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ELRCPartially AllowedConsolidated Claims (ELRC, Nairobi) — Claims dated 11th August 2014, 7th August 2014 and 12th March 2014· [2019] KEELRC 1296 (KLR)

Joseph Naftaly Macharia Karumba & 2 others v National Bank of Kenya Limited [2019] KEELRC 1296 (KLR)

Employment and Labour Relations Court
14 June 2019
4,219 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~17 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court ruled National Bank unfairly fired three staff because it never gave them a proper disciplinary hearing before dismissal.

What this practically means

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Executive summary

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Three employees of National Bank of Kenya — Joseph Naftaly Macharia Karumba, Sylvester Akoli Mutuli and Jimmy Mathew Labi — sued over termination of their employment on 26th September 2013 following a systems breach in the bank's BFUB system that threatened a potential loss of Kshs.330 million in March 2013. Joseph and Sylvester, administrators of the VPN system, were blamed for failing to maintain audit trails and to cooperate during investigations; Jimmy, the ICT Infrastructure Manager, was suspended from duties, interrogated and eventually dismissed over alleged improper procurement and supervisory failures. The court framed two issues: whether the terminations were wrongful, unfair and unlawful, and whether the Claimants were entitled to the reliefs sought. Finding that none of the Claimants was issued with notices summoning them to a disciplinary hearing as required by Section 41 of the Employment Act, and that all they underwent was an interrogation more than six months after the incident, the court held there could be no proof of a valid reason without a hearing and declared the terminations unfair both substantively and procedurally. Compensation was awarded under Section 49: Kshs.800,000 to Joseph, Kshs.4,714,980 to Sylvester and Kshs.5,699,160 to Jimmy, together with certificates of service, costs and interest from judgment. Claims for constitutional damages, defamation, salary for periods not worked, reinstatement, severance and medical allowance were dismissed for want of proof or legal basis.

Key legal issues

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01

Procedural fairness under Section 41 of the Employment Act

Holding

Termination was procedurally unfair — the Claimants were never summoned to a disciplinary hearing in the manner provided by Section 41; what they underwent was an interrogation

Reasoning

The court found it uncontested that no notices summoning the Claimants to disciplinary hearings were issued as required by Section 41. The Respondent relied only on reports and recommendations from its Security Investigations and HR managers. The meeting of 6th September 2013 was merely an interrogation conducted more than six months after the triggering incident, with no charges, minutes, or opportunity to present a defence.

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02

Substantive fairness / valid reason under Sections 43 and 45

Holding

Termination was substantively unfair; valid reasons could not be established without a hearing

Reasoning

Each Claimant denied the accusations against them and was not given an opportunity to be heard. Because Section 41 requires a hearing before dismissal, the court held that the Respondent could not prove a valid reason for termination in the absence of such a hearing, rendering the termination unfair within Sections 43 and 45.

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03

Remedies — compensation under Section 49

Holding

Each Claimant awarded compensation considering length of service, the anguish of the hostile treatment between March and September 2013, and the manner of termination

Reasoning

Having found unfair termination, the court exercised its discretion under Section 49, taking into account each Claimant's long service and the anguish suffered during the period of hostile treatment before termination. Joseph received 10 months' gross salary and Sylvester and Jimmy 12 months' each. Claims for periods not worked were rejected as unjust enrichment, and reinstatement was refused as the three-year period had lapsed.

p. 5

Legal principles established

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  • An employee facing disciplinary action must be given adequate opportunity to respond to charges; termination without a hearing is unfair regardless of the offence charged
  • Where no hearing is accorded as envisaged under Section 41 of the Employment Act, there can be no proof of a valid reason for termination

Court orders

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  1. 1.Declaration that the termination of the Claimants' employment was unfair both substantively and procedurally
  2. 2.Compensation of 10 months' gross salary (Kshs.800,000) to Joseph Naftaly Macharia Karumba
  3. 3.Compensation of 12 months' gross salary (Kshs.4,714,980) to Sylvester Akoli Mutuli
  4. 4.Compensation of 12 months' gross salary (Kshs.5,699,160) to Jimmy Mathew Labi
  5. 5.Certificates of service to all the Claimants
  6. 6.Respondent to pay the Claimants' costs of the suit
  7. 7.Interest on the decretal sum from date of judgment

Authorities

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Legislation

  • Employment ActSection 41
  • Employment ActSection 43
  • Employment ActSection 44(4)
  • Employment ActSection 44(4)(c) and (g)
  • Employment ActSection 45
  • Employment ActSection 47(5)
  • Employment ActSections 49(1) and 49(4)
  • Employment ActSection 50
  • Employment ActSection 40
  • Constitution of KenyaArticle 41(1)
  • Constitution of KenyaArticle 47
  • ELRC (Procedure) RulesRule 28(1)(e)

Cases cited (10)

  • Peterson Ndung'u & 5 Others –V- Kenya Power and Lighting Company Ltd
    [2014] eKLR
  • Fredrick Odongo Owegi –v- CFC Life Assurance Limited
    [2014] eKLR
  • Anthony Mkala Chitavi –v- Malindi Water and Sewerage Co. Ltd
    [2013] eKLR
  • Sophia Wambui Muthoni –v- Muramati Sacco Society Ltd
    [2014] eKLR
  • Ahmednasir Abdulahi –v- National Bank of Kenya
    [2006] eKLR
  • Abraham Gumba –v- Kenya Medical Supplies Authority
    [2014] eKLR
  • John Muia Mbute and Another –v- Rakim Rajan t/a Smokey's Bar & Restaurant
    [2016] eKLR
  • Donald Odeke –v- Fidelity Security Ltd, Cause No.1998 of 2011
    Cause No.1998 of 2011
  • Ezekiel Nyangoya Okemwa v Kenya Marine & Fisheries Research Institute
    [2016] eKLR
  • Naqvi Syed Omar v. Paramount Bank Limited & the Attorney-General
    [2015] e-KLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act (ss. 41, 43, 44, 45, 47, 49) and Article 41 & 47 of the Constitution of Kenya

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, "Joseph Naftaly Macharia Karumba & 2 others v National Bank of Kenya Limited [2019] KEELRC 1296 (KLR)", Case Analysis (2019). Consolidated Claims (ELRC, Nairobi) — Claims dated 11th August 2014, 7th August 2014 and 12th March 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2019/1296/eng@2019-06-14

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