Abdallah Abdi Ali & another v First Community Bank Limited [2019] KEELRC 2390 (KLR)
The bottom line
#A Kenyan court blocked National Bank from raising a fired employee's staff loan rate, because the bank couldn't prove it followed redundancy procedures correctly.
What this practically means
#Executive summary
#Key legal issues
#Prima facie case on unfair redundancy
A prima facie case was established because the respondent attached no documentation showing the redundancy procedure followed
The Claimant alleged the redundancy process was unfair and did not comply with section 40 of the Employment Act. The respondent's Replying Affidavit attached no documentation of the procedure followed, depriving the court of the benefit of perusing the termination process. On the Giella test, the court therefore found a prima facie case warranting further inquiry at trial.
Irreparable harm from conversion of staff rates to commercial rates
Denying the orders would cause irreparable harm not compensable by damages, and the bank remains secured
The Claimant had a legitimate expectation to continue servicing the facilities at preferential rates tied to his employment. With the rates converted and a statutory notice of sale issued, the court found the harm not compensable in damages, guided by the principle that an employer may not withdraw special loan facilities where the termination's lawfulness is in question. The bank remains covered by the securities and suffers no prejudice.
Balance of convenience
The balance of convenience favours the applicant since loss of the property would be greater to him while the respondent remains covered by securities
Applying the test in Pius Kipchirchir Kogo v Frank Kimeli Tenai, the court weighed the inconvenience to each party. Loss of the charged properties would be a greater loss to the applicant, whereas the respondent retains the securities it can realise if the claim ultimately fails. The comparative mischief therefore favoured granting relief preserving the staff rate.
Legal principles established
#- An employer's right to withdraw or vary special loan terms on termination of employment is withheld where there is a whiff of unlawfulness in the termination
- Employment-linked benefits follow the cause where employment is unfairly terminated
- Definition of a prima facie case in civil applications
Court orders
#- 1.The respondent is restrained, by itself, servants and/or agents, from reviewing and effecting the financing rate of interest payable in respect of the first facility at the staff rate of 5% to the commercial financing rate of 14%, pending the determination of the main Claim
- 2.The respondent is directed to readjust and credit the applicant's account with the difference between the staff rate and the commercial rate
- 3.The applicant is under obligation to service the loans, failing which the respondent is at liberty to realise the securities and to list the applicant with the Credit Reference Bureau (CRB) as mandated by law
- 4.Parties are directed to comply with all pre-trial requirements and fix the case for hearing within the next 60 days so that the main claim can be concluded expeditiously
- Jurisdiction invoked
- Articles 10, 21, 22, 23, 27, 28, 40, 41, 48, 50, 159(2)(a) of the Constitution of Kenya, 2010; Sections 12, 40, 45, 49 and 50 of the Employment and Labour Relations Court Act; Rules 17 and 28 of the ELRC (Procedure) Rules, 2016
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Abdallah Abdi Ali & another v First Community Bank Limited [2019] KEELRC 2390 (KLR)", Case Analysis (2019). Not stated in the judgment as provided. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2019/2390/eng@2019-02-04
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.