Silas Nthiga Njeru v Kenya Women Micro Finance Bank Ltd [2020] KEELRC 680 (KLR)
The bottom line
#A Kenyan court ruled a bank rightly dismissed an employee for negligence, but illegally cut his pay during suspension, awarding him over Kshs. 532,000.
What this practically means
#Executive summary
#Key legal issues
#Whether the dismissal was for a valid reason
The Respondent had a valid reason to dismiss the Claimant under Section 43 of the Employment Act, as the Claimant authorised four large over-the-counter withdrawals from two corporate accounts without interviewing the customers or making a call back to the domicile branch, exposing the bank to a Kshs. 14 million loss.
The Claimant admitted he did not interview the customers or call back to Thika Branch. Even without express policy requirements, the court held a banker must act reasonably and responsibly; four six-digit withdrawals within two days should have raised alarm. His withdrawal of the appeal and request for forgiveness showed awareness of the failure of due care. His criminal acquittal did not absolve him from administrative charges.
Whether the procedure for dismissal was fair under Section 41 of the Employment Act
The Respondent substantially complied with Section 41 procedural fairness, as the Claimant was notified of the charges, invited to a hearing and heard; but the suspension on half pay without statutory or contractual basis tainted the procedure with illegality, entitling the Claimant to compensation.
Notification and hearing before the Staff Disciplinary Committee were proved. However, the suspension letter relied on section 10.7 of the HR Policy which the Respondent never availed to the court, so withholding half salary during suspension had no statutory or contractual basis and was unlawful and unfair.
Entitlement to accrued gratuity despite summary dismissal
The claim for accrued gratuity succeeds; Section 18(4) of the Employment Act entitles a lawfully summarily dismissed employee to all moneys, allowances and benefits due up to dismissal, so the Respondent had no reason to withhold gratuity.
The Respondent argued that gratuity was forfeited because the Claimant did not complete his contract. The court held this stance contravened the express provision of Section 18(4) of the Employment Act, which mandates payment of all accrued benefits upon lawful summary dismissal.
Remedies payable
The Claimant was awarded three months' salary in compensation, one month's salary in lieu of notice, unpaid three months' half salary, and leave pay at the admitted figure of Kshs. 95,485.20.
Compensation was scaled to three months considering length of service, the Claimant's contribution to the dismissal, and the Respondent's unlawful withholding of half salary. Leave pay was adopted at the figure admitted by the Respondent's witness since the Claimant adduced no supporting evidence for his higher claim.
Legal principles established
#- An acquittal in a criminal case does not immunise an employee against disciplinary action by an employer, even on the same set of facts, because criminal trial and disciplinary proceedings are distinct processes with diverse procedural and standard of proof requirements
- Suspension is a neutral action aimed at paving way for unhindered investigations and should not be used as a punishment to the affected employee
- Where an employee is summarily dismissed for lawful cause, the employee shall on dismissal be paid all moneys, allowances and benefits due up to the date of dismissal (Section 18(4) Employment Act)
- Bank employees must demonstrate a high degree of integrity and financial probity, and even absent express policy guidelines an employee must act reasonably and responsibly in handling customer funds
Court orders
#- 1.Judgment entered in favour of the Claimant: 3 months' salary in compensation Kshs. 238,200.00; 1 month's salary in lieu of notice Kshs. 79,400.00; unpaid 3 months' half salary Kshs. 119,100.00; leave pay for 2014-2015 Kshs. 95,485.20; total Kshs. 532,185.20
- 2.The total award to attract interest at court rates from the date of judgment until payment in full
- 3.Respondent directed to tabulate and pay the Claimant's accrued gratuity up to the date of dismissal within thirty (30) days from the date of the judgment
- 4.Respondent directed to liquidate the Claimant's shares under the ESOP arrangement and pay the current value plus accrued dividends net of third party loan balances within thirty (30) days
- 5.Respondent to meet the costs of the case
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction over employment disputes (Employment Act claim)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Silas Nthiga Njeru v Kenya Women Micro Finance Bank Ltd [2020] KEELRC 680 (KLR)", Case Analysis (2020). Cause No 141 of 2018. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2020/680/eng@2020-05-21
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.