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Case Brief · caselaw.co.ke
Court of AppealPartially AllowedCivil Appeal No. 296 of 2016 consolidated with Civil Appeal No. 301 of 2016· [2018] KECA 718 (KLR)

Barclays Bank of Kenya Ltd & 1 other v Gladys Muthoni & 20 Others

Court of Appeal
16 March 2018
12,739 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~51 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal ruled Barclays' redundancy of 21 staff was unfair because the bank skipped proper consultation and notice, though discrimination claims failed.

What this practically means

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Executive summary

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This consolidated judgment of the Court of Appeal (Waki, Ouko and M'inoti JJ.A) determined two appeals arising from a constitutional petition before the Employment and Labour Relations Court at Nairobi (Mbaru, J) concerning the redundancy of 21 employees seconded from Barclays Bank of Kenya (BBK) to Barclays Africa Group (BAGL) upon the closure of BAGL's Nairobi regional office. In the main appeal (CA 296), the Court affirmed the trial court's finding that BBK was the employer, that the redundancy was unprocedural, unjustified and unfair, and that pre-redundancy consultation is mandatory under Article 41 of the Constitution and ILO Convention No. 158 as domesticated by Article 2(6). It upheld the award of 10 months' gross salary per respondent under section 49 of the Employment Act and the ancillary exit-package orders. However, it overturned the finding of discrimination on grounds of nationality for want of evidence and flawed procedure (further affidavits filed without leave, no cross-examination), setting aside the Sh.500,000 damages per respondent and the six months' salary aggravated damages for the confidentiality clause, and dismissed the respondents' cross appeal seeking enhanced remedies and orders on the Banking, Capital Markets and Competition Acts. In CA 301, the Court held that the trial judge erred in confirming the decretal amount at Sh.252,793,280.80 on a mention date with no formal application pending, and set aside that order, declining to delve into functus officio and bias. Each party was ordered to bear its own costs. The decision binds subordinate courts and tribunals on the seven mandatory conditions in section 40 of the Employment Act and the imperative of meaningful pre-redundancy consultation.

Key legal issues

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01

Who was the employer of the respondents?

Holding

BBK was the employer; BAGL was joined as a necessary party given their special relationship, and the trial court was not under any misapprehension that BAGL was the employer.

Reasoning

The contracts of service were signed with BBK, which paid the salaries. The trial court expressly recognised the respondents as BBK employees before deployment to BAGL. BAGL was joined because the symbiotic relationship between the two companies made it necessary for effective determination of all issues. The first ground of appeal therefore had no firm basis.

p. 5
02

Whether the redundancy notices complied with section 40 of the Employment Act

Holding

The notice was invalid: the reasons and extent of the redundancy were never given as required, and there was no proof of service on the Labour Officer.

Reasoning

Although the Court accepted the disputed letter was intended as a redundancy notice giving over two months' notice, the employer was obliged to give the reasons and extent of the redundancy at least one month before effect, and to serve the Labour Officer. The appellants made only a bare assertion of service on the Labour Officer, and in the absence of proof the Court found there was no service, rendering the notice invalid.

p. 10
03

Whether pre-redundancy consultation is mandatory for non-unionisable employees

Holding

Yes; meaningful consultation before declaring redundancy is an imperative requirement, aligned with the Constitution and ILO standards.

Reasoning

Although the Employment Act is silent on consultation with non-unionisable employees, the Court found the dicta of Maraga and Murgor JJ.A in the Kenya Airways case resonate with the Constitution and domesticated international law under Article 2(6). Article 41 on fair labour practices supports real, not cosmetic, consultation, in good faith, before redundancy notices issue.

p. 11
04

Whether the redundancy was justified

Holding

No; the appellants failed to discharge the heavy burden of justifying the redundancy.

Reasoning

The trial court found the employer's business remained intact, the nature of business and technical support had not changed, and only the location of BAGL's operations was changing. No evidence was laid on the positions previously held by the respondents before redeployment. On a first appeal, the Court found no basis to disturb that finding, and the questions of substantial justification and fair implementation were answered in the negative.

p. 11
05

Whether discrimination on grounds of nationality was proved

Holding

No; the finding of discrimination was overturned for want of evidence and flawed procedure.

Reasoning

The prayers for disclosure of criteria and documents were neither granted nor pursued, so the appellants were under no compulsion to produce documents. The respondents filed further affidavits without leave and never sought oral evidence tested in cross-examination. The affidavits fell short of proving so serious a charge; a petition by way of declarations was an inappropriate vehicle for such proof.

p. 16
06

Whether the remedies awarded were lawful

Holding

The 10 months' salary award for unfair termination and other discretionary awards were upheld; damages for discrimination and aggravated damages for the confidentiality clause were set aside.

Reasoning

The award of 10 months' gross salary fell within section 49 of the Employment Act and the trial court laid a proper basis for it; appellate interference with judicial discretion requires demonstrated misdirection. The discrimination damages dissipated with the overturned finding, and aggravated damages lacked proof of malice. The other awards mirrored the appellants' own exit package offers.

p. 19
07

Whether the trial court could make substantive orders on a mention date (Appeal No. 301)

Holding

No; the order confirming the decretal amount made on 4th August 2016 was made in error on a mention date with no formal application before the court, and was set aside.

Reasoning

There was no formal application for hearing and determination; the matter was fixed for mention. While the Court declined to delve into functus officio and bias, settled authority holds that substantive matters cannot be determined on a mention date unless the parties agree. The fourth, most drastic order determining computation of dues on contentious documents breached that rule.

p. 21

Legal principles established

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  • Section 40 of the Employment Act prescribes seven mandatory conditions precedent to termination on account of redundancy, including written notice of the reasons and extent of the redundancy at least one month before it takes effect, served personally on non-unionisable employees and on the labour officer.
  • Meaningful pre-redundancy consultation with affected employees is an imperative requirement of Kenyan law, in accord with Article 41 of the Constitution and ILO Convention No. 158 as domesticated by Article 2(6) of the Constitution.
  • The employer bears a heavy burden to justify termination of employment; a bare assertion of business reorganisation or relocation does not discharge it.
  • Compensatory damages for unfair termination are subject to the 12-month salary cap in section 49 of the Employment Act, and judicial restraint must be exercised in exceeding it.
  • Substantive orders cannot be made on a mention date; a matter fixed for mention cannot be determined on its merits unless the parties so agree after hearing submissions.

Court orders

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  1. 1.Appeal No. 296 of 2016 is partly successful on the findings on the grounds of appeal discussed, but otherwise dismissed
  2. 2.The cross appeal is dismissed
  3. 3.The appellants are partly successful in Appeal No. 301 of 2016 and Order No. 1 made and issued on 4th August, 2016 is set aside
  4. 4.Each party shall bear its own costs of the appeals
On appeal from
Employment and Labour Relations Court at Nairobi
Constitutional Petition No. 25 of 2016
Jurisdiction invoked
First appeal under the Court of Appeal Rules (Rule 29) from the Employment and Labour Relations Court

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (7)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Barclays Bank of Kenya Ltd & 1 other v Gladys Muthoni & 20 Others", Case Analysis (2018). Civil Appeal No. 296 of 2016 consolidated with Civil Appeal No. 301 of 2016. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2018/718/eng@2018-03-16

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.