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ELRCDismissedCause No 362 of 2019· [2021] KEELRC 805 (KLR)

John Mathenge Macharia v National Bank Of Kenya [2021] KEELRC 805 (KLR)

Employment and Labour Relations Court
8 October 2021
MOMaureen Onyango
4,546 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~18 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court upheld a bank employee's dismissal and ruled his staff loans must now attract commercial interest rates.

What this practically means

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Executive summary

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The Claimant, formerly a Relationship Manager with the Respondent bank, was summarily dismissed on 18th March 2019 following an attempted cyber-attack on the bank's network, investigations and criminal charges. He sued seeking declarations that his termination was unlawful and unfair, an injunction restraining the bank from converting his house loan and secured personal loan to commercial interest rates, continued servicing of the loans at staff preferential rates, one month's salary in lieu of notice, twelve months' salary as damages for unfair dismissal, severance pay, certificate of service and costs. The Respondent justified the dismissal on loss of confidence arising from gross violation of its code of conduct, and relied on Clause 1.18.7 of its Staff Facilities Policy allowing conversion of interest rates upon exit. The court framed three issues: lawfulness of termination, entitlement to staff preferential interest rates, and entitlement to reliefs. It found the Respondent had valid reasons and followed fair procedure: the Claimant knew the allegations, responded to the show cause letter, attended the disciplinary hearing, raised no complaints there and signed the minutes without reservation. The Jackson Leparmarai authority was distinguished. The court held a bank, as a financial institution, may dismiss for loss of confidence given higher integrity requirements. The Claimant admitted awareness that preferential rates would cease and that he received the 90-day conversion notice, so commercial rates apply and the Barclays Bank authority was held inapplicable. The suit was dismissed with no orders for costs, the Claimant being entitled only to a certificate of service if not already issued.

Key legal issues

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01

Whether termination was lawful (substantive and procedural fairness)

Holding

Termination was lawful - valid reason existed and fair procedure was followed

Reasoning

The Claimant was investigated, charged with criminal offences arising from the same events, issued a show cause letter, responded to it, attended a disciplinary hearing, raised no complaint there, and signed the minutes without reservation. Delays in receiving correspondence were explained by suspension arrangements. The Claimant knew the allegations against him, distinguishing Jackson Leparmarai. Loss of confidence justified dismissal given the bank's heightened integrity requirements.

p. 6
02

Whether loans should be serviced at staff or commercial rate

Holding

Commercial rate applies; the staff preferential rate ceased on dismissal per the Staff Facilities Policy

Reasoning

The Claimant admitted knowing the preferential rates would cease on loss of employment and admitted receiving the 90-day notice of conversion under Clause 1.18.7 of the Staff Facilities Policy. Since termination was found valid, the bank was entitled to charge commercial rates. The Barclays Bank case relied on by the Claimant was held inapplicable.

p. 6
03

Whether Claimant entitled to reliefs

Holding

Not entitled to any monetary or declaratory reliefs; only certificate of service

Reasoning

Having found the dismissal lawful, the court held the Claimant was not entitled to the declaratory and monetary prayers. Severance pay is a redundancy entitlement under Section 40 of the Employment Act and unavailable on dismissal for misconduct.

p. 7

Legal principles established

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  • The employer bears the burden of proving reasons for termination; failure renders termination unfair
  • A bank, as a financial institution, may dismiss for loss of confidence given the higher integrity required of its employees

Court orders

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  1. 1.The suit is dismissed
  2. 2.No orders for costs (each party to bear own costs)
  3. 3.Claimant to be issued a certificate of service if not yet issued

Authorities

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Legislation

  • Employment Act, 2007Section 41
  • Employment Act, 2007Section 43
  • Employment Act, 2007Section 45
  • Employment Act, 2007Section 47(5)
  • Employment Act, 2007Section 40
  • Constitution of Kenya, 2010Article 159(2)(d)
  • Constitution of Kenya, 2010Article 48
  • Civil Procedure Act (Chapter 21)Section 1B
  • Civil Procedure RulesOrder 21 Rule 1

Cases cited (8)

  • Naumy Jemutai Kirui v Unilever Tea Kenya Limited
    [2020] eKLR
  • Walter Ogal Anure v Teachers Service Commission
  • Jackson Leparmarai v L.A.B International Kenya Limited
    [2019] eKLR
  • Pius Machafu Isindu v Lavington Security Guards Limited
    [2017] eKLR
  • Kenya Akiba Micro Financing Limited v Ezekiel Chebii & 14 Others
    [2021]
  • Gladys Muthoni Mwangi & 20 Others v Barclays Bank of Kenya Limited & Another
    [2016] eKLR
  • CFC Stanbic Bank Limited v Danson Mwa Kuwona
    Civil Appeal No. 3 of 2014
  • Thomas Sila Nzivo v Bamburi Cement Limited
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over employment claims; reliefs founded on the Employment Act, 2007

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, "John Mathenge Macharia v National Bank Of Kenya [2021] KEELRC 805 (KLR)", Case Analysis (2021). Cause No 362 of 2019. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2021/805/eng@2021-10-08

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