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ELRCPartially AllowedNot stated in the judgment provided· [2020] KEELRC 1861 (KLR)

Julius Bii Kipyegon Bati & another v Kenya Commercial Bank Limited [2020] KEELRC 1861 (KLR)

Employment and Labour Relations Court
20 January 2020
MNMathews N. Nduma
3,898 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's employment court ruled KCB wrongly fired two managers over a system loophole no one knew about, awarding each 12 months' maximum pay.

What this practically means

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Executive summary

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Two senior managers of Kenya Commercial Bank's Kakamega Branch - the cash manager (Julius Kipyegon Bati) and operations manager (Robert Watila) - sued for wrongful termination after their employment was ended for gross negligence following the theft of about Kshs. 2 Million by a teller, Pauline, who exploited an 'override' loophole in the newly installed T24 banking system between August and November 2011. The claimants testified that the preliminary investigation blamed the system failure, not them; that the teller was summarily dismissed; and that disciplinary action against them only commenced a year later in 2012 after the insurer demanded a concluded investigation report before refunding the loss. The respondent's witnesses maintained the managers failed in their oversight duties and that termination was lawful. The court found that the overriding loophole was new and unknown to anyone in the bank, that the swift discovery of the fraud reflected well on the 1st claimant's oversight, and that the disciplinary process was actuated by the insurance company's demand. It held the termination violated Sections 43 and 45 of the Employment Act. Under Section 49, the court awarded each claimant the maximum statutory compensation of 12 months' gross salary - Kshs. 1,790,208 for the 1st claimant and Kshs. 2,436,000 for the 2nd - with interest at court rates from the date of judgment and costs of the suit. The additional reliefs sought (six years' salary and general damages beyond the statutory award) were refused. Judgment dated 20th January 2020, delivered by Mathews N. Nduma, Judge.

Key legal issues

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01

Whether the termination was for a valid reason and followed a fair procedure

Holding

The termination was wrongful and unfair: the reason relied on (gross negligence) was invalid because the loss was caused by a systemic loophole in the T24 banking system unknown to anyone in the bank, and the disciplinary process was actuated by the insurance company's demand rather than genuine culpability. The termination violated Sections 43 and 45 of the Employment Act.

Reasoning

The court found the 'overriding' loophole in the newly installed T24 system was completely new and unknown in the bank. Preliminary investigations blamed the system failure, yet disciplinary action only commenced a year later after the insurer demanded a concluded investigation report before refunding the loss. The discovery of the theft within about a month reflected well on the 1st claimant's oversight. Holding the managers to an unknown standard was unfair.

p. 4
02

Whether the claimants were entitled to the reliefs sought

Holding

The claimants were entitled to statutory compensation under Section 49(1)(c) and (4), awarded at the maximum of 12 months' gross salary each, but the additional reliefs sought (six years' salary, general damages beyond statutory compensation) were refused.

Reasoning

The court weighed the claimants' long unblemished service (19 and 21 years), seniority, clean records, inability to secure alternative employment in banking, and the mental anguish of being scapegoated, and concluded both deserved maximum compensation of 12 months' salary, being the remedy permissible by statute.

p. 5

Legal principles established

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  • An employer cannot hold an employee to a different and higher standard based on a system loophole that was new and unknown within the bank; termination on such an invalid reason violates Sections 43 and 45 of the Employment Act.
  • An employee cannot be held culpable for a failure they had no idea of nor anticipated, and where termination is actuated by extraneous considerations (an insurance claim), the dismissal is wrongful and unfair.
  • Compensation for wrongful and unfair termination under Section 49 of the Employment Act is the permissible statutory remedy, and other reliefs outside it are refused.

Court orders

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  1. 1.Judgment entered in favour of the claimants against the respondent: Julius Bii Kipyegon Bati awarded Kshs. 1,790,208 (149,184 x 12 months).
  2. 2.Robert Watila awarded Kshs. 2,436,000 (203,000 x 12 months).
  3. 3.Interest at court rates from date of judgment till payment in full.
  4. 4.Costs of the suit to the claimants.

Authorities

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Legislation

  • Employment ActSection 43
  • Employment ActSection 45
  • Employment ActSection 49(1)(c) and (4)

Cases cited (2)

  • Banking Insurance and Finance Union (Kenya) vs Namini Sacco Society Ltd (2014) eKLR
    (2014) eKLR
  • Peterson Ndungu and 5 others vs Kenya Power and Lighting Company Ltd (2014) eKLR
    (2014) eKLR
Jurisdiction invoked
Employment Act, Sections 43, 45 and 49 (first-instance claim under the Employment and Labour Relations Court's jurisdiction)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Julius Bii Kipyegon Bati & another v Kenya Commercial Bank Limited [2020] KEELRC 1861 (KLR)", Case Analysis (2020). Not stated in the judgment provided. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2020/1861/eng@2020-01-20

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