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Court of AppealDismissedCivil Appeal (ELRC Appeal) from ELRC No 1359 of 2011· [2021] KECA 95 (KLR)

Cooperative Bank of Kenya Limited v Yator (Civil Appeal 87 of 2018) [2021] KECA 95 (KLR)

Court of Appeal
22 October 2021
ASAsike-MakhandiaHOH. OmondiMNMumbi Ngugi
4,796 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~19 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal confirmed that an employer cannot dismiss an employee for misconduct it already resolved, and must always allow the employee a fair hearing.

What this practically means

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Executive summary

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This is a first appeal by Co-operative Bank of Kenya Ltd against the judgment of N Nderi, J of the Employment and Labour Relations Court at Nairobi, which found that the summary dismissal of its employee (the respondent) on 11th September 2007, following a loss of Kshs 1,796,300 at the Nakuru branch, violated sections 45(2)(a) and (c) of the Employment Act, 2007, and awarded the respondent ten months' salary as compensation, one month's salary in lieu of notice, two months' house allowance, interest and a certificate of service. The appellant argued principally that the 2007 Act, which came into force on 2nd June 2008, did not apply retrospectively to a dismissal that predated it, that the dismissal was justified as gross misconduct under the staff manual, and that damages should have been limited to one month's salary. The Court of Appeal rejected the retrospectivity argument, holding that section 93 of the 2007 Act expressly saved contracts made under the repealed Employment Act and demonstrated legislative intent that the new Act apply to them. On the merits, the Court found the dismissal amounted to double punishment for a complaint already resolved by a warning letter, and that no fair hearing was accorded; the employer failed to discharge its burden of proving a fair procedure. It upheld the ten-months' salary award as a judicious exercise of the section 49 discretion, being compensatory rather than punitive. It declined to address the certificate of service issue for want of a cross appeal. The appeal was dismissed in its entirety with costs to the respondent. The decision binds subordinate courts and tribunals on retrospectivity under section 93, the prohibition of double punishment, and the employer's burden of proving procedural fairness.

Key legal issues

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01

Retrospective application of the Employment Act, 2007 to a dismissal that occurred before it came into force

Holding

Section 93 of the Employment Act, 2007 expressly saved contracts made under the repealed Act, so the 2007 Act applied retrospectively to the respondent's contract and the trial court rightly applied it.

Reasoning

Although statutes are presumptively prospective per Samuel Kamau Macharia, the legislators inserted section 93 as a transitional provision, providing that valid contracts of service made under the repealed Employment Act continue in force and are read and construed as if made under the 2007 Act. This demonstrated a clear legislative intention for retrospective application, so the trial court's reliance on sections 45 and 49 was proper.

p. 9
02

Whether the summary dismissal was unprocedural, unlawful and illegal

Holding

Yes. The dismissal amounted to double punishment for a complaint already resolved by a warning, and was effected without a fair hearing.

Reasoning

The respondent had been suspended, investigated, reinstated and issued a first warning letter, with the matter deemed closed. The appellant then summarily dismissed him for the same infraction without a fresh show-cause notice. The employer's own witness conceded no fair hearing was accorded. The employer bore the burden of proving a fair procedure and failed to discharge it; even gross misconduct requires procedural fairness absent exceptional demonstrated circumstances.

p. 3
03

Whether the award of ten months' salary as compensation was erroneous

Holding

No. The remedies under section 49 are discretionary, the trial court was guided by the section 49(4) considerations, and no basis for interference was shown.

Reasoning

Section 49(1) permits an award of up to twelve months' salary; section 49(4) sets out considerations the court must weigh. Compensation is compensatory, not punitive. The trial judge gave cogent reasons: loss of a good job in banking, loss of income with loans and young children, and fifteen years of service. Discretion, once exercised judiciously, is not interfered with absent misdirection or injustice.

p. 11

Legal principles established

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  • Section 93 of the Employment Act, 2007 saves contracts made under the repealed Employment Act and renders the 2007 Act applicable to them retrospectively.
  • An employer cannot revive and punish an employee for a complaint that has already been dealt with, resolved and closed; doing so amounts to unlawful double punishment.
  • Even where gross misconduct warrants summary dismissal, the employer must accord procedural fairness by allowing the employee to give his defence, save in exceptional circumstances which the employer must demonstrate.
  • The burden lies on the employer to prove that termination was in accordance with fair procedure.
  • Remedies under section 49 of the Employment Act are discretionary, not mandatory, to be granted on the peculiar facts of each case guided by the considerations in section 49(4); an appellate court will not interfere absent misdirection or injustice.
  • Compensation for unfair termination is meant to make good the employee's loss, not to punish the employer.
  • In a first appeal, the Court of Appeal must reconsider and re-evaluate the evidence and draw its own independent conclusions.

Court orders

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  1. 1.Appeal dismissed
  2. 2.Appellant to pay costs of the appeal to the respondent

Authorities

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Legislation

  • Employment Actsection 4(21)
  • Employment Act, 2007sections 45(2)(a) and 45(5); 45(2)(c)
  • Employment Act, 2007section 51
  • Employment Act, 2007section 49(1)(c); 49(4)
  • Employment Act, 2007section 93
  • Employment Act, 2007section 50
  • Employment Act (re repealed), Cap 226section 17(c)
  • Employment Act (repealed)section 40
  • Employment and Labour Relations Court Actsection 12(3)(vi) and (vii)
  • Legal Notice No 61 of 23rd May 2008commencement of Employment Act, 2007
  • Labour Relations Act (South Africa)

Cases cited (11)

  • Samuel Kamau Macharia and Another vs Kenya Commercial Bank Limited & 2 Others
    [2012] eKLR
  • Sotik Highlands Tea Estates Limited vs Kenya Plantation & Agricultural Workers Union
    [2017] eKLR
  • Kenneth Kariza Kasemo vs Kenya Bureau of Standards
    [2013] eKLR
  • Peter Otieno Opollo vs Board of Governors Kisumu Polytechnic College & Another
    [2013] eKLR
  • Sanitam Service (EA) Ltd vs Rentokil
    [2006] 2 KLR 70
  • National Social Security Fund Board Trustees & Others vs Central Organization of Trade Union (K)
    [2015] eKLR
  • National Planners Limited vs Contributories ETC
    AIR (1958) PH 230
  • Hema Hospital vs Wilson Makongo Marwa
    [2015] eKLR
  • Le Monde Luggage cc t/a Pakwells Petze vs Commissioner G Dun & Others
    Appeal Case No JA 65/205
  • Co-operative Bank of Kenya Ltd vs Banking Insurance & Finance Union
    CA No 188 of 2014
  • Kenya Revenue Authority & 2 others vs Darasa Investments Limited
    [2018] eKLR, Civil Appeal No 24 of 2018
On appeal from
Employment and Labour Relations Court at Nairobi
ELRC No 1359 of 2011
Jurisdiction invoked
First appeal to the Court of Appeal from the Employment and Labour Relations Court ( appellate jurisdiction over ELRC decisions)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (25)

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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, "Cooperative Bank of Kenya Limited v Yator (Civil Appeal 87 of 2018) [2021] KECA 95 (KLR)", Case Analysis (2021). Civil Appeal (ELRC Appeal) from ELRC No 1359 of 2011. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2021/95/eng@2021-10-22

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