When Ronald Otieno, the former general manager of the Kenyan ride-hailing company Little Cab, pressed the voice recording button on his mobile phone during a tense meeting with his former employer, little did he know that the audio clips would later become the smoking gun in a landmark labour relations suit.
Last week, the Employment and Labour Relations Court in Nairobi awarded Mr Otieno $750,000 (Sh96.9 million) after he proved that his former bosses had unlawfully fired him to avoid honouring a one percent equity promise – a claim cemented by his covert recordings.
Mr Otieno’s contract as the founding general manager of Little Cab was terminated in May 2017 due to allegations of gross misconduct.
But, in a landmark ruling, the court found that his dismissal was unlawful and that Craft Silicon Ltd, Little Cab’s parent company, had schemed to deny him the promised one percent equity stake in return for his role in building the ride-hailing giant.
He joined Craft Silicon in April 2016 on a mission to transform Little Cab from a start-up into Kenya’s premier taxi-hailing service.
Within six months, he negotiated a salary bump from the initial Sh240,000 to Sh340,000. The CEO, Kamal Budhabhatti, also unconditionally offered him a one percent share in the ride-hailing entity, known as Little Limited. The company is currently valued at $75 million.
He was also promised that, as the company grew, he would be offered an additional one percent share, making it two percent in total.
Mr Otieno testified that he wholly accepted the new terms and signed the employment contract, the terms of which took effect immediately. However, he was not given a copy of the contract.
Threats from CEO’s wife
However, trouble began when Mr Otieno repeatedly requested a copy of his revised contract.
Instead, he was inundated with disciplinary memos accusing him of incompetence and insubordination, and even of exposing the company to a Sh350 million loss.
A disciplinary hearing based on a performance review was also convened.
‘This litany of adverse letters to the claimant (Mr Otieno) in a short space of one month corroborates the claimant’s evidence that he began to be threatened and harassed upon insistence on being given a copy of his contract that had awarded him one percent of company shares,’ reads the judgment.
The verdict further reveals that the employer failed to counter the credible evidence of persistent abuse, harassment, threats and the promise of termination of employment from the CEO’s wife, who was also a director of Little Limited. The said director did not testify in court.
Mr Otieno’s legal victory hinged on authenticated audio recordings of meetings in which Mr Budhabhatti admitted to the one percent equity grant, a claim the CEO later denied in court.
In one clip, Mr Budhabhatti conceded that Mr Otieno was entitled to the shares, but argued that the second one percent was performance-dependent.
While testifying in court, Mr Budhabhatti denied promising Mr Otieno any shareholding in the company after working there for only six months.
‘The claimant acting in breach of the contract continuously failed to keep proper records of mobile phone corporate contracts and process orientation, and oversight, which resulted in the second respondent (Little Limited) making losses,’ said the CEO.
Unbelievable responses
However, the court dismissed the CEO’s evasive responses during cross-examination as unbelievable, noting that the disciplinary actions had coincided with Mr Otieno’s demands regarding his contract.
Upon examining the arguments by both parties, the court found Mr Otieno’s evidence to be credible, consistent, and verifiable.
The court ruled that the termination was unlawful and unfair, and was ‘based on trumped-up charges, false accusations and devious attempts made solely to stop the claimant from obtaining a copy of his employment contract through which he was awarded one percent share of the Little Limited’.
‘Thanks to the secretly recorded electronic evidence, which was authenticated and admitted before the court, this truth was proved by the claimant on a balance of probability,’ said the trial judge.
According to the court, the recordings proved the termination was a scheme to deny Mr Otieno his rightful stake.
‘Clearly, the claimant was awarded a one percent share of the company for his stellar effort in starting the second respondent (Little Limited), but was later victimised in the respondents’ effort to conceal that fact as seen in the recorded minutes of the meeting between CW1 (Otieno) and RW1 (Budhabhatt),’ said the trial judge.
‘The court is satisfied that the claimant had been awarded a one percent shareholding by the respondent’.
The company failed to provide valid reasons for termination under Sections 43-45 of the Employment Act. It also failed to demonstrate that it had followed due process in disciplinary hearings as required under Section 41 of the Act.
In addition, it failed to disprove Mr Otieno’s claim that his dismissal was intended to avoid the equity payout.
Ultimately, the court awarded Mr Otieno $750,000 (one percent of Little’s $75 million valuation). ‘This value was not contested by the respondent, who made a bare denial of the claim,’ noted the court.
He was also awarded Sh1 million for unfair dismissal (three months’ salary) and full costs of the case, with the court rejecting Little’s argument that he underperformed.
‘The claimant lost career growth and was not compensated for the loss. The claimant was mistreated greatly for the last part of his tenure with a view to denying him his entitlement,’ remarked the trial judge.
The ruling highlights how Kenya’s workplace disputes are evolving, with more employees now turning to digital evidence, from emails and recordings to text messages, to challenge unfair dismissal.