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ELRCPartially AllowedCause No. 53 of 2011· [2015] KEELRC 1558 (KLR)

Catherine Wanja Njeru v Kenya Post Office Savings Bank [2015] KEELRC 1558 (KLR)

Employment and Labour Relations Court of Kenya
19 February 2015
MMM. Mbaru
8,608 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~34 min to read original · ~4 min brief

The bottom line

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A Kenyan court ruled that even when an employee's dismissal was justified, firing her without a fair hearing entitled her to substantial compensation.

What this practically means

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Executive summary

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The Claimant, employed by the Respondent bank from 2nd January 1990 and rising to Regional Manager, Western Region based in Kisumu, was terminated on 30th November 2010 following a double transfer of Kshs.2.67 million to a customer through both an electronic transfer and a cheque she signed as second signatory on 26th October 2009. She was interdicted on half pay from 30th May 2010, appealed twice without success, and was terminated after a five-minute management meeting on 18th November 2010 without a formal disciplinary hearing. She sought reinstatement, withheld salaries, notice pay, compensation, severance and a certificate of service. The Court, in a judgment by M. Mbaru, J, found that although substantive grounds for termination existed - the Claimant as overall supervisor contributed to the losses through lack of diligence, compounded by weak and ambiguous Respondent procedures under review - the procedure adopted was fundamentally unfair: the interdiction exceeded the one-month policy period, investigations were not shared with or put to her, no disciplinary hearing was convened with a right to be accompanied by a fellow employee, and the termination letter did not indicate appeal mechanisms. The Court declared the termination procedurally unfair and awarded three months' pay as compensation (Kshs.662,520.00), notice pay of Kshs.662,520.00, withheld salaries of Kshs.443,448.00 with interest, and costs. Reinstatement was refused because the substantive grounds stood; salary increments to retirement and severance/gratuity were declined for lack of contractual or statutory basis. Withholding terminal dues without a counter-claim was held to be double punishment, and the Respondent was ordered to release the Certificate of Service within seven days, awards being subject to section 49(2) of the Employment Act.

Key legal issues

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01

Whether there was a valid reason for the termination

Holding

There were substantive grounds for termination as the Claimant as overall supervisor contributed to the losses through failure to act diligently

Reasoning

The Court found that the RTGSS procedures were under review and open to misinterpretation, but the Claimant as Regional Manager received end-of-day reconciliation reports and had access to customer accounts; a diligent supervisor would have detected the double transfer earlier and acted promptly to recover funds. The audit report acknowledged procedural weaknesses but also attributed the loss to negligence. Substantive reasons therefore existed at the time of termination.

p. 11
02

Whether the procedure adopted was fair

Holding

The termination was procedurally unfair - no disciplinary hearing was convened, investigations were not shared with the Claimant, and appeal rights were not outlined

Reasoning

The Claimant was on interdiction beyond the one-month policy period, appeals were rejected without conclusion of investigations, the 18 November 2010 meeting lasted five minutes with no agenda or minutes, she was never invited to a disciplinary hearing nor accompanied by a fellow employee, and the termination letter did not indicate how or to whom an appeal would lie. Reliance on investigations conducted without interviewing her was unfair.

p. 12
03

What remedies flow from the finding of procedural unfairness

Holding

Compensation of three months' pay, notice pay, withheld salaries, interest on withheld salaries, costs and release of the certificate of service; reinstatement refused

Reasoning

Having found the termination procedurally unfair but substantively justified, the Court awarded compensation under section 49 of the Employment Act, confirmed the offered three months' notice pay, and ordered payment of salaries withheld during interdiction. Reinstatement was declined because substantive grounds for termination existed. Withheld terminal dues had to be released unconditionally as withholding them was double punishment.

p. 12

Legal principles established

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  • An employer must prove the reasons for termination, which are the matters the employer genuinely believed to exist at the time of termination
  • Even where valid grounds for termination exist, fair procedure including a hearing in the presence of a fellow employee and notification of appeal rights under section 41 must be followed
  • Withholding terminal dues without a counter-claim, where the amounts relate to the subject of termination, amounts to double punishment
  • Keeping an employee on interdiction beyond the policy period causes mental anguish and loss of income and is procedurally unfair

Court orders

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  1. 1.A declaration that the termination of the Claimant was procedurally unfair
  2. 2.Award of Kshs.662,520.00 in compensation
  3. 3.Notice pay awarded at Kshs.662,520.00
  4. 4.Withheld salaries awarded at Kshs.443,448.00
  5. 5.Interest on the withheld salaries at court rates
  6. 6.Costs of the suit to the Claimant
  7. 7.The Respondent to release the Certificate of Service to the Claimant within 7 days
  8. 8.Amounts payable subject to section 49(2) of the Employment Act

Authorities

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Legislation

  • Employment Actsection 43
  • Employment Actsection 45(5)
  • Employment Actsection 44(4)(c) and (e)
  • Employment Actsection 47(5)
  • Employment Actsection 49(4)(b) and (d)
  • Employment Actsection 49(2)
  • Employment Actsection 41
  • Employment Actsection 51
  • Employment Actsections 35 and 47

Cases cited (7)

  • Frederick Odongo Owegi versus CFC Life Assurance Ltd
    [2014] eKLR
  • Banking Insurance & Finance Union versus Post Bank Ltd
    [2013] eKLR, Cause No.694 of 2010
  • David Getare Nyangau versus Houseman General Contractors Ltd
    [2013] eKLR
  • BIFU versus Barclay Bank of Kenya
    Cause No.1660 of 2013
  • Caliph O Ogega versus the National Social Security Fund
    Cause No. 280 of 2013
  • Peter Akidah Ombuoro versus South Nyanza Sugar Company Limited
    Cause No. 366 of 2010
  • Rift Valley Textiles Ltd v Edward Onyango Oganda
    Nakuru Civil Appeal No. 27 of 1992
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act and Labour Relations Act (claim for unfair termination filed in Cause No. 53 of 2011)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (2)

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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, "Catherine Wanja Njeru v Kenya Post Office Savings Bank [2015] KEELRC 1558 (KLR)", Case Analysis (2015). Cause No. 53 of 2011. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2015/1558/eng@2015-02-19

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