Francis M.P. Nyamu & 10 others v National Bank of Kenya Limited [2020] KEELRC 1774 (KLR)
The bottom line
#Kenya's Employment Court ruled National Bank unfairly retired 11 employees via early retirement but denied their discrimination and severance claims, awarding 10 months' salary each.
What this practically means
#Executive summary
#Key legal issues
#Whether early retirement under clause 9.4 of the HR Manual, exercised at the Bank's discretion, was lawful
The clause formed part of the contract and bound both parties, but the employer's discretion required valid and fair reasons communicated to the employee with a prior hearing; failure to do so rendered the early retirement unfair termination under section 45 of the Employment Act.
The court held the HR Manual formed part of the contract, and both employer and employee could invoke the early retirement clause. However, contractual discretion must be exercised on reasonable factual and legal grounds with a prior hearing. The reason (operational requirements) was valid but disclosed only at the hearing, too late to allow representations, so the termination was procedurally unfair though for a valid cause.
Whether paying the Claimants a lesser package than 2014 VER retirees was discrimination
No discrimination established; VER terms applied only to those who opted in, and no comparator evidence was produced.
The Claimants admitted they declined the 2014 VER and thus could not claim its benefits. Except for the 1st Claimant (whose rebate was reviewed on request), none contested their terms. They also failed to produce names of same-age-bracket employees not retired, so the discrimination claim failed on proof.
Entitlement to remedies
Ten months' salary compensation per claimant under section 49(1)(c) for unfair termination; severance, gratuity, discrimination damages and 40% rebate refused.
Compensation was awarded considering long service exceeding 25 years, absence of misconduct contribution, and reduced re-employment prospects past age 50. Severance failed absent redundancy; gratuity failed because pensions were paid; discrimination-based damages failed with the discrimination finding.
Legal principles established
#- An employer's HR policy manual forms part of the contract of employment and binds both employer and employee equally; the employer may invoke an early retirement clause but its discretion must be exercised on valid and fair reasons with a prior hearing.
- A discretionary contractual power to terminate via early retirement must be founded on valid and fair reasons explained to the employee, who must be accorded an opportunity to respond.
- An employer who gives reasons for early retirement too late, without according the employees a hearing, effects an unfair termination under section 45 of the Employment Act.
- An employee cannot claim discrimination based on benefits under a voluntary scheme they opted out of, and must prove comparators to establish discrimination.
Court orders
#- 1.Declaration that the Claimants' employment was unfairly terminated
- 2.Award to each claimant of ten months' salary as compensation for unfair termination under section 49(1)(c) of the Employment Act, based on respective gross salary (as tabulated per claimant)
- 3.Awards subject to statutory deductions but in addition to costs and interest at court rates from the date of the judgment
- 4.Respondent to issue the 2nd Claimant with a Certificate of Service in accordance with section 51 of the Employment Act
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (first-instance employment claim)
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (1)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
Cite this brief
#Cite this brief
Caselaw, "Francis M.P. Nyamu & 10 others v National Bank of Kenya Limited [2020] KEELRC 1774 (KLR)", Case Analysis (2020). Cause No 1476 of 2015. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2020/1774/eng@2020-01-24
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.