Skip to content
AI-generated case briefs sourced from Kenya Law · Not legal advice
Caselaw
AI-generated case brief
Case Brief · caselaw.co.ke
ELRCPartially AllowedCause not stated in judgment (Industrial Cause, Employment and Labour Relations Court)· [2015] KEELRC 148 (KLR)

Esther Mbinya Musau v National Bank of Kenya Limited [2015] KEELRC 148 (KLR)

Employment and Labour Relations Court of Kenya (Industrial Court)
9 November 2015
MMM. Mbaru
3,642 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~15 min to read original · ~4 min brief

The bottom line

#

A Kenyan court ruled a dismissed bank employee keeps her preferential staff loan rates until her unfair termination case is decided.

What this practically means

#

Executive summary

#
This is a ruling on the Claimant's Notice of Motion dated 8th June 2015 filed in an employment dispute after her summary termination on 13th April 2015 on grounds of poor performance. The Claimant, employed since 1st September 1995, sought interlocutory injunctions restraining the Respondent from collecting loan monies or converting her staff loans from preferential rates (3% mortgage, 10% personal loan) to market rates pending the suit, and an order for a favourable recommendation letter. The Respondent opposed, arguing the loan terms are contractual privileges under the Staff Loan Policy that ceased on termination, that the dispute is outside the court's jurisdiction as it concerns charges over land and interest rates, and that damages would be adequate. The Claimant relied on Giella v Cassman Brown; the Respondent relied on Mrao, Elijah Kipng'eno Arap Bii and American Cyanamid. The court applied Giella and held that whether the poor-performance termination was fair requires evidence at trial and cannot be resolved interlocutorily. It rejected the jurisdictional objection, holding the loan facilities arose from the employment relationship and cannot be severed from the termination claim. It found no legal right to a favourable recommendation letter, but held section 51 of the Employment Act requires an unconditional Certificate of Service immediately. The court granted an interlocutory injunction preserving the loan terms, directed issuance of a Certificate of Service within seven days, gave priority hearing directions, and ordered costs in the cause. Judgment delivered at Nairobi on 9th November 2015 by M. Mbaru, Judge.

Key legal issues

#
01

Jurisdiction over disputes on staff loan facilities and interest rates

Holding

The court has jurisdiction because the loan facilities were advanced by virtue of the employment relationship and cannot be severed from the unfair termination claim

Reasoning

The Respondent argued that interest rates on loans secured by a charge over land are purely contractual and outside the court's jurisdiction under section 12 of the Employment and Labour Relations Court Act. The court held that matters stemming from the employment relationship cannot be separated; the determination of the unfair termination claim affects the loan privileges, so jurisdiction is founded on the employment relationship.

p. 6
02

Whether an interlocutory injunction should preserve the preferential loan terms

Holding

Yes - the main issue of whether the termination was unfair must go to trial with evidence, and pending that determination the Respondent should not change the terms of the Staff Loan Policy as against the Claimant

Reasoning

The question whether the Claimant's poor-performance termination was fair requires evidence and cannot be resolved at interlocutory stage. Since the loan privileges flowed from the employment, whose fairness is under challenge, the status quo on the loan terms should be preserved pending determination of the suit.

p. 6
03

Right to a favourable recommendation letter versus Certificate of Service

Holding

There is no right to a favourable recommendation letter, but the Certificate of Service required by section 51 of the Employment Act must issue immediately and unconditionally

Reasoning

Employment law, the Constitution and current jurisprudence do not recognise a right to a favourable recommendation letter. However, section 51 of the Employment Act mandates a Certificate of Service upon termination, with sanctions for non-issuance, and it should issue with the termination letter, not on demand. Because the Claimant is not seeking reinstatement, this order need not await trial.

p. 5

Legal principles established

#
  • An interlocutory injunction requires a prima facie case with a probability of success; where the court is in doubt it decides on the balance of convenience (Giella v Cassman Brown)
  • An employment contract is founded on special circumstances regulated by statute under Article 41 of the Constitution, and questions of fairness in the employment relationship cannot be adjudged summarily on an interlocutory application
  • Upon termination, whatever the reason, an employer must issue a Certificate of Service under section 51 of the Employment Act, and it should not be left to the employee to demand it

Court orders

#
  1. 1.An interlocutory injunction restraining the Respondent and any other party from changing in any form the terms and conditions of the various loan facilities obtained by the Claimant during her employment, with the Claimant to continue repaying at the same terms and conditions enjoyed while in employment
  2. 2.Parties to be allocated a mention date before the Deputy Registrar within 14 days to be allocated a hearing date on priority basis
  3. 3.The Respondent to comply with section 51 of the Employment Act and issue the Claimant a Certificate of Service within seven (7) days
  4. 4.Costs to be in the cause

Authorities

#

Legislation

  • Industrial Court Act (Employment and Labour Relations Court Act)section 3(1)
  • Employment and Labour Relations Court Actsection 12
  • Constitution of KenyaArticle 41
  • Constitution of KenyaArticle 162(2)
  • Employment Actsections 43, 47 and 51
  • Central Bank Actsection 36(4)
  • Court Rules (Industrial Court/Employment and Labour Relations Court)rules 16(1), (3), (4), (5) and (8)

Cases cited (13)

  • Mbuthia versus Jimba Credit Corporation & Another
    [1988] KLR
  • Giella versus Cassman Brown Company Ltd
    [1993] EA
  • Dorris Kanini Ndunda versus Family Bank Limited
    [2013] eKLR
  • Mrao versus First American Bank of Kenya & 2 Others
    [2013] eKLR
  • Abraham Nyambane versus Barclays Bank of Kenya limited
    [2013] eKLR
  • Alfred Muthomi & 2 others versus National bank of Kenya
    [2014] eKLR
  • Elijah Kipng'eno Arap Bii versus Kenya Commercial Bank Ltd
    [2001] eKLR
  • Abraham Asiago versus Barclays Bank Ltd
    [2013] eKLR
  • Kenya Commercial Finance Co. Ltd versus Afraha Educational Society
    (2001) 1 EA
  • American Cyanamid versus Ethicon ltd
    (1975) All ER; (1975) A.C.
  • Peter Mutisya Musembi & Another versus Kenya Commercial Bank Ltd
    (2001) eKLR
  • Sita International Networking Computing B.V. & Another versus Transport and Allied Workers Union
    Cause No.991 of 2012
  • Elizabeth Washeke and 62 others versus Airtel Networks Limited & Another
    Cause No.1972 of 2013
Jurisdiction invoked
Articles 41 and 162(2) of the Constitution and section 12 of the Employment and Labour Relations Court Act (Industrial Court Act)

Key timeline

#

Practical implications

#

Frequently asked questions

#

Cite this brief

#

Cite this brief

Caselaw, "Esther Mbinya Musau v National Bank of Kenya Limited [2015] KEELRC 148 (KLR)", Case Analysis (2015). Cause not stated in judgment (Industrial Cause, Employment and Labour Relations Court). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2015/148/eng@2015-11-09

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