Ndzai v Century Micro Finance Bank Ltd (Employment and Labour Relations Cause 383 of 2016) [2023] KEELRC 435 (KLR)
The bottom line
#A Kenyan court ruled that even regulator-driven dismissals require a valid reason and a hearing before termination.
What this practically means
#Executive summary
#Key legal issues
#Whether the termination was fair and lawful notwithstanding the Central Bank of Kenya's refusal to approve the claimant's appointment
The termination was unfair and unlawful; the respondent failed to give a valid reason and flouted the procedure in sections 41 and 45 of the Employment Act
The court held the respondent should have done due diligence and sought Central Bank clearance before hiring. The termination letter was vague, citing only 'issues raised by the Central Bank of Kenya during your vetting process'. No hearing was held and no valid reasons were communicated. Even an illegal contract did not excuse the absence of procedural fairness. The authorities relied on (Co-operative Bank v Yator; Standard Group v Lyesby) confirm the section 41 procedure is mandatory.
Whether the claimant's reliefs were merited
Partially: notice pay, accrued leave, one month's compensation and costs awarded; acting CEO salary disallowed for want of evidence
The court awarded two months' salary in lieu of notice (Kshs 500,000), accrued leave of 18 days less 5 days taken, and compensation of Kshs 250,000 for one month, totalling Kshs 750,000 subject to clarification of December salary and leave dues. The acting CEO salary claim failed because there was no documentation establishing the position or acting allowance.
Whether the respondent's counterclaim of Kshs 267,011/- was merited
The counterclaim did not succeed; judgment was entered for the claimant
Although the respondent alleged unaccounted-for floats, an outstanding loan to a junior employee induced for the claimant's benefit, and an outstanding loan to the claimant's sister, the claimant explained the float was for an office meeting and unreconciled because an invoice had not been received before termination, and that his sister's loan predated his employment. The court entered judgment for the claimant without upholding the counterclaim.
Legal principles established
#- Sections 41 and 45 of the Employment Act are mandatory; an employer must give a valid reason and an opportunity to be heard before terminating an employee, even where gross misconduct or an illegal contract is alleged.
- Even where an employee operates under an illegal contract, procedural fairness under section 41 must still be accorded before termination.
Court orders
#- 1.Judgment entered in favour of the claimant on the claim of unfair termination
- 2.Award of two months' salary in lieu of notice - Kshs 500,000/-
- 3.Accrued leave for 18 days less 5 days already taken, parties to confirm amount due
- 4.Prayer for unpaid salary for acting as CEO disallowed
- 5.Compensation of Kshs 250,000/- for one month; total awarded Kshs 750,000/- subject to clarifying December 2015 salary and leave pay
- 6.Costs awarded to the claimant plus interest at court rates from date of judgment till full payment
- 7.Certificate of service to be issued within 14 days
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction over employment claims (Employment Act; Employment and Labour Relations Court Act) - not expressly stated in the judgment
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Ndzai v Century Micro Finance Bank Ltd (Employment and Labour Relations Cause 383 of 2016) [2023] KEELRC 435 (KLR)", Case Analysis (2023). Amended Memorandum of Claim dated October 25, 2021. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/435/eng@2023-02-16
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.