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ELRCPartially AllowedELRC Cause (interlocutory application dated 10th October 2017)· [2018] KEELRC 1938 (KLR)

Victor K. Mutisya v First Community Bank Limited [2018] KEELRC 1938 (KLR)

Employment and Labour Relations Court
28 May 2018
HWHellen Wasilwa
2,401 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court stopped a bank from raising a fired employee's loan interest rate or blacklisting him with credit bureaus until his unfair termination case is heard.

What this practically means

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Executive summary

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The Applicant, former Head of ICT at the Respondent bank, brought a notice of motion dated 10th October 2017 seeking interlocutory relief following his termination on grounds of redundancy effective 1st December 2016. He contended the redundancy was a sham: no consultation was held, the criteria for selecting him were never disclosed, his position was taken over by his assistant and partly by an IT consultant, and the bank's own Human Resource Policy preconditions for redundancy were not met. He also complained that the bank unilaterally converted his two staff loan facilities (a Musharaka facility at 6.3% per annum and an Asset Finance Murabaha with monthly repayment of Kshs.32,275.00) to commercial rates of 14% and Kshs.37,509.00 respectively, and threatened to list him with credit reference bureaux. The Respondent admitted the employment and the loans but maintained the restructuring was necessitated by losses, was conducted fairly and objectively, and that staff rates are available only to employees; it relied on Clause 4.19(e) of its Financing Policy and on two ELRC authorities. Considering whether a prima facie case with a probability of success had been established, the court found the Applicant would suffer double prejudice if forced to repay at commercial rates after an arguably unfair termination. It granted prayers (c), (d), (e) and (f): preserving the staff loan rates, restraining CRB listing, compelling production of records of employees terminated after 1st December 2016, and directing issuance of a certificate of service under Section 51 of the Employment Act. The recruitment injunction was overtaken by events, reinstatement was not granted at the interlocutory stage, and costs were awarded in the cause.

Key legal issues

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01

Whether the Applicant established a prima facie case with a probability of success

Holding

The court found that on a balance of probabilities the Applicant would be doubly prejudiced if the Respondent varied the loans to commercial rates, and granted the orders preserving staff rates, restraining CRB listing, compelling production of redundancy records, and directing issuance of a certificate of service.

Reasoning

The court noted the Applicant was terminated allegedly on redundancy and that if the termination was later found unfair, he would suffer both wrongful loss of employment and enforcement of commercial loan rates. Balancing the parties' positions, the interests of justice favoured preserving the staff rates and related reliefs pending full hearing, while declining the recruitment injunction as overtaken by events and not granting reinstatement at the interlocutory stage.

p. 3

Legal principles established

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  • An interim relief preserving the status quo on staff loan terms may issue where unfair termination would otherwise expose the ex-employee to commercial lending rates.

Court orders

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  1. 1.The Respondent is stopped from changing the rate of interest of the Claimant's two loan facilities from 6.3% to 14% or any other interest rate and the monthly repayment of the Asset Finance Murabaha Agreement loan from Kshs.32,275.00 to Kshs.37,509.00 pending hearing and determination of the application and the claim
  2. 2.An order restraining the Respondent, its employees, servants and/or agents from listing the Applicant with any credit reference bureau on account of the non-performing financial facilities pending hearing and determination of the application and the claim
  3. 3.The Respondent is compelled to produce for inspection a written record of all employees fired after 1st December, 2016 with particulars of job title, grade and salaries
  4. 4.The Respondent is directed to issue the Applicant with a certificate of service in terms of Section 51 of the Employment Act, 2007
  5. 5.Costs in the cause

Authorities

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Legislation

  • Constitution of Kenya 2010Articles 10, 21, 22, 23, 27, 28, 41, 50, 159(a)
  • Employment and Labour Relations Court ActSections 12, 40, 45, 49, 50
  • Employment and Labour Relations Court (Procedure) Rules, 2016Rules 17 and 28
  • Employment Act, 2007Sections 40, 40(1)(d), 51

Cases cited (2)

  • Peter Mutisya Musembi & Another versus National Bank of Kenya Limited
    ELRC Cause No. 1777 of 2014
  • Banking Insurance & Finance Union Versus National Bank of Kenya
    ELRC No. 846 of 2014
Jurisdiction invoked
Articles 10, 21, 22, 23, 27, 28, 41, 50, 159(a) of the Constitution of Kenya 2010; Sections 12, 40, 45, 49 and 50 of the Employment and Labour Relations Court Act; Rules 17 and 28 of the ELRC (Procedure) Rules, 2016

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, "Victor K. Mutisya v First Community Bank Limited [2018] KEELRC 1938 (KLR)", Case Analysis (2018). ELRC Cause (interlocutory application dated 10th October 2017). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2018/1938/eng@2018-05-28

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