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ELRCPartially AllowedNot stated in the judgment text (notice of motion filed 25th June 2016 in a pending ELRC suit)· [2016] KEELRC 162 (KLR)

Banking Insurance & Finance Union (Kenya) v National Bank of Kenya (Cause 846 of 2014) (Employment and Labour) [2016] KEELRC 162 (KLR)

Employment and Labour Relations Court
9 December 2016
MNMATHEWS NDERI NDUMA
1,504 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~6 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court let a bank keep recovering a staff loan at preferential rates but halted any sale of the property until fresh statutory notice is issued.

What this practically means

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Executive summary

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The claimant union, by notice of motion filed on 25th June 2016, sought to injunct the respondent bank from realizing loan securities (LR No. Eldoret Municipality Block 9/1168 and Ngong/Ngong 55765) belonging to former employees Janet Patricia Maina and Andrew Kiptoo Kotut, pending determination of a suit challenging the termination of their employment. The union argued that the loans were granted on special preferential terms tied to employment, repayable by payroll deductions and pegged on retirement age, so the bank should await the outcome of the termination suit. The respondent opposed, raising a preliminary jurisdictional objection that the ELRC has no jurisdiction over charges under the Land Act, 2012, and asserting that due statutory process had been followed before exercising its statutory power of sale. The court framed two issues: jurisdiction and whether injunctive relief was merited. On jurisdiction, the court adopted Rika, J.'s reasoning in Industrial Court Cause No. 900 of 2012, holding that a dispute over a charge securing a staff loan is a matter of employment, so the ELRC is the appropriate forum. On the merits, applying the Mrao test for interlocutory injunctions, the court found the claimant had an arguable case only that the loans be computed at preferential employee rates pending the suit, but no prima facie case to halt repayment outright, since the grievants were in default. The application was refused. The court ordered continued recovery at the special staff rates, a fresh computation of arrears at special rates, and realization of the security only after fresh statutory notice, with costs in the cause.

Key legal issues

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01

Jurisdiction of the ELRC over an application to restrain realization of a charge securing staff loans

Holding

The ELRC has jurisdiction because the dispute over the charge securing the staff loan arises from the employment relationship.

Reasoning

The court adopted the reasoning of Rika, J. in BIFU v Consolidated Bank of Kenya, ELRC Cause No. 900 of 2012, where a similar objection was raised against injunctive relief over staff loan securities. Rika, J. held that although the Environment and Land Court is not entirely divested of jurisdiction, the ELRC is the most appropriate forum for disputes arising from staff loans granted by virtue of employment. The court agreed in full that this is the most appropriate court to hear the cause and matters arising from the main dispute.

p. 3
02

Whether the applicant satisfied the requirements for an interlocutory injunction

Holding

No prima facie case was established to stop loan repayment; defaulting employees cannot be shielded from their contractual obligations even where the termination is contested.

Reasoning

Applying the Mrao test (prima facie case with probability of success, irreparable injury not compensable in damages, balance of convenience), the court found the claimant had an arguable case only that the loans should be computed on preferential employee rates pending determination of the termination dispute. However, the grievants were in default and the court could not condone that digression from contractual obligations. Special rates were to be retained, but realization of security after fresh statutory notice was permitted.

p. 4

Legal principles established

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  • A dispute over a charge created to secure a staff loan is a matter of employment within the ELRC's jurisdiction, notwithstanding the Land Act framework governing charges.
  • An employer who grants an employee a loan facility on special terms is entitled to vary the terms once the employment relationship ceases, provided the termination was lawful.

Court orders

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  1. 1.The application to stop the loan repayment pending the hearing and determination of the suit is refused
  2. 2.The respondent to continue recovering the loan repayment on the special rates granted to the grievants until the suit is heard and determined
  3. 3.The process of computing the loan arrears at special rates and the realization of the security to commence afresh after giving the grievants the necessary statutory notice from the date of the ruling
  4. 4.Costs in the cause
Jurisdiction invoked
Section 12 of the Employment and Labour Relations Court Act, 2011 as amended by Misc. Amendment Law No. 18 of 2014

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Banking Insurance & Finance Union (Kenya) v National Bank of Kenya (Cause 846 of 2014)  (Employment and Labour) [2016] KEELRC 162 (KLR)", Case Analysis (2016). Not stated in the judgment text (notice of motion filed 25th June 2016 in a pending ELRC suit). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2016/162/eng@2016-12-09

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