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ELRCPartially AllowedNot stated in judgment (Certificate of Urgency, ELRC, Nairobi)· [2021] KEELRC 904 (KLR)

Jacob Kelly Omondi Onyango v National Bank of Kenya [2021] KEELRC 904 (KLR)

Employment and Labour Relations Court
30 September 2021
OMOnesmus N. Makau
4,672 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~19 min to read original · ~4 min brief

The bottom line

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A Kenyan bank was ordered to pay a former executive Kshs. 6.5 million after failing to prove he was responsible for the misconduct behind his dismissal.

What this practically means

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Executive summary

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The Claimant, employed by the Respondent bank in May 2013 and promoted rapidly to Head of Origination, Monitoring and Controls, received a show cause letter dated 12.5.2016 alleging lending malpractices over temporary overdraft facilities for TSS Group, and was summarily dismissed on 22.6.2016 for gross misconduct and loss of confidence. He sued for a declaration of unfair dismissal, reinstatement, twelve months' salary in the alternative, general damages, and an injunction over his staff mortgage interest rate. The Respondent defended the dismissal as lawful under section 44 of the Employment Act for gross misconduct, asserting a fair hearing and forgone appeal. The court framed three issues: validity of the reasons, fairness of procedure, and entitlement to relief. On the evidence, the Respondent's own witness admitted the Claimant played no role in the approval or disbursement of the overdraft, and the Credit Risk Management Policy showed no role for the Claimant's division in approving Temporary Excesses; the reasons were therefore not valid and fair, rendering the dismissal unfair, wrongful and unlawful. However, the show cause letter, written response and disciplinary hearing minutes satisfied section 41, so the procedure was fair. Reinstatement was barred by the three-year rule in section 12(3)(vii) of the ELRC Act. The court awarded the maximum twelve months' gross salary of Kshs. 6,542,232, but refused general damages as unpleaded and the mortgage injunction as unprosecuted. Judgment was entered for the Claimant with costs and interest at court rates.

Key legal issues

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01

Validity of the reasons for dismissal

Holding

The Respondent failed to prove valid and fair reasons; the Claimant played no role in the approval and disbursement of the temporary overdraft

Reasoning

RW1 admitted under oath that the Claimant played no role in the approvals and disbursements. The application forms, offer letter and instructions were signed by managers superior to the Claimant, and the Credit Risk Management Policy shows no role for Credit Origination in approving Temporary Excesses. The facility was also sufficiently secured within the TSS Group credit limit.

p. 5
02

Fairness of the procedure followed

Holding

The Claimant was accorded a fair hearing through the show cause letter, written response and disciplinary hearing, so procedure was fair despite the change in the quantum cited

Reasoning

The court examined the show cause letter, the Claimant's written response dated 18.5.2016 and the minutes of the disciplinary hearing of 6.6.2016. Although the amount initially cited was Kshs. 157,000,000 and the dismissal letter cited Kshs. 110,000,000, the court found no prejudice since the transaction was the same, satisfying section 41 of the Employment Act.

p. 5
03

Appropriate remedies

Holding

Reinstatement unavailable; maximum 12 months' salary awarded; general damages and injunction refused

Reasoning

Section 12(3)(vii) of the ELRC Act bars reinstatement after three years from separation. Considering the Claimant's outstanding three-year record, lack of alternative employment and the sensitive banking sector, the court awarded the maximum twelve months' gross salary. General damages failed for want of pleading and the injunction for want of prosecution.

p. 5

Legal principles established

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  • The employer bears the burden of proving both valid and fair reasons and fair procedure under sections 43 and 45 of the Employment Act
  • An employee dismissed for reasons not proved valid is entitled to compensation of up to twelve months' gross salary under section 49

Court orders

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  1. 1.Declaration that the dismissal was unfair, wrongful and unlawful within the meaning of section 45 of the Employment Act
  2. 2.Judgment for the Claimant in the sum of Kshs. 6,542,232 less statutory deductions
  3. 3.Costs of the suit to the Claimant plus interest at court rates from the date of the judgment

Authorities

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Legislation

  • Employment Actsections 41, 42(1), 43, 44, 45, 47(c), 49
  • ELRC Actsections 12, 12(3)(vii)
  • Constitution of KenyaArticle 162(2)
  • ELRC Procedure RulesRule 28(3)

Cases cited (6)

  • Kenfreight (EA) Limited v. Benson K. Nguti
    [2016]eKLR
  • Nicholas Otinya Muruka v. Equity Bank Limited
    [2013]eKLR
  • John Rioba Maugo v Riley Falcon Security Services Limited
    [2016]eKLR
  • The Standard Group Limited v Jenny Luesby
    [2018]eKLR
  • Kenya Revenue Authority v. Renwel Waithaka Gitahi & 2 Others
    [2019]eKLR
  • Kenya Airways Limited v Aviation Workers Union Kenya & 3 Others
    [2014]eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under section 12 of the ELRC Act and Article 162(2) of the Constitution

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 Kelly Omondi Onyango v National Bank of Kenya [2021] KEELRC 904 (KLR)", Case Analysis (2021). Not stated in judgment (Certificate of Urgency, ELRC, Nairobi). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2021/904/eng@2021-09-30

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