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ELRCPartially AllowedHCCC 1899 of 1997 consolidated with Civil Suit No. 1900 of 1994· [2016] KEELRC 800 (KLR)

James Kabinga Kibugu & another v Central Bank of Kenya [2016] KEELRC 800 (KLR)

Employment and Labour Relations Court
20 July 2016
HWHellen Wasilwa
2,694 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~11 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court ruled the Central Bank unfairly fired two employees without proving misconduct, awarding each KShs 2 million in damages.

What this practically means

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Executive summary

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The two Claimants, former employees of the Central Bank of Kenya, sued for damages for unfair termination following the disappearance of surrendered Forex C certificates in 1994. They were interdicted in June 1994, issued show cause letters in September 1994, and had their services terminated on 18 October 1994 on the ground that the Bank had lost trust and confidence in them, pursuant to Clause 6.21 of the Staff Rules and Regulations. The Respondent denied wrongdoing, asserting that the interdiction and termination followed its Staff Rules, that no conviction was required under Regulation 6.34, and that the Claimants were paid three months' salary in lieu of notice, unspent leave and withheld half salary. The court examined the chronology and held that Clause 6.21, which governs employees found guilty of misconduct, connotes a finding of guilt by a criminal court after due process. Since the Claimants were never charged or found guilty, reliance on Clause 6.21 was wrong. The court also noted a later Standard Newspaper report indicating the Claimants were not involved in the disappearance of the certificates. It found the Respondent had no valid reason to terminate the Claimants and that their termination was unfair and unjustified. Applying the repealed Employment Act Cap 226 and the Staff Rules, the court awarded each Claimant Kshs. 2 million in damages for breach of contract, terminal dues as officers who retired in service at termination, and costs of the suit against the Respondents, rejecting the claim for twelve months' damages under the Employment Act 2007 which post-dated the cause of action.

Key legal issues

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01

Whether the Claimants were lawfully terminated under Clause 6.21 of the Staff Rules and Regulations

Holding

Clause 6.21 did not apply as the Claimants were never charged in any Court nor pronounced guilty; the termination citing that clause was wrong.

Reasoning

The court traced the chronology from interrogation in March 1994 to termination in October 1994 and observed that Clause 6.21 deals with employees found guilty of misconduct. It held that 'being found guilty' connotes a finding of guilt by a criminal court after due process. Since the Claimants were never charged or found guilty, invoking Clause 6.21 was erroneous, and the appeal against termination was also rejected.

p. 5
02

Whether the Respondent had a valid reason for termination

Holding

The Respondent had no valid reason to terminate the Claimants' services; the disappearance of the Forex C certificates was attributed to other persons.

Reasoning

The Claimants tendered a Standard Newspaper report of 15 October 2004 in which a Bank cleaner revealed that a former Department Manager asked him to carry the two bags of Forex C's. The court found that the certificates which formed the basis of termination were not connected to the Claimants, so the reasons given for termination turned out not to be true, entitling the Claimants to a remedy for breach of contract.

p. 5
03

Applicable law and measure of damages

Holding

The repealed Employment Act Cap 226 and the Staff Rules applied, entitling the Claimants to terminal dues and damages for breach of contract.

Reasoning

The court noted that the Employment Act Cap 226 (now repealed) governed employment relations at the time of termination, with Section 16 permitting termination without notice upon payment in lieu. Read with Clause 6.1 of the Staff Rules permitting dismissal for misconduct on three months' notice or pay, the court found no valid misconduct finding and awarded general damages of Kshs. 2 million per Claimant plus terminal dues.

p. 4

Legal principles established

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  • Termination of a permanent and pensionable employee for misconduct under a clause requiring a finding of guilt cannot stand where the employee was never charged or found guilty
  • An employer must have a valid reason to terminate an employee's services

Court orders

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  1. 1.Declaration that the Claimants' termination was unfair and unjustified
  2. 2.The Claimants are entitled to their terminal dues as officers who retired in the service at the time of termination
  3. 3.Payment of damages for breach of contract of Kshs. 2 million for each Claimant
  4. 4.Respondents to pay costs of the suit

Authorities

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Legislation

  • Employment Act, Cap 226 (now repealed)Section 16
  • Employment Act 2007

Cases cited (3)

  • Fulgence Sunza Masai vs. Kenya Revenue Authority
    (2014) eKLR
  • Kenya Revenue Authority Vs Menginya Salim Murgani
    (2010) eKLR
  • Ombanya Vs Gailey Roberts Limited
    (1974) E.A. 522
Jurisdiction invoked
First-instance claim for damages for unfair termination under the repealed Employment Act Cap 226 and the contract of employment

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, "James Kabinga Kibugu & another v Central Bank of Kenya [2016] KEELRC 800 (KLR)", Case Analysis (2016). HCCC 1899 of 1997 consolidated with Civil Suit No. 1900 of 1994. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2016/800/eng@2016-07-20

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