Muthiga v Diamond Trust Bank Ltd (Cause 423 of 2017) [2021] KEELRC 1030 (KLR)
The bottom line
#Kenya's Employment Court declared a bank employee's redundancy unfair, but she got no compensation because she had signed a full settlement voucher.
What this practically means
#Executive summary
#Key legal issues
#The Claimant's position at termination
She was a BMU department staff seconded to Ngong' branch, not promoted to branch manager.
The letter of 17th August 2016 was headed 'transfer' and described a 'lateral transfer' on the same terms. No letter appointing her branch manager was ever issued. The BMU mandate included setting up new branches, consistent with a temporary deployment rather than a promotion.
Whether the redundancy was lawful under sections 40, 43 and 45 of the Employment Act
The termination was unfair: the notice communicated a redundancy rather than an intended redundancy, the selection process was opaque, and the employer failed to prove the grounds for redundancy.
The 7th October 2016 notice communicated a fait accompli rather than an intended redundancy. The selection was done behind closed doors without involving affected employees, contrary to the seniority, skill, ability and reliability criteria. The employer did not produce evidence (e.g. organograms) proving the merger of departments, and under sections 43, 45 of the Employment Act and section 112 of the Evidence Act it bore the burden of justifying the redundancy.
Effect of the pretrial settlement on the claim for compensation
The settlement voucher was freely signed and unchallenged, so it barred further claims for compensation.
Applying guidelines drawn from Court of Appeal authority, the court found no allegation of fraud, mistake or undue influence; the Claimant conceded receipt of the amounts and did not contest the settlement in further pleadings, so it was not open to the court to reopen monetary compensation.
Legal principles established
#- A discharge voucher or pretrial settlement does not per se absolve an employer of statutory obligations; the court must examine its import and whether it was freely executed with full knowledge.
- An employer alleging redundancy must prove the grounds, including evidence such as organograms showing the reorganisation, failing which the termination may be found to be a disguised ordinary termination.
- A selection process conducted without involvement of affected employees casts doubt on its fairness.
Court orders
#- 1.Declaration that the Claimant's termination on account of redundancy was flawed and unfair
- 2.Dismissal of the claims for compensation
- 3.Each party to bear their own costs of the cause
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction over employment disputes (Employment Act; ELRC Procedure Rules, 2016)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Muthiga v Diamond Trust Bank Ltd (Cause 423 of 2017) [2021] KEELRC 1030 (KLR)", Case Analysis (2021). Cause No 423 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2021/1030/eng@2021-09-10
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.