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ELRCPartially AllowedMemorandum of Claim dated 20th March 2018, filed 22nd March 2018· [2021] KEELRC 728 (KLR)

Jacob Kemboy Komen v Kenya Women Microfinance Bank Limited [2021] KEELRC 728 (KLR)

Employment and Labour Relations Court
21 October 2021
LNLinnet Ndolo
2,012 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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What this practically means

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Executive summary

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This Employment and Labour Relations Court judgment, delivered by Linnet Ndolo, Judge, on 21st October 2021, determined the surviving limbs of a claim by a former bank employee summarily dismissed following fraudulent over-the-counter withdrawals totalling Kshs. 14,000,000 at the Respondent's Mombasa Branch in December 2014. By a consent adopted on 29th July 2021, the parties settled claims for gratuity, pay in lieu of leave, half salary during suspension, travelling allowance and ESOP shares, leaving only compensation for unfair termination, one month's salary in lieu of notice and house allowance. The Claimant, employed from 2007 and dismissed by letter dated 23rd March 2015, contended there was no valid reason for dismissal and that the process was unlawful, relying partly on his acquittal in Criminal Case No. 622 of 2016. The Respondent maintained the dismissal was for gross misconduct causing a Kshs. 14,000,000 loss, with due procedure followed. The court held that the Respondent had a valid reason under Section 43 of the Employment Act, as the Claimant, the first point of contact with the fraudsters, failed to exercise due care beyond the standard KYC drill despite the unusual nature of the transactions; his criminal acquittal did not immunise him from disciplinary action. On procedure, the court found substantial compliance with Section 41, but faulted the withholding of half pay during suspension, which had no statutory or contractual basis, entitling the Claimant to some compensation. The court awarded three months' salary (Kshs. 181,800) and one month's notice pay (Kshs. 60,600), with interest, and dismissed the house allowance claim as the salary was consolidated. Costs were awarded to the Claimant.

Key legal issues

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01

Validity of the reason for dismissal

Holding

The Respondent had a valid reason under Section 43 of the Employment Act; the Claimant negligently paid out Kshs. 14,000,000 in fraudulent over-the-counter transactions

Reasoning

The Claimant effected four unusually large payments over two days from accounts domiciled at Thika Branch without doing more than the standard KYC drill, including a call back to the domicile branch. His acquittal on criminal charges did not bar disciplinary action. The court found the employer lost Kshs. 14,000,000 and exposed itself to reputational risk.

p. 4
02

Procedural fairness under Section 41

Holding

The Respondent substantially complied with Section 41, but withholding half pay during suspension had no statutory or contractual basis, warranting some compensation

Reasoning

The Claimant was notified of the charges by the suspension letter of 9th January 2015 and invited to a personal hearing before the Staff Disciplinary Committee on 23rd March 2015. He raised no issue with the proceedings. The sole defect was the withholding of half pay during suspension without statutory or contractual basis, for which compensation was awarded.

p. 4
03

House allowance claim

Holding

Disallowed because the salary was consolidated and inclusive of house allowance

Reasoning

The Claimant's confirmation letter dated 29th May 2008 provided for a consolidated monthly salary, which ordinarily includes house allowance. The court therefore found no basis for the claim and disallowed it.

p. 4

Legal principles established

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  • A supervisor's negligence does not diminish the culpability of a junior employee; every employee owes a direct duty of care to their employer under their own contract
  • An acquittal in a criminal case does not immunise an employee against disciplinary action by an employer on the same facts
  • Bank employees' standard of care must be correspondingly high because their lifeline is customer confidence

Court orders

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  1. 1.Award of three (3) months' salary (Kshs. 181,800) in compensation for unfair termination
  2. 2.Award of one (1) month's salary in lieu of notice (Kshs. 60,600), total judgment Kshs. 242,400
  3. 3.Interest at court rates from the date of judgment until payment in full
  4. 4.Respondent to meet the costs of the case
Jurisdiction invoked
First-instance employment dispute under the Employment Act (Sections 41 and 43 applied); specific constitutional provision not invoked

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, "Jacob Kemboy Komen v Kenya Women Microfinance Bank Limited [2021] KEELRC 728 (KLR)", Case Analysis (2021). Memorandum of Claim dated 20th March 2018, filed 22nd March 2018. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2021/728/eng@2021-10-21

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