Skip to content
AI-generated case briefs sourced from Kenya Law · Not legal advice
Caselaw
AI-generated case brief
Case Brief · caselaw.co.ke
ELRCDismissedNot stated in the judgment (Notice of Motion dated 26th February 2019)· [2019] KEELRC 1597 (KLR)

Joseph Njagi Mwita & 4 others v Barclays Bank Limited [2019] KEELRC 1597 (KLR)

Employment and Labour Relations Court
24 May 2019
OMOnesmus N. Makau
2,708 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~11 min to read original · ~4 min brief

The bottom line

#

Kenya's Employment Court ruled that staff loan interest rates can jump to commercial rates once your employment ends, if your loan agreement says so.

What this practically means

#

Executive summary

#
This is a ruling of the Employment and Labour Relations Court at Nairobi (Onesmus N. Makau J) on the Claimants' Notice of Motion dated 26th February 2019 seeking an interlocutory injunction to suspend the migration of interest rates on their loan facilities from staff preferential rates (6% per annum) to commercial rates (13% per annum) pending hearing of the main claim. The claimants, former employees of the respondent bank terminated in February 2018 under a Voluntary Exit Scheme (VES), alleged unfair termination, non-disclosure of material facts in the VES process, and unilateral variation of loan terms. The respondent countered that the claimants voluntarily applied for and accepted the VES on terms that commercial rates would apply after a 12-month grace period, and that clause 2 of the staff loan terms provided preferential rates would cease on exit from employment for any reason. The court applied the Giella v Cassman Brown principles. It found the claimants had voluntarily created a binding contract by accepting the VES terms, that preferential interest rates are discretionary fringe benefits which fall away with termination of employment, and that since the claimants were not seeking reinstatement, applying commercial rates was lawful and infringed no rights. Having failed to establish a prima facie case with probability of success, the applicants' application was dismissed, with costs in the cause. The interim injunction granted on 26th February 2019 consequently fell away, and the main claim remains pending.

Key legal issues

#
01

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

Holding

No. The claimants voluntarily accepted their loan terms and the VES 2018 terms, including migration to commercial rates after a 12-month grace period, creating a binding contract; the respondent's application of commercial rates was lawful

Reasoning

The court found exhibits VO-5 and VO-6 showed the claimants applied for the VES and unconditionally accepted its terms by signed Acceptance Forms, voluntarily creating a binding contract. Clause 2(c) of the staff loan terms permitted the bank to cease the preferential rate upon termination of employment for whatever reason. As the claimants were no longer employees and did not seek reinstatement, applying commercial rates did not infringe their rights. Accordingly, no prima facie case was proved.

p. 4
02

Whether the applicants would suffer irreparable harm absent the injunction

Holding

Not considered, since the cumulative injunction principles had already failed at the first stage

Reasoning

The court held that having found no prima facie case with probability of success, it was unnecessary to consider irreparable harm because the Giella principles are cumulative. The interim injunction granted on 26th February 2019 pending determination of the application therefore lapsed with dismissal of the motion.

p. 4

Legal principles established

#
  • Preferential interest rates on staff loans are discretionary employment fringe benefits that cease upon termination of employment for whatever reason, where the loan terms so provide
  • The principles for granting an interlocutory injunction are cumulative in nature

Court orders

#
  1. 1.The Notice of Motion dated 26th February 2019 is dismissed
  2. 2.Costs in the cause

Authorities

#

Legislation

  • Employment ActSection 87(1) and (2)
  • Employment and Labour Relations Court Act Cap 234BSection 12(1)(a)
  • Fair Administrative Action Act 2015Section 4(3)
  • Constitution of KenyaArticle 40

Cases cited (5)

  • Giella v Cassman Brown & Co. Ltd
    [1973] E.A. 360
  • Mrao Ltd. v First American Bank of Kenya Ltd & 2 Others
    [2003] KLR 155
  • Fadhil Juma Kisua & another v Kenya Ports Authority
    [2015] eKLR
  • Evans Oliver Olwali v Standard Chartered Bank Limited
    [2018] eKLR
  • Erick VJ Makhokha & 4 others v Lawrence Sagini & 2 others
    [1994] eKLR
Jurisdiction invoked
Section 87(1) and (2) of the Employment Act and section 12(1)(a) of the Employment and Labour Relations Court Act Cap 234B (as invoked by the applicants)

Key timeline

#

Practical implications

#

Frequently asked questions

#

Later judgments citing this (4)

#

Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

#

Cite this brief

Caselaw, "Joseph Njagi Mwita & 4 others v Barclays Bank Limited [2019] KEELRC 1597 (KLR)", Case Analysis (2019). Not stated in the judgment (Notice of Motion dated 26th February 2019). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2019/1597/eng@2019-05-24

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