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ELRCPartially AllowedCause No. 2424 of 2012· [2015] KEELRC 1070 (KLR)

Frederick Kariuki Kamau v Bank of India [2015] KEELRC 1070 (KLR)

Employment and Labour Relations Court of Kenya
19 May 2015
7,367 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Employment Court ruled Bank of India unfairly dismissed a banker over fraud he didn't commit, awarding him about Kshs 5.6 million.

What this practically means

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Executive summary

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The Claimant, employed by Bank of India from 8th November 1983 and rising to Assistant Manager of the Industrial Area Branch, was arrested on 14th May 2010 over the payment of ten forged cheques from Alpharama Limited's account totalling Kshs.6,519,049.00, tendered a resignation the same day, and was instead served with a letter of summary dismissal on 2nd June 2010 rejecting his resignation. He was acquitted in the criminal trial on 23rd August 2012. He claimed the dismissal was unprocedural, illegal and unconstitutional, seeking compensation to retirement, gratuity, medical allowances and legal fees. The Respondent maintained he had voluntarily resigned, that there were valid reasons for summary dismissal under section 44 of the Employment Act, and that terminal dues of Kshs.177,391.00 and Kshs.1,485,705.00 were already paid. The court framed three issues: whether the separation was by summary dismissal or voluntary resignation, whether there was discrimination, and what remedies were due. It held the resignation was unequivocally rejected, so the separation was a summary dismissal; the dismissal violated section 41's procedural fairness requirements and lacked substantive grounds since the cheques passed UV light, system signature and supervisory checks, and the cheque paper had been stolen from the printer. Discrimination was not established as all staff gave statements during investigations. Judgment was entered for the Claimant with compensation of Kshs.1,996,872.00 (12 months under section 49), gratuity of Kshs.3,494,526.00, notice pay of Kshs.166,406.00 and costs. Claims for future earnings to retirement, medical allowances and criminal defence legal fees were declined.

Key legal issues

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01

Whether the separation of the Claimant was by voluntary resignation or summary dismissal

Holding

The Respondent unequivocally rejected the Claimant's resignation, so the separation was a summary dismissal for which the employer bore the burden of justification

Reasoning

The Respondent's letter of 2nd June 2010 expressly rejected the resignation and dismissed the Claimant summarily under section 44 of the Employment Act. The court found no legal basis for denying terminal benefits on the strength of a rejected resignation, and found credible the Claimant's evidence that he was denied the opportunity to work. The two-week interval showed the Respondent had means and policy to address alleged misconduct but instead dismissed without hearing.

p. 8
02

Whether the summary dismissal was fair in procedure and substance

Holding

The dismissal was procedurally flawed (no hearing under section 41) and substantively unjustified (no valid reasons under sections 43 and 45), rendering it a nullity

Reasoning

The employer suspected the Claimant of involvement in cheque fraud, but the Claimant and the Respondent's own witness showed the cheques passed UV light, system signature and supervisory checks. The investigation report confirmed the Claimant passed the cheques at payment point and supervisors counter-signed them. The forged cheques were printed on paper stolen from the cheque printer, and other cashiers who paid more cheques were not charged. The dismissal without a hearing and without valid grounds was unfair and equivalent to unfair labour practice.

p. 10
03

Whether the Claimant was discriminated against

Holding

No discrimination established; all staff went through the same investigatory procedures, though the process and outcome were biased against the Claimant

Reasoning

A party alleging discrimination must outline the circumstances and show how those circumstances create discrimination. Here all employees, including Ms Osoro and Mr Allan Mburu, gave statements during investigations. The Claimant was not singled out at the investigation stage; his grievance lay in the dismissal without due process and without valid reasons, which the court addressed under unfair termination rather than discrimination.

p. 11
04

What remedies are due

Holding

Terminal dues awarded: 12 months' compensation under section 49, one month's notice pay, and gratuity for 21 years; medical allowance and criminal defence legal fees declined

Reasoning

The cause of action arose in 2010 when the Employment Act capped remedies under section 49. Considering years served and circumstances, 12 months' compensation was adequate. Notice pay followed the contract's one-month termination clause and sections 35 and 36. Gratuity, payable on 21 or more years of service, could not be denied on lapsed caution letters. Medical allowances were speculative and double pay; legal fees for the criminal trial had no linkage to the Respondent.

p. 11

Legal principles established

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  • A resignation tendered by an employee must be accepted to take effect; rejecting it and requiring the employee to continue working violates section 5 of the Employment Act which prohibits forced labour
  • Even summary dismissals under section 44 of the Employment Act are subject to the procedural fairness requirements of section 41
  • Where inadequate tools of work cannot detect fraud, such discrepancies cannot be visited upon the employee
  • Gratuity is a work benefit that can only be removed by consent or statute; lapsed warnings cannot be used to deny it

Court orders

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  1. 1.Declaration that the summary dismissal of the Claimant was unfair in procedure and substance
  2. 2.Compensation at Kshs.1,996,872.00
  3. 3.Gratuity at Kshs.3,494,526.00
  4. 4.Notice pay at Kshs.166,406.00
  5. 5.Costs of the suit to the Claimant

Authorities

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Legislation

  • Employment Actsection 5(1) and (2)
  • Employment Actsection 35(1)
  • Employment Actsection 36
  • Employment Actsection 41 and 41(2)
  • Employment Actsection 43
  • Employment Actsection 44(3) and (4)
  • Employment Actsection 45(2)(a) and (b)
  • Employment Actsection 47 and 47(5)
  • Employment Actsection 49
  • Industrial Court (Procedure) RulesRule 4(e)
  • Civil Procedure Act and the Rules theretonot specified
  • Criminal Procedure Codenot specified
  • Penal Codenot specified
  • Contract Actnot specified

Cases cited (6)

  • Alphonse Maghanga versus Operation 680 Ltd
    Cause No.146 of 2012 (Mombasa)
  • George Onyango Akuti versus G4S Security Services Kenya Ltd
    Cause No.107 of 2013 (Mombasa)
  • Gilbert Nyabuto Mosome v the Standard Limited
    Cause No. 697 N of 2009
  • Jorum Gakumo v Thika Coffee Mills Ltd
    Cause No.693 of 2012
  • Collins Osoro Lukhele versus AAA Growers Limited
    Cause No. 100 of 2012
  • Hesbon Ngaruiya Waigi versus Equatorial Commercial Bank Limited
    Cause No. 60 of 2013
Jurisdiction invoked
Industrial Court jurisdiction over employment and labour relations disputes under the Industrial Court Act and Employment Act (dispute referred under written law per Rule 4 of the Industrial Court (Procedure) Rules)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (14)

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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, "Frederick Kariuki Kamau v Bank of India [2015] KEELRC 1070 (KLR)", Case Analysis (2015). Cause No. 2424 of 2012. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2015/1070/eng@2015-05-19

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