.

The judge held that his prolonged acquiescence defeated his claim for KSh 5.256 million in salary arrears.

The court distinguished the unlawful reduction from his entitlement to recover historical differences.

Nine Months’ Pay

Justice Kebira awarded Esmail nine months’ salary, amounting to KSh 1.035 million.

He considered his nearly 13 years of service and absence of disciplinary records.

The judge also weighed the company’s earlier positive performance assessments.

Most significantly, he treated the cheque dispute and arrest as aggravating conduct.

Kingsway must additionally pay KSh233,833.33 for 61 outstanding leave days.

The company had admitted that leave balance, although Esmail claimed 273 days.

The court rejected his demand for a KSh46,000 refund. Esmail had paid the money before the police report and raised no timely protest.

It also dismissed his claims for notice pay and KSh5 million in constitutional damages.

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The judge considered separate constitutional compensation unnecessary after awarding statutory remedies.

Kingsway must issue Esmail a certificate of service within 30 days. The awarded sums will attract interest at court rates until payment.

The ruling leaves employers with a pointed warning: customer debts do not automatically become employees’ liabilities.

And allegations of poor performance require evidence, fair procedures and a genuine opportunity to improve.

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