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ELRCPartially AllowedNot stated in the judgment as provided· [2019] KEELRC 2352 (KLR)

Rael Mwiyathi Mutinda v Kenya Commercial Bank Limited [2019] KEELRC 2352 (KLR)

Employment and Labour Relations Court
29 January 2019
MOMaureen Onyango
4,661 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~19 min to read original · ~4 min brief

The bottom line

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A Kenyan court ruled KCB unfairly fired an employee over fraud she couldn't have caught, awarding her nearly Kshs. 2 million in compensation.

What this practically means

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Executive summary

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The claimant, employed by the respondent bank in Kenya from 1992 and seconded to KCB Sudan Ltd, Juba Branch from July 2007, was terminated on 10th June 2010 while serving as acting Manager Remittances after two fraudulent Swift transfers of SDG 1,274,000 and SDG 89,000 were processed from a client account. She claimed unlawful and wrongful termination, seeking a declaration, reinstatement or damages, full compensation and costs. The respondent contended she was grossly negligent, having authorised transactions despite an override message, and that due process was followed. The court first held that the claimant remained on her Kenyan terms of employment and thus the Employment Act, 2007 applied despite her secondment. On the merits, the court found no evidence of negligence on her part, only ignorance arising from inadequate training, noting she had not been advised of her authorisation limit and that all staff missed the override accessible under 'Audit Details'. Procedurally, the Staff Disciplinary Committee's recommendations were not produced, and the Human Resource Compensation Committee enhanced the recommended disciplinary action to dismissal without hearing the claimant. Both the grounds and procedure failed the thresholds in sections 41, 43 and 45 of the Employment Act, and the termination was declared unfair. The respondent's objection that the verifying affidavit was undated was rejected as raised irregularly at submissions stage and contrary to the substantive justice provisions of Article 159 of the Constitution and section 20 of the Employment and Labour Relations Court Act. Reinstatement was refused as time-barred; service pay was excluded as the claimant was an NSSF member; notice pay had been made. The court awarded maximum compensation of 12 months' salary, Kshs.1,986,708, with costs and interest to the claimant.

Key legal issues

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01

Applicable law given secondment to South Sudan

Holding

The claimant remained employed in Kenya on her Kenyan terms and was therefore subject to the Employment Act, 2007 notwithstanding her secondment to KCB Sudan

Reasoning

The letter of assignment of 8th November 2007 seconded the claimant to KCB Sudan Ltd for two years while stating she would continue on her current grade, gross salary and return to her current role on completion, with additional benefits pegged to the assignment. The court concluded she remained on her Kenyan terms of employment and thus within the Employment Act, 2007.

p. 4
02

Whether the termination was unfair

Holding

Both the grounds and procedure of termination failed the thresholds in sections 41, 43 and 45(1) and (2) of the Employment Act

Reasoning

The termination letter cited neglect of duties leading to loss of confidence, but the forensic report showed the claimant was unaware of her authorisation limit, the cheque was regular, staff training on the T24 system was wanting, and the override was missed by all staff who handled the transactions. No evidence of negligence by the claimant was found. Procedurally, no disciplinary meeting attended by the claimant was proved; the Human Resource Compensation Committee enhanced the apparently lenient recommended action to dismissal without hearing her.

p. 5
03

Whether the suit was competent notwithstanding the undated verifying affidavit

Holding

The objection was a moot issue raised irregularly at submissions stage and did not affect the validity of the claim

Reasoning

The undated affidavit was not pleaded in the defence, was not raised at the preliminary objection stage (which had been dismissed), was not put to the claimant or witnesses at the hearing, and no prejudice was shown. The claimant had testified on oath confirming the averments. Raising the point in submissions after the claimant filed her submissions was irregular, and the constitutional and statutory preference for substantive justice over technicalities prevailed.

p. 6
04

Remedies entitlement

Holding

The claimant qualified for maximum compensation of 12 months' salary but not reinstatement, service pay or notice pay

Reasoning

Reinstatement was time-barred, having been sought more than 3 years after termination with no exceptional circumstances. Notice pay, leave and arrears had already been paid. Service pay was excluded under section 35(6) as an NSSF member. Considering the manner of termination, benefits already paid, her length of service (18 years) and the respondent's own contribution to the circumstances, the court awarded the maximum 12 months' compensation under section 49 of the Employment Act.

p. 6

Legal principles established

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  • Termination is unfair where the employer lacks a valid and fair reason and fails to follow fair procedure under sections 41, 43 and 45 of the Employment Act; procedural fairness is mandatory even where summary dismissal is warranted
  • An undated verifying affidavit objection raised for the first time at submissions stage, after evidence has been taken and without demonstration of prejudice, does not invalidate a claim, the court being bound to favour substantive justice

Court orders

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  1. 1.Declaration that the termination of the claimant's employment was unfair
  2. 2.Award of 12 months' salary as compensation for unfair termination in the sum of Kshs.1,986,708
  3. 3.Respondent to bear the claimant's costs of the suit with interest at court rates from the date of judgment

Authorities

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Legislation

  • Constitution of Kenya, 2010Article 47
  • Constitution of Kenya, 2010Article 159
  • Employment Act, 2007Sections 35(6), 41, 43, 44, 45(1) and (2), 49
  • Employment and Labour Relations Court ActSections 12, 12(3), 20
  • Industrial Court (Procedure) Rules 2010Rule 5(1)
  • Employment and Labour Relations Court (Procedure) Rules 2016Rule 4(2)
  • Collective Bargaining Agreement (KCB unionisable staff)Clause 14

Cases cited (6)

  • Josephine Ngatia v The Executive Director of The Non-Governmental Organisation Co-ordination And Another
  • Henry Musemate Murwa v The Public Service Commission & Another
  • Nyabuto Arambe Abusa v Kenya Power and Lighting Company Ltd
    [2015] eKLR
  • CMC Aviation Limited v Mohammed Noor
    [2015] eKLR
  • Kenya Union of Commercial Food And Allied Workers v Meru North Farmers Sacco Limited
    [2013] eKLR
  • Mary Chemweno Kiptui v Kenya Pipeline Company Limited
    [2014] eKLR
Jurisdiction invoked
Employment and Labour Relations Court Act, Section 12; Employment Act, 2007

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (3)

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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, "Rael Mwiyathi Mutinda v Kenya Commercial Bank Limited [2019] KEELRC 2352 (KLR)", Case Analysis (2019). Not stated in the judgment as provided. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2019/2352/eng@2019-01-29

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