Banking Insurance and Finance Union v National Bank of Kenya Limited [2020] KEELRC 1511 (KLR)
The bottom line
#Kenya's Employment Court ruled KCB unfairly fired employees for poor performance without hearings, awarding each 12 months' salary.
What this practically means
#Executive summary
#Key legal issues
#Whether the union ought to have been involved in the performance management process
The court declined to interfere; performance management is a non-negotiable management prerogative under clause 17 of the Memorandum of Agreement
The parties' Memorandum of Agreement of 2000 listed management methods among non-negotiable items and clause 7(c) bound the union not to interfere with management functions. Performance appraisals and PIPs fall within this. The court therefore held the respondent acted within its mandate and relied on the Barclays Bank decision.
Whether the terminations were procedurally fair
Unprocedural - no show cause letters, warnings or disciplinary hearings were issued despite the requirement of sections 41 and 44(2) and 45(1) of the Employment Act
All claimant witnesses testified they never received warnings or show cause letters and were never subjected to a disciplinary process. RW1 conceded in cross-examination that grievants ought to have been issued with show cause letters and taken through disciplinary hearings, and produced no documents proving a disciplinary process. Section 41 is a mandatory process.
Whether the reasons for termination were valid and substantively justified
Not valid - the respondent failed to justify the reasons, which were never tested through a disciplinary hearing; some grievants were assessed against positions they had not held
Section 43(1) places the burden on the employer to prove reasons for termination. Applying the Jane Samba Mukala criteria, the employer must show a performance measurement policy, measures to address poor performance, and a hearing. The respondent produced no PIP for some grievants and assessed employees against roles they had not worked in, leading the court to find the process was a disguised redundancy.
What remedies were appropriate
Twelve months' compensation awarded to each grievant; reinstatement, notice pay, leave and terminal dues claims refused
Reinstatement was time-barred as more than three years had passed. Compensation was justified by the callous manner of the process, grievants assessed against positions they had never held and the apparent disguise of a redundancy as poor-performance terminations. Notice pay, leave and terminal dues had already been paid.
Legal principles established
#- Performance appraisal, review and performance improvement plans are management prerogatives and, where the parties have agreed they are non-negotiable, the court will not disturb that agreement
- Termination for poor performance without a notice to show cause and a disciplinary hearing under section 41 of the Employment Act is unprocedural and unfair
- An employer must prove that reasons for termination on grounds of poor performance were valid and tested through a disciplinary hearing
Court orders
#- 1.Declaration that the terminations of the grievants' employment were unfair both procedurally and substantively (implied from the finding)
- 2.Award of 12 months' salary as compensation to each of the grievants for unfair and unlawful termination
- 3.Costs of the suit awarded to the Claimant, assessed at Kshs.100,000
- Jurisdiction invoked
- Article 162(2) of the Constitution and the Employment and Labour Relations Court Act, jurisdiction under section 12 of the ELRC Act
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Banking Insurance and Finance Union v National Bank of Kenya Limited [2020] KEELRC 1511 (KLR)", Case Analysis (2020). Cause 1653 of 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2020/1511/eng@2020-02-21
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.