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ELRCPartially AllowedIndustrial Cause (number not stated in judgment)· [2013] KEELRC 271 (KLR)

LOICE OTIENO V KENYA COMMERCIAL BANK LTD [2013] KEELRC 271 (KLR)

Industrial Court of Kenya
24 May 2013
RSRadido Stephen
2,411 words in judgment
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The bottom line

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A Kenyan bank's failure to follow fair dismissal procedures made an employee's sacking unlawful, earning her six months' pay in compensation.

What this practically means

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Executive summary

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Loice Otieno, employed by Kenya Commercial Bank Ltd as a bank clerk from 2 December 1985 and earning a gross monthly salary of Kshs 98,597, had her services terminated on 14 April 2009 on grounds of loss of confidence, pursuant to Clause 5(d) of the Collective Bargaining Agreement between the bank and the Banking Insurance and Finance Union. She claimed unfair termination and refusal to pay full terminal benefits, seeking a declaration, reinstatement or alternatively 12 months' compensation. The Respondent maintained that she was dismissed for unexplained cash shortages, that she had prior warnings, and that the Collective Bargaining Agreement permitted instant dismissal without warning. The Respondent's witness conceded in cross-examination that no show cause letter was issued, the Claimant was not invited to the disciplinary hearing, and no shop steward attended. The court held that section 41 of the Employment Act requires an employer contemplating termination to explain the reasons to the employee, allow representation, hear explanations, and comply with internal disciplinary rules; written correspondence suffices only if it expressly states that termination is under consideration, gives reasons, informs of entitlement to representation, and is copied to the union. The memos exchanged with the Claimant met none of these requirements, and the disciplinary meeting was attended only by senior managers. The termination was therefore procedurally unfair, and the court declined to examine the validity of the reasons under sections 43 and 45. Reinstatement was refused as four years had elapsed; the court awarded 6 months' compensation of Kshs 591,582 with interest at court rates from the date of filing, made no order as to costs, and directed the file's return to Nairobi.

Key legal issues

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01

Whether the memos issued to the Claimant satisfied section 41 of the Employment Act

Holding

The memos did not inform the Claimant that termination was being contemplated and were not copied to her union, so section 41 was not complied with

Reasoning

The four memos merely requested explanations for cash differences and never indicated that the Respondent was contemplating terminating the Claimant's services. Section 41(2) requires an employer contemplating termination to expressly and unambiguously inform the employee of the contemplated action. The memos were also not copied to the union of which the Claimant was a member despite the CBA. The disciplinary meeting of 31 March 2009 was attended only by senior managers; the Claimant was not invited and no shop steward was present. Termination was therefore procedurally unfair.

p. 4
02

Whether the court needed to consider the validity and fairness of the reasons for termination under sections 43 and 45

Holding

Not necessary, since the termination failed on procedural grounds alone

Reasoning

Having found the termination procedurally unfair for non-compliance with section 41, the court declined to examine whether the Respondent proved the reasons for termination or whether those reasons were valid and fair under sections 43 and 45, as such an exercise would serve only an academic purpose.

p. 5

Legal principles established

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  • Procedural fairness under section 41 of the Employment Act is mandatory even where summary or instant dismissal is contemplated
  • Written correspondence can satisfy section 41 only if it expressly states that termination is under consideration, states the reasons, informs the employee of the entitlement to representation, and is copied to the union where the CBA so provides
  • An appeal against termination cannot cure non-compliance with section 41

Court orders

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  1. 1.Declaration that the termination of the Claimant was procedurally unfair
  2. 2.The prayer for reinstatement is declined
  3. 3.The Respondent to pay the Claimant 6 months' compensation in the sum of Kshs 591,582/- with interest at Court rates from date of filing of claim
  4. 4.No order as to costs because of the interest awarded
  5. 5.The Deputy Registrar to transmit the file back to Nairobi after delivery of the judgment

Authorities

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Legislation

  • Employment Actsection 41
  • Employment Actsection 41(2)
  • Employment Actsections 43 and 45
  • Employment Actsection 49 and 49(4)
  • Employment Actsection 12
  • Industrial Court Actnot specified (reinstatement within three years)

Cases cited (2)

  • Kenya Scientific Research International Technical & Allied Institutions Workers Union v Stanley Kinyanjui & Magnate Ventures Ltd
    Industrial Cause No. 273 of 2010
  • Kenya Revenue Authority v Menginya Salim Murgani
    Civil Appeal No. 108 of 2010
Jurisdiction invoked
Employment Act 2007 and Industrial Court Act (first-instance employment dispute; specific provision not stated)

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, "LOICE OTIENO V KENYA COMMERCIAL BANK LTD [2013] KEELRC 271 (KLR)", Case Analysis (2013). Industrial Cause (number not stated in judgment). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2013/271/eng@2013-05-24

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