Asetto v Faulu Microfinance Bank Kenya Limited (Cause 754 of 2017) [2022] KEELRC 4113 (KLR)
The bottom line
#A Kenyan bank unfairly fired an employee for negligence, winning nothing on process, yet still recovered her staff loan at the discounted rate.
What this practically means
#Executive summary
#Key legal issues
#Burden of proof in unfair termination
Employee bears burden of proving unfair termination; employer bears burden of justifying grounds under sections 47(5) and 43
The court invoked sections 47(5) and 43 of the Employment Act, and the Pius Machafu Isindu authority, to allocate burdens: the employer must prove reasons for termination, that they are valid and fair, and must follow the mandatory process under section 41.
Procedural fairness under section 41
Termination was unfair because the show-cause notice was generic, the investigations report was not shared, and no hearing notice issued securing section 41 rights
The court found the notice to show cause was generic and not filed, the disciplinary hearing invitation was not filed, the investigators who also sat in the hearing were not witnesses, and the alleged forged documents were never filed. These omissions breached section 41 and rendered the dismissal unlawful.
Missing records and quantum of documents
The respondent failed to file the key loan records said to have been negligently approved, undermining its justification
The documents said to have been forged and the loan records approved were not filed and could not be authenticated, denying the court key records on dates, timelines and the claimant's exact role; the claimant was also only an acting branch manager without confirmation or job description.
Counter-claim on staff loan
Counter-claim allowed; claimant to continue repaying at staff rate of 9% with 90 days' grace, failing which the respondent may recall the full facility
The court held that the preferential staff rate was an employment benefit and that unfair termination did not extinguish the loan obligation. Repayment at 9% was ordered with a 90-day grace period, failing which the security and full facility could be recalled, with dues off-set against the loan.
Legal principles established
#- Suspension to allow investigations must be followed by a notice to show cause outlining the matters to be answered before a disciplinary hearing
- Failure to issue notice and secure section 41 rights renders any sanction unlawful and the termination unfair
- An employee's preferential staff loan rate is an employment benefit which persists despite unfair termination, secured by the charge over her property
Court orders
#- 1.Declaration that the claimant's employment terminated unfairly
- 2.Compensation awarded at Ksh 1,290,000
- 3.50% of costs to the claimant
- 4.Counter-claim allowed: respondent entitled to recover the loan advanced at staff rate of 9%
- 5.Claimant to continue repaying the loan at 9% until payment in full
- 6.Claimant to repay outstanding loan balances and regularise repayments within 90 days
- 7.On non-compliance, respondent at liberty to recall the full loan facility with all due costs
- 8.Dues owed to the claimant by the respondent to be applied to off-set the loan facility
- Jurisdiction invoked
- First-instance employment claim under the Employment Act, 2007
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Asetto v Faulu Microfinance Bank Kenya Limited (Cause 754 of 2017) [2022] KEELRC 4113 (KLR)", Case Analysis (2022). Not stated in the judgment text. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2022/4113/eng@2022-05-12
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.