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Court of AppealPartially AllowedCivil Appeal (Judgment dated 6th August 2019, Nairobi; companion to Civil Appeal No. 117 of 2017, National Bank of Kenya Ltd v Anthony Njue John)· [2019] KECA 404 (KLR)

National Bank of Kenya v Samuel Nguru Mutonya

Court of Appeal of Kenya
6 August 2019
RNR.N. NambuyePKP.O. KiageSKS. ole Kantai
5,721 words in judgment
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The bottom line

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Kenya's Court of Appeal confirmed an unfairly dismissed bank employee's reinstatement, but struck out extra money awards because courts cannot grant main and alternative reliefs together.

What this practically means

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Executive summary

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The Bank appealed against a decision of Monica Mbaru, J of the ELRC delivered on 22nd February 2017, which found that the termination of the respondent's 22-year employment for unacceptable performance was procedurally and substantively unfair, ordered reinstatement with salary arrears and benefits, and additionally awarded alternative reliefs of three years' salary (Kshs. 6,955,164.00), 12 months' compensation (Kshs. 2,318,388.00), leave pay and notice pay. The Court of Appeal (Nambuye, Kiage and ole Kantai, JJA) framed three issues: procedure, validity of reason, and remedies. On procedure, it adopted the summary of sections 41, 43 and 45 of the Employment Act in Janet Nyandiko v Kenya Commercial Bank and held that the Bank had followed none of the mandatory steps: no notification of the poor-performance finding, no hearing in the presence of a representative, and no 2014 re-appraisal before termination despite DW1's concession. It rejected the Bank's argument that managerial prerogative was immune from judicial scrutiny, holding that such a rule would render the statutory procedures meaningless. Reinstatement, salary arrears to the date of reinstatement and full benefits were affirmed. However, applying Alex Wainaina and Olive Mwihaki Mugenda, the Court held that main and alternative reliefs cannot both be granted in blanket form; the alternative awards were vitiated and set aside. Each party was ordered to bear its own costs in the appeal, with the costs orders below affirmed. The appeal therefore partially succeeded: it failed on fairness and reinstatement but succeeded on the alternative reliefs.

Key legal issues

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01

Whether the Bank followed the correct procedure in terminating the respondent's employment

Holding

No. Sections 41, 43 and 45 of the Employment Act prescribe mandatory procedure; none of the required steps (notification of reasons, hearing in the presence of a representative, and a 2014 re-appraisal before termination) were undertaken, so termination was unprocedural.

Reasoning

The Court adopted the summary of sections 41, 43 and 45 in Janet Nyandiko v Kenya Commercial Bank. DW1 conceded there was no 2014 follow-up re-evaluation after the September 2013 rating and PIP, and no notice or hearing preceded the termination letter. Payment of one month's salary in lieu of notice could not cure the procedural unfairness under section 41.

p. 9
02

Whether the managerial-prerogative argument ousted the court's scrutiny of the termination

Holding

No. While termination was an exercise of managerial supervisory power, that exercise is subject to the Act's procedures and remains amenable to court scrutiny; otherwise sections 41, 43 and 45 would be rendered meaningless.

Reasoning

The Court agreed the termination was a managerial decision but rejected the claim that it was not justiciable. Parliament enacted redress provisions in the Act precisely for grievances about non-compliance with the built-in procedures; the courts' role is limited to examining whether the termination was fair, not to supervising day-to-day management.

p. 9
03

Whether reinstatement with back salary and benefits lay in law

Holding

Yes. Reinstatement under section 49(3)(a), considered against the section 49(4) factors, was appropriate given the fault lay with the Bank; salary arrears from termination to reinstatement and full benefits are affirmed and enforceable by execution.

Reasoning

The respondent had been reinstated effective 1st April 2017. The Court held the circumstances (the Bank's failure to re-evaluate in 2014 before terminating) warranted reinstatement and affirmed the Judge's finding, including attendant salary arrears and benefits.

p. 10
04

Whether the alternative reliefs (3 years' salary, 12 months' compensation, leave and notice pay) could stand alongside reinstatement

Holding

No. Having granted the main relief, the trial court had no mandate to grant the alternative reliefs; they were granted in error, vitiated and set aside.

Reasoning

Relying on Alex Wainaina T/A John Commercial Agencies v Janson Mwangi Wanjihia and Olive Mwihaki Mugenda v Okiya Omtata Okoiti, the Court held that main and alternative reliefs cannot both be granted in blanket form without a choice and reasons.

p. 11

Legal principles established

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  • Where the main relief and an alternative relief are both prayed for, a court must choose one on the facts and give reasons; it cannot grant both in blanket form.
  • An employer's exercise of managerial supervisory power in terminating employment is amenable to scrutiny by the courts for compliance with the procedures in sections 41, 43 and 45 of the Employment Act.
  • Before terminating an employee for poor performance, the employer must follow section 41: notify the employee of the poor-performance finding and intended termination, and hear the employee in the presence of a fellow employee or representative; payment in lieu of notice does not cure procedural unfairness.
  • Where poor performance is the reason for termination, the employer bears a high level of proof and must show the evaluation measures, remedial measures and a hearing; termination without a re-appraisal confirming continued poor performance is unfair.
  • The remedies under section 49 of the Employment Act are discretionary, to be granted on the peculiar facts of each case, guided by the 13 considerations in section 49(4).
  • An appellate court will not interfere with the exercise of judicial discretion unless the judge misdirected himself or was clearly wrong and injustice was occasioned.

Court orders

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  1. 1.The finding that the termination of the respondent's employment was unprocedural and substantively unfair is affirmed, as is the main relief of reinstatement with salary arrears from the date of termination to reinstatement and full attendant benefits.
  2. 2.The alternative reliefs (three years' salary of Kshs. 6,955,164.00, 12 months' compensation of Kshs. 2,318,388.00, leave days of Kshs. 19,056.00 and notice pay of Kshs. 193,199.00) are vitiated and set aside as having been granted in error.
  3. 3.Each party shall bear its own costs in the appeal; the costs orders awarded by the High Court (ELRC) stand affirmed.
On appeal from
Employment and Labour Relations Court of Kenya at Nairobi
Not stated in the judgment
Jurisdiction invoked
First appeal to the Court of Appeal under the Court of Appeal's appellate jurisdiction (the judgment characterises the appeal as 'a first appeal'); no specific constitutional or statutory provision is cited in the judgment.

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (8)

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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, "National Bank of Kenya v Samuel Nguru Mutonya", Case Analysis (2019). Civil Appeal (Judgment dated 6th August 2019, Nairobi; companion to Civil Appeal No. 117 of 2017, National Bank of Kenya Ltd v Anthony Njue John). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2019/404/eng@2019-08-06

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