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Case Brief · caselaw.co.ke
ELRCPartially AllowedConsolidated suits instituted on 19.3.2015 and consolidated on 31.5.2018 (ELRC, Nairobi)· [2020] KEELRC 22 (KLR)

Madagow & another v African Banking Corporation Ltd (Cause 424 & 425 of 2015) [2020] KEELRC 22 (KLR)

Employment and Labour Relations Court
17 December 2020
5,058 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~20 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court ruled one bank employee's dismissal unfair because her employer couldn't prove she did anything wrong, awarding six months' salary.

What this practically means

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Executive summary

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Two bank employees, a Customer Service Representative and her supervisor the Cash Officer, sued the Respondent bank after being summarily dismissed on 9.2.2015 over a fraudulent withdrawal of Kshs. 1,950,000 from a customer's Eldoret Branch account via a previously used cheque on 28.7.2014. They sought declarations that their terminations were unfair and unlawful, compensation of Kshs. 777,000 and Kshs. 1,867,824 respectively, interest, certificates of service and costs. The bank defended the dismissals as lawful, citing breach of payment procedure, and asserted that show cause letters and hearings preceded the dismissal and that terminal dues were paid. Framing two issues - whether the dismissals were unfair and unlawful, and entitlement to the reliefs sought - the court held under sections 43, 44(4) and 45 of the Employment Act that the reason for dismissing the 1st claimant was invalid: her email trail showed she had notified the domicile branch, the Central Back Office and her supervisor of the used cheque, and the system alerts were available to all. The 2nd claimant, however, was found to have negligently advised the processing of the cheque as a debit voucher, so his dismissal was for valid reason. Both dismissals followed fair procedure under s. 41. The 1st claimant received six months' gross salary (Kshs. 222,000) as compensation, subject to statutory deductions, plus costs and interest; both claimants received certificates of service; no costs for the 2nd claimant. Judgment delivered online on 17.12.2020 pursuant to Covid-19 directives.

Key legal issues

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01

Whether there was a valid reason for dismissing the 1st claimant

Holding

No - the charges were not made out; she had notified her supervisor and the verifier by email and all officers had system alerts on the used cheque.

Reasoning

The email trail showed the 1st claimant sent the cheque to the domicile branch, was confirmed for payment by Ms. Magut, and forwarded it to the CBO (Ms. Costa), copying the 2nd claimant, who admitted she had told him the cheque had been used. Since the supervisor admitted being informed and the verifier had system access, the first charge (failure to inform) failed, and with it the second charge of misrepresentation fell away.

02

Whether there was a valid reason for dismissing the 2nd claimant

Holding

Yes - he negligently authorised the transaction and was rightly dismissed under s. 44(4).

Reasoning

As the 1st claimant's supervisor, he was told the cheque had previously been presented and honoured, yet he advised her to treat it as a Debit Voucher. The court believed Cw1's account and found he was the right person to stop the fraudulent transaction at branch level and escalate to senior managers. His negligence occasioned the loss of Kshs. 1,950,000, proving a valid reason on a balance of probability.

p. 5
03

Whether a fair procedure under s. 41 was followed

Holding

Yes - both claimants were served with show cause letters, attended hearings, and were effectively recorded as admitting a fair hearing.

Reasoning

The claimants admitted receiving show cause letters and attending hearings with a fellow employee of their choice. Though they complained the notice was short, they never protested in writing or sought adjournment. When proceedings were withdrawn and fresh hearings scheduled, they objected through counsel rather than attend, which the court treated as an admission that the initial process was fair.

p. 5

Legal principles established

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  • Failure by an employer to prove a valid reason for dismissal renders the termination unfair under ss. 43 and 45 of the Employment Act.
  • Under s. 41 of the Employment Act, an employer must accord a fair hearing to an employee before termination on account of misconduct.

Court orders

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  1. 1.1st Claimant: compensation of Kshs. 222,000 (6 months' gross salary at Kshs. 37,000) for unfair dismissal, subject to statutory deductions
  2. 2.1st Claimant: Certificate of Service
  3. 3.1st Claimant: costs plus interest at court rates from the date of judgment
  4. 4.2nd Claimant: Certificate of Service
  5. 5.2nd Claimant: no order as to costs
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act (ss. 41, 43, 44(4), 45, 49, 51) and ELRC Procedure Rules

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, "Madagow & another v African Banking Corporation Ltd (Cause 424 & 425 of 2015) [2020] KEELRC 22 (KLR)", Case Analysis (2020). Consolidated suits instituted on 19.3.2015 and consolidated on 31.5.2018 (ELRC, Nairobi). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2020/22/eng@2020-12-17

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