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ELRCPartially AllowedCause No 2168 of 2012· [2016] KEELRC 1203 (KLR)

Rehema Muthoni Saidi v Kenya Commercial Bank Limited [2016] KEELRC 1203 (KLR)

Employment and Labour Relations Court
6 May 2016
MNMathews Nderi Nduma
2,028 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 KCB unfairly fired a manager over fraud she couldn't have prevented, awarding her 10 months' salary.

What this practically means

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Executive summary

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The Claimant, employed by Kenya Commercial Bank from 11th July 2005 and rising to Manager Operations, was terminated on 6th September 2011 for gross negligence after authorising a fraudulent cash withdrawal of Ksh. 1,800,000 at Prestige Plaza Branch on 19th January 2011. She claimed the termination was unfair, arguing she followed the applicable circulars, that the 'call back' directive was not mandatory, that the policy on black and white photographs postdated the fraud, and that her long clean service was ignored. The Respondent admitted the employment particulars and maintained she failed to call the home branch, counter-check system details, or exercise due diligence, and sought dismissal with costs. The Court evaluated sworn testimony of the Claimant and two Respondent witnesses and framed three issues: valid reason, fair procedure, and entitlement to reliefs. It found the Claimant took all reasonable verification steps except calling the Embu branch, that the circular only required a call when in doubt, and that the bank itself contributed to the fraud through undetected prior withdrawals at other branches, an outdated photograph, no telephone reference, and the fraudster's insider information. Her long, unblemished service was strong mitigation, and dismissal rather than a severe warning was inordinate. The reason for termination was held invalid under section 43(1), the termination wrongful and unfair under sections 45 and 47(5), and compensation was assessed under section 49. Following the Court's earlier decision in BIFU v Barclays Bank of Kenya (Cause No. 125 of 2014), 10 months' salary (Ksh. 1,823,250) was awarded with interest from filing, plus costs to the Claimant.

Key legal issues

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01

Validity of the reason for termination under section 43(1) Employment Act

Holding

The reason (gross negligence) was invalid because the Claimant exercised reasonable care and the bank contributed to the fraud going undetected

Reasoning

The Claimant took all reasonable verification steps except calling the home branch; the circular only required a call when in doubt. The bank's failure to update the account, notify branches of prior frauds, and warn of insider information invalidated the negligence finding. Her 16-year clean record was strong mitigation, warranting a severe warning rather than dismissal.

p. 4
02

Whether termination was wrongful and unfair under sections 45 and 47(5)

Holding

Claimant discharged the onus on a balance of probabilities; termination violated section 45(1) as read with 45(2)(a)

Reasoning

Having found the reason invalid and the punishment inordinate in light of comparable authority, the Court held the claimant proved her case under section 47(5) and was entitled to compensation under section 49(1)(c).

p. 4
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Quantum of compensation under section 49(4)

Holding

10 months' salary awarded, following the Court's award in BIFU v Barclays Bank of Kenya

Reasoning

The Court considered mitigating and aggravating factors: clean service record, difficulty of securing banking employment after dismissal, loss of career prospects, but also that she received notice and pension benefits. Following its award in Cause No. 125 of 2014, it granted 10 months' salary.

p. 4

Legal principles established

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  • An employer bears responsibility for system and record-keeping failures (outdated photographs, missing telephone references, undetected prior fraudulent withdrawals, insider information) that impair an employee's ability to detect fraud.
  • A long unblemished service record is a strong mitigating factor that must be considered before dismissal; termination may be disproportionate where the employee exercised reasonable care.

Court orders

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  1. 1.The Respondent to pay the Claimant Ksh. 1,823,250 being equivalent of 10 months salary as compensation for the wrongful and unfair termination of employment
  2. 2.The amount is payable with interest at Court rates from date of filing suit till payment in full
  3. 3.Costs of the suit are awarded to the Claimant

Authorities

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Legislation

  • Employment Act, 2007section 43(1)
  • Employment Act, 2007section 45(1) as read with 45(2)(a)
  • Employment Act, 2007section 47(5)
  • Employment Act, 2007section 49(1)(c)
  • Employment Act, 2007section 49(4)

Cases cited (1)

  • Banking Insurance and Finance Union -vs- Barclays Bank of Kenya
    ELRC Cause No. 125 of 2014
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (sections 43, 45, 47(5), 49 applied)

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, "Rehema Muthoni Saidi v Kenya Commercial Bank Limited [2016] KEELRC 1203 (KLR)", Case Analysis (2016). Cause No 2168 of 2012. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2016/1203/eng@2016-05-06

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