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ELRCPartially Allowed· [2019] KEELRC 478 (KLR)

Rabin Patrick Opwaka & another v National Bank of Kenya [2019] KEELRC 478 (KLR)

Employment and Labour Relations Court
30 September 2019
2,434 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan bank was ordered to pay two managers a full year's salary each because it fired them for poor performance without first giving them a hearing.

What this practically means

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Executive summary

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Two bank employees (a Relationship Manager and a Business Relationship Officer at the Respondent's Nakuru branch) challenged the termination of their employment by letter dated 13th April 2015 on grounds of poor performance. They sought declarations that the termination was unprocedural and violated Articles 27, 41 and 47 of the Constitution, VER exit terms, 12 months' compensation, general damages, notice pay, accrued leave, a favourable recommendation letter and costs. The Respondent maintained that the Claimants were poor performers who received warnings, performance reviews and Performance Improvement Plans under its policies, that the reduction of the notice period to one month was lawful and industry-aligned, and that the Claimants, having declined the voluntary early retirement plan, were not entitled to VER benefits. The Court held that Section 41 of the Employment Act requires a hearing before termination even for poor performance, and that despite below-par ratings the Respondent failed to demonstrate any discussions or hearings before terminating the Claimants. The termination was therefore unfair under Section 45(2). The Court declined VER benefits since the programme took effect in April 2014 and the Claimants were terminated in April 2015 for poor performance after opting not to exit. The Court awarded each Claimant maximum compensation of 12 months' salary (KShs. 1,172,028 for the 1st Claimant and KShs. 1,623,336 for the 2nd), ordered certificates of service, and awarded the Claimants costs plus interest at Court rates from the date of judgment. The claim thus succeeded on the compensation head but the declaratory, VER, damages, notice and leave prayers were not granted.

Key legal issues

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01

Procedural fairness in termination for poor performance

Holding

The termination was unfair because the Respondent failed to give the Claimants a hearing or disciplinary hearing before termination

Reasoning

Section 41 of the Employment Act requires an employer to explain reasons and hear representations before terminating for poor performance. Although the Claimants had been warned, placed on PIPs and rated below performance, the Respondent failed to show any discussions or hearings before termination. Omitting the hearing deprived the Claimants of a chance to present their version, rendering the termination unfair under Section 45(2).

p. 3
02

Entitlement to VER exit terms

Holding

Claimants not entitled to VER benefits because they declined the package and were terminated later for poor performance

Reasoning

The VER programme took effect in April 2014 while the Claimants' employment was terminated in April 2015 on grounds of poor performance. The Claimants opted to continue serving and did not apply for VER; they therefore could not claim benefits accorded to employees who exited under that package.

p. 2
03

Remedy for unfair termination without a hearing

Holding

Maximum compensation of 12 months' salary awarded for termination without a hearing

Reasoning

Having found the termination unfair for want of a hearing, the Court exercised its discretion under the Employment Act to grant the maximum 12 months' gross salary as compensation to each Claimant, computed from their respective salaries, and directed issuance of certificates of service.

p. 4

Legal principles established

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  • An employer must accord an employee a hearing before terminating employment even on grounds of poor performance, per Section 41 of the Employment Act
  • A below-par performance rating does not dispense with the need for a disciplinary hearing before termination
  • Termination is unfair under Section 45(2) where the employer fails to prove a valid and fair reason and a fair procedure

Court orders

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  1. 1.Maximum compensation of 12 months' salary in lieu of notice: 1st Claimant KShs. 1,172,028 (97,669 x 12); 2nd Claimant KShs. 1,623,336 (135,278 x 12)
  2. 2.The Respondent to issue the Claimants with a certificate of service
  3. 3.The Respondent to pay costs of the suit plus interest at Court rates from the date of the judgment

Authorities

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Legislation

  • Constitution of Kenya 2010Article 41
  • Constitution of Kenya 2010Article 47
  • Constitution of Kenya 2010Article 27
  • Employment Act 2007Section 41
  • Employment Act 2007Section 43
  • Employment Act 2007Section 45(2)
  • Employment Act 2007Section 47(5)
  • Respondent's Staff Loan PolicyClause 10.1
  • Respondent's Performance Management PolicyClause 4.7.2

Cases cited (12)

  • Lilian O. Ochang vs. Kenol Kobil Limited
    [2015] eKLR
  • Elizabeth Osiche Apwora vs. National Bank of Kenya
    [2017] eKLR
  • Mary Matanu Mwendwa vs. Ayuda
    [2013] eKLR
  • Kenya Union of Commercial Food and Allied Workers vs. Meru North Farmers Sacco Limited
    [2013] eKLR
  • Patrick Njuguna Kariuki vs. Del Monte Kenya Limited
    [2012] eKLR
  • David Gichana Omuya vs. Mombasa Maize Millers Limited
    [2014] eKLR
  • Kenfreight (EA) Limited vs. Benson K. Nguti
    [2016] eKLR
  • Cooperative Bank of Kenya Limited vs. Banking Insurance & Finance Union
    [2017] eKLR
  • Nazareno Kariuki vs. Feed the Children Kenya
    [2013] eKLR
  • Judicial Service Commission vs. Gladys Boss Shollei & Another
    [2014] eKLR
  • CMC Aviation Limited vs. Mohammed Noor
    [2015] eKLR
  • Edgar Khaemba Pukah vs. County Assembly of Trans Nzoia
    [2017] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over employment claims (Employment Act 2007); no specific constitutional provision invoked

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, "Rabin Patrick Opwaka & another v National Bank of Kenya [2019] KEELRC 478 (KLR)", Case Analysis (2019). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2019/478/eng@2019-09-30

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