Njeru v Equity Bank of Kenya Limited (Civil Appeal 85 of 2019) [2025] KECA 1592 (KLR)
The bottom line
#The Court of Appeal dismissed a former bank employee's appeal, confirming his pension membership barred service pay and that courts rarely increase unfair dismissal awards without showing clear error.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the appellant was entitled to three months' pay in lieu of notice
- 2.Whether the appellant was entitled to service pay
- 3.Whether the award of compensation for unfair dismissal granted by the trial court was inordinately low
- 4.Whether the appellant was entitled to an award of general damages for distress and agony
- 5.Whether the learned Judge erred in making a finding with respect to the appellant's loan facility
Key legal issues
#Notice pay on termination
The appellant was entitled only to the one month's notice provided in his appointment letter, not three months' notice.
The appointment letter of 1st August 2011 stipulated one month's notice on termination. It was not contested that no notice was issued, and the trial court awarded one month's salary in lieu of notice. The claim for three months' notice had no contractual or statutory foundation.
Service pay
The claim for service pay was properly dismissed because the appellant was a member of the NSSF and the respondent's Group Pension Scheme and received his pension.
Section 35(6) of the Employment Act excludes entitlement to service pay under section 35(5) where the employee is a member of a registered pension scheme or the NSSF. Pay slips and the appellant's own testimony showed membership of both schemes and payment of pension contributions on retirement.
Quantum of compensation for unfair dismissal
The award of four months' salary for unfair termination was not inordinately low and the appellate court would not interfere with the trial court's discretion.
Under section 49 of the Employment Act the court may award up to twelve months' wages, but the exercise is discretionary. Retirement on medical grounds was justified, though the procedure was flawed; discrimination was not proved since even the appellant's own doctor recommended retirement on medical grounds. No misdirection was shown.
General damages for distress and agony
General damages for distress and agony were not available because the respondent was not liable for the accident and the appellant had already received compensation from other sources.
The accident was caused by a third-party vehicle; the appellant sued that third party and received Kshs. 276,311 under the personal accident cover and Kshs. 1,839,821 as work injury benefits, and his medical bills were partly offset. There were no special circumstances warranting further compensation.
Finding on the loan facility without a counter-claim
The learned Judge committed no error in observing that the loan contract provided for conversion of a staff loan to an ordinary loan on termination, since no orders for payment of the loan were made.
The trial Judge's remark on the loan facility was made in assessing whether the respondent treated the appellant unfairly; the contract expressly provided for conversion of staff loans upon termination of employment. As no payment orders were made, there was no basis for complaint.
Legal principles established
#- On a first appeal, the appellate court must reconsider the evidence, evaluate it itself and draw its own conclusions, while making due allowance for not having seen or heard the witnesses.
- An appellate court will not interfere with a trial judge's exercise of discretion on damages unless satisfied of misdirection or clear error occasioning injustice.
- An employee is not entitled to service pay under section 35(5) of the Employment Act where he is a member of a registered pension scheme or the National Social Security Fund.
Court orders
#- 1.The appeal is dismissed
- 2.Costs of the appeal to the respondent
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- Employment and Labour Relations Court at Meru
- ELRC Cause No. 40 of 2018
- Jurisdiction invoked
- First appeal to the Court of Appeal under the Court of Appeal's appellate jurisdiction (first appeal by way of retrial)
Relief refused
#Three months' pay in lieu of notice
Appointment letter stipulated one month's notice
Service pay for six years
Appellant was a member of NSSF and the respondent's Group Pension Scheme and was paid his pension
Enhanced compensation for unfair dismissal (beyond four months' salary)
No misdirection by the trial Judge shown; discrimination claim unfounded
General damages for distress and agony
Respondent not liable for the third-party accident; appellant already compensated by insurance and work injury benefits
Setting aside the trial court's observation on the loan facility
The learned Judge made no orders on payment of the loan and was right that conversion of staff loan to ordinary loan was contractual
Costs
Appeal dismissed with costs to the respondent.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
The upshot of the foregoing is that we find that the appeal lacks merit and is hereby dismissed, with costs to the respondent.
An appeal to this Court from a trial by the High Court is by way of retrial and the principles upon which this Court acts in such an appeal are well settled.
the appellant has not furnished sufficient reasons to prove misdirection on the part of the trial Judge to justify the interference with the damages awarded by this Court.
Section 41 of the Employment Act acknowledges physical incapacity as a valid ground for termination of employment.
we find no special circumstances herein that would warrant additional compensation in the manner claimed for by the appellant.
Issues in the judgment
#Judgment header refers to a first appeal from a trial by the High Court, but the decision appealed from is of the Employment and Labour Relations Court; the Gitobu Imanyara quotation references a High Court trial.
Typographical error in the key holding sentence: 'It our considered view...' (missing 'is').
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Njeru v Equity Bank of Kenya Limited (Civil Appeal 85 of 2019) [2025] KECA 1592 (KLR)", Case Analysis (2025). ELRC Cause No. 40 of 2018 (appeal therefrom). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2025/1592/eng@2025-10-03
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.