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ELRCPartially AllowedCause No 2153 of 2017· [2022] KEELRC 1223 (KLR)

Chimwani v Diamond Trust Bank Limited (Cause 2153 of 2017) [2022] KEELRC 1223 (KLR)

Employment and Labour Relations Court
28 April 2022
SRStella Rutto
4,408 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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A Kenyan bank's dismissal of a receptionist was ruled unfair because it couldn't prove the reason, but her union-based pay claim failed for lack of union membership.

What this practically means

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Executive summary

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The claimant, employed by the respondent bank on a two-year fixed-term contract from January 2012 and later confirmed on permanent terms, was suspended in August 2014 on grounds of attempted fraud and terminated on 30th October 2014. She claimed her termination was substantively and procedurally unfair and sought twelve months' salary as compensation, CBA-based underpayments of about Kshs 1.8 million, one month's notice pay, exemplary damages, interest and costs. The respondent maintained the termination followed investigations linking her to fraudulent transactions causing a loss of about Kshs 10 million, that she was not a union member and thus not covered by the BIFU/Kenya Bankers Association CBA, and that it complied with the Employment Act. The court framed three issues: CBA entitlement, fairness of termination, and reliefs. It held that the claimant did not prove membership of BIFU (no membership number, no dues deductions) and, following the Court of Appeal in East Africa Portland Cement Co Ltd v Kenya Chemical & Allied Workers Union, could not benefit from the CBA. On the termination, the respondent's evidence rested on a hearsay investigation report with no direct link to the claimant, and the termination letter omitted the reasons; substantive justification therefore failed despite procedural compliance at the disciplinary hearing. The termination was declared unfair and unlawful. The court awarded seven months' gross salary (Kshs 385,000/=) with interest at court rates from the date of judgment and costs of the suit, but refused the CBA underpayments and exemplary damages.

Key legal issues

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01

Entitlement to CBA terms without proven union membership

Holding

Claimant could not benefit from the CBA because she did not prove membership of BIFU

Reasoning

The claimant admitted she had no membership number and no union dues were deducted from her salary; no register or payslip evidence was produced. Relying on East Africa Portland Cement Co Ltd v Kenya Chemical & Allied Workers Union, the court held CBA terms benefit only union members, and unionisable status does not create automatic membership, since Article 41(1)(c) grants workers freedom to join or not join a union.

p. 6
02

Substantive justification for termination

Holding

Termination was not substantively justified; the respondent failed to prove a valid reason

Reasoning

Under sections 43 and 45(2) of the Employment Act the employer must prove valid reasons. The investigation report implicating the claimant was hearsay based on Mr. Joakim's alleged statements, with no witness statement from him and no call logs linking her to the fraudsters. The termination letter also did not state the reasons, so the court could not safely assume the alleged fraud was the reason for termination.

p. 7
03

Procedural fairness

Holding

Procedure was substantially complied with but the termination was still unfair for want of substantive justification

Reasoning

Despite short notice of the disciplinary hearing, the claimant attended and participated, accompanied by a colleague of her choice, and the minutes confirmed her participation. However, since the respondent failed to link her to wrongdoing, procedural compliance could not cure the absence of substantive justification, and the termination fell within section 45 of the Employment Act as unfair.

p. 8

Legal principles established

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  • Non-members of a trade union cannot benefit from a CBA negotiated for union members; CBA provisions are enforceable only by and against union members
  • Membership to a union is voluntary and unionisable status does not confer automatic benefit of a CBA
  • The employer bears the burden of proving valid reason and fair procedure for termination; hearsay in an investigation report does not discharge that burden

Court orders

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  1. 1.A declaration that the claimant's termination by the respondent was unfair and unlawful
  2. 2.The claimant is awarded compensatory damages in the sum of Kshs 385,000/= equivalent to 7 months gross salary
  3. 3.Interest on the amount in (b) at court rates from the date of Judgment till payment in full
  4. 4.The claimant shall have the costs of the suit

Authorities

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Legislation

  • Constitution of KenyaArticle 27
  • Constitution of KenyaArticle 41, including Article 41(1)(c)
  • Constitution of KenyaArticle 159(2)(d)
  • Constitution of KenyaArticle 48
  • Employment Act, 2007Sections 10(3), 26, 41, 43, 45, 47(5)
  • Labour Relations ActSections 4, 48, 59
  • Civil Procedure ActSection 1B
  • Civil Procedure RulesOrder 21 Rule 1

Cases cited (6)

  • East Africa Portland Cement Co Limited v Kenya Chemical & Allied Workers Union
    (2017) eKLR
  • Fredrick Odongo Owegi v CFC Life Assurance Limited
    (2014) eKLR
  • John Ratemo Ondiek v Islamic Relief Food Worldwide
    (2014) eKLR
  • National Bank of Kenya v Samuel Nguru Mutonya
    (2019) eKLR
  • Walter Ogal Anuro v Teachers Service Commission
    (2013) eKLR
  • Pius Machafu Isindu v Lavington Security
    (2014) eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 and the Labour Relations Act over the trade dispute referred after conciliation

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, "Chimwani v Diamond Trust Bank Limited (Cause 2153 of 2017) [2022] KEELRC 1223 (KLR)", Case Analysis (2022). Cause No 2153 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2022/1223/eng@2022-04-28

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