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ELRCPartially AllowedMemorandum of Claim dated 9th July 2020 (Employment and Labour Relations Court)· [2022] KEELRC 53 (KLR)

Mwilo v Absa Bank (K) PLC (Cause 31 of 2020) [2022] KEELRC 53 (KLR)

Employment and Labour Relations Court
5 May 2022
ANAgnes Kitiku Nzei
4,129 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~17 min to read original · ~4 min brief

The bottom line

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A Mombasa court ruled a bank couldn't extend an expired probation period and unfairly fired an employee, awarding him over Ksh.1.7 million.

What this practically means

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Executive summary

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The Claimant, employed by the Respondent bank as an SME Banker effective June 12, 2019 on a six-month probation, was terminated by letter dated March 27, 2020 on grounds of underperformance, after his probation had purportedly been extended by a letter of January 27, 2020 for three months. The Respondent maintained the termination was a lawful probationary termination under Sections 41 and 42 of the Employment Act and that the salary was consolidated and inclusive of house allowance. The Court held that the contractual probation lapsed on December 12, 2019 and, by operation of Section 42(2), the Claimant stood confirmed to employment; the purported retrospective extension and alteration of the start date were an outright illegality, and receipt of the letter did not validate it. The alleged oral agreement to extend was rejected as a written contract cannot be varied orally where one party denies it. On the second issue, the Court found the Respondent had not complied with the mandatory procedural requirements of Section 41 before terminating on grounds of poor performance, rendering the termination unfair; the Court declined to examine the validity of the reasons and noted the Claimant's March 2020 scorecard showed outstanding performance which the Respondent did not await. The Court awarded eight months' salary (ksh.1,518,000) as compensation for unfair termination and house allowance of ksh.222,750 at 15% of monthly salary for nine months, holding 'salary package' is not synonymous with 'consolidated salary'. Total award ksh.1,740,750, subject to statutory deductions, with costs and interest at Court rates to the Claimant.

Key legal issues

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01

Whether the Claimant was on probation at the time of termination

Holding

The six-month probation lapsed on 12th December 2019; the purported retrospective extension of January 27, 2020 was illegal and the Claimant was confirmed by operation of Section 42(2).

Reasoning

Employment commenced June 12, 2019, so the contractual six-month probation ended December 12, 2019. Section 42(2) caps probation at six months and permits extension only for up to a further six months with the employee's agreement. The January 27, 2020 letter purported to extend probation retrospectively and to alter the start date; receipt of the letter did not validate its contents, and the alleged oral agreement was rejected.

p. 6
02

Whether the termination was unlawful and unfair

Holding

Termination was procedurally unfair as the Respondent did not comply with Section 41's mandatory requirements before terminating on grounds of poor performance.

Reasoning

Section 41 obliges the employer to explain the reasons for contemplated termination and to hear the employee's representations. The Claimant received no notice of intended termination and no opportunity to be heard. The Court declined to examine the validity of the reasons, having found procedural unfairness; the Respondent also terminated without reviewing the Claimant's March 2020 performance, which turned out outstanding.

p. 7
03

Entitlement to house allowance

Holding

The Claimant was entitled to house allowance at 15% of monthly salary for the nine months of employment because the salary was not shown to be consolidated.

Reasoning

The term sheet referred to a 'salary package', not a consolidated salary. Section 31(2) excludes employees whose contracts consolidate basic wage with a housing element, but no such provision existed and no payslip itemizing house allowance was exhibited. The Court awarded 9 x 24,750 = ksh.222,750.

p. 9

Legal principles established

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  • A probationary period cannot exceed six months and may only be extended for a further period of not more than six months with the agreement of the employee; once it lapses, the employee stands confirmed by operation of statute.
  • A purported retrospective extension of a lapsed probationary period is an illegality and receipt of the extension letter does not amount to agreement to its contents.
  • A written contract cannot be varied by an alleged oral agreement where one party denies it.
  • Termination without compliance with Section 41's mandatory procedure is unfair.
  • 'Consolidated salary' and 'salary package' are not synonymous; without a consolidation provision, Section 31 house allowance entitlement stands.

Court orders

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  1. 1.Eight months salary, inclusive of house allowance, for unfair termination of employment (8x189,750) ksh.1,518,000
  2. 2.Unpaid house allowance (9 x 24,750) ksh.222,750
  3. 3.Total award of ksh.1,740,750
  4. 4.The sum awarded is subject to applicable statutory deductions under Section 49(2) of the Employment Act, to be remitted to relevant statutory bodies within thirty days of making the deductions
  5. 5.The Claimant is awarded costs of the claim and interest at Court rates

Authorities

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Legislation

  • Employment Act 2007Section 31
  • Employment Act 2007Section 31(2)
  • Employment Act 2007Section 41
  • Employment Act 2007Section 42(1) and 42(2)
  • Employment Act 2007Section 44
  • Employment Act 2007Section 45(1), 45(2)(c) and 45(4)(b)
  • Employment Act 2007Section 49(2)
  • Constitution of KenyaArticle 41

Cases cited (3)

  • Janet Nyandiko v Kenya Commercial Bank Limited
    [2017] eKLR
  • Jane Samba Mukala v Ol Tukai Lodge Limited
    Industrial Court Case No. 823 of 2010 [2013] eKLR
  • National Bank of Kenya v Samuel Nguru Mutonya
    [2019] eKLR
Jurisdiction invoked
Employment Act 2007 (Sections 31, 41, 42, 44, 45, 49); original jurisdiction of the Employment and Labour Relations Court

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (6)

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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, "Mwilo v Absa Bank (K) PLC (Cause 31 of 2020) [2022] KEELRC 53 (KLR)", Case Analysis (2022). Memorandum of Claim dated 9th July 2020 (Employment and Labour Relations Court). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2022/53/eng@2022-05-05

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