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ELRCPartially AllowedNot stated (Cause instituted 3 April 2013; Issues in Dispute: Wrongful dismissal from employment of Melodie N. Gatuguta)· [2019] KEELRC 911 (KLR)

Banking, Insurance & Finance Union v Co-operative Bank of Kenya Ltd [2019] KEELRC 911 (KLR)

Employment and Labour Relations Court
16 September 2019
RSRadido Stephen
1,598 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 ruled a bank worker unfairly dismissed over a fraud she didn't initiate, but her supervisor approved, awarding three months' salary instead of reinstatement.

What this practically means

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Executive summary

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The Banking, Insurance & Finance Union sued Co-Operative Bank of Kenya Ltd on behalf of grievant Melodie N. Gatuguta, challenging her summary dismissal following a fraudulent RTGS transfer of Kshs 3.7 million from a customer's account in December 2012. The Respondent contended the dismissal was procedural, lawful and fair because the Grievant processed the instructions without confirming the presenter's identity, contrary to the Operating Manual. On procedural fairness, the Court found substantial compliance: the Grievant received a show cause letter, attended a disciplinary hearing with a right to be accompanied, and exercised an appeal, and her claim of being denied a union representative failed for want of evidence of a request or refusal. On substantive fairness, however, the Court held that the dismissal did not accord with justice and equity under sections 45(2)(b) and (4)(b) of the Employment Act, 2007. The Grievant did not initiate or unilaterally post the transaction; she sought guidance from the Operations Manager, who made a call-back, and the Branch Manager approved the transaction before she completed it. Fraudsters had fraudulently replaced the account holder's SIM card, so the call-back gave false clearance. Summary dismissal was too severe where lesser penalties, including termination on notice, were available. Reinstatement was refused owing to the lapse of more than 3 years. In lieu, the Court awarded compensation equivalent to 3 months' gross wages, Kshs 218,619/41, with costs to the Claimant. Judgment was delivered in Nairobi on 16 September 2019 by Radido Stephen, Judge.

Key legal issues

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01

Procedural fairness in summary dismissal

Holding

The Respondent was in substantial compliance with procedural fairness requirements

Reasoning

The Grievant was issued a show cause letter, responded to it, was invited to an oral disciplinary hearing with the right to be accompanied, attended the hearing, and was given a right of appeal which she exercised. Her claim that she was denied a union representative failed because she did not request one or raise dissatisfaction with being accompanied by a colleague before the Disciplinary Committee.

p. 2
02

Substantive fairness of summary dismissal

Holding

The summary dismissal was not fair and did not accord with justice and equity under sections 45(2)(b) and (4)(b)

Reasoning

The Grievant did not initiate or unilaterally process the fraudulent RTGS instructions; she sought guidance from the Operations Manager, who made a call-back, and the Branch Manager approved the transaction before she posted it. It was probable the fraud would not have succeeded had the superiors not endorsed it. Summary dismissal was too severe where the disciplinary procedures provided lesser sanctions such as termination on notice.

p. 3
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Appropriate remedy

Holding

Reinstatement refused due to lapse of time; compensation of 3 months' gross wages awarded in lieu

Reasoning

Reinstatement was inappropriate because more than 3 years had elapsed since dismissal. In lieu, and considering the Grievant's slightly above 2 years of service and January 2013 gross salary of Kshs 72,873/-, compensation equivalent to 3 months' gross wages (Kshs 218,619/41) was appropriate and fair.

p. 3

Legal principles established

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  • Sections 35(1) and 41 of the Employment Act, 2007 provide the primary procedural safeguards an employer must comply with before terminating employment for misconduct, poor performance or physical incapacity
  • Sections 43 and 45 of the Employment Act, 2007 place the burden on the employer to prove valid and fair reasons for dismissal and to act in accordance with justice and equity
  • An employee who consults superiors and acts on their approval before processing a transaction does not merit summary dismissal even where standard operating procedures were not strictly followed

Court orders

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  1. 1.Finding that the summary dismissal of the Grievant was not fair or in accord with justice and equity
  2. 2.Award of compensation of Kshs 218,619/41 (equivalent to 3 months gross wages)
  3. 3.Costs to the Claimant

Authorities

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Legislation

  • Employment Act, 2007Section 35(1)
  • Employment Act, 2007Section 41
  • Employment Act, 2007Sections 43 and 45
  • Employment Act, 2007Section 45(2)(b) and 45(4)(b)

Cases cited (1)

  • Mutua Musau v Barclays Bank of Kenya Ltd
    (2016) eKLR
Jurisdiction invoked
First-instance employment cause under the Employment Act, 2007 (specific provision not stated)

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 v Co-operative Bank of Kenya Ltd [2019] KEELRC 911 (KLR)", Case Analysis (2019). Not stated (Cause instituted 3 April 2013; Issues in Dispute: Wrongful dismissal from employment of Melodie N. Gatuguta). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2019/911/eng@2019-09-16

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