Kaguo v Equity Bank (Kenya) Ltd (Employment and Labour Relations Cause 480 of 2016) [2023] KEELRC 1379 (KLR)
The bottom line
#A Kenyan court upheld a bank manager's dismissal for approving loans to relatives but still ordered the bank to pay his salary arrears and leave pay.
What this practically means
#Executive summary
#Key legal issues
#Whether the dismissal was substantively fair
Yes - the Respondent had genuine and reasonable grounds to dismiss the Claimant for negligent, careless, reckless or fraudulent approval of loans and overdrafts under Section 44(4) of the Employment Act
The court applied Section 43(2): the employer need only genuinely believe reasons existed at the time of termination, tested objectively. The Claimant admitted approving loans for his wife, sister, brother, friends and himself without disclosing conflicts of interest, and signed off facilities for newly opened accounts, exposing the bank to losses. No evidence rebutted the Respondent's documentary evidence.
Whether the dismissal was procedurally fair
Yes - the Claimant was afforded a fair hearing consistent with natural justice
The Claimant recorded a detailed statement during investigations, received a detailed show-cause letter, responded in detail, attended a disciplinary hearing, questioned and answered, signed the minutes, was dismissed, appealed and was informed of the appeal outcome. Disciplinary process is administrative action, not a court trial, and courts should not interfere where natural justice is observed.
Salary arrears for the suspension period March-October 2016
Awarded in full at Kshs.688,000/= as the arrears were not denied and no counterclaim for set-off was pleaded
The Respondent alleged the Claimant owed it money by way of personal loan and mortgage arrears, but never filed a counter-claim or set-off; the court could not make findings on unpleaded claims. The salary for months served until October 2016 was payable regardless of the 'clearance' excuse.
Outstanding leave days
Awarded at Kshs.114,656/= because the employer failed to avail employment records to dislodge the claim
Sections 10 and 74 of the Employment Act place the duty to keep employment records on the employer; the Respondent produced none, so the Claimant's claim of 32 unutilised leave days stood unrebuted and was awarded as claimed.
Legal principles established
#- An employee who has been terminated has no obligation to 'clear' with the employer before receiving terminal dues; an employer with claims against a former employee must pursue them in court.
- Where an employer has supplied details and particulars of charges and the employee responds in detail without qualification, the employee cannot later allege he needed more particulars.
- A pay-slip does not constitute a contract of employment and cannot vary contractual terms.
- Under Sections 10 and 74 of the Employment Act the employer bears the burden of availing employment records to dislodge a claim for unutilised leave days.
- Section 51 of the Employment Act obliges an employer to unconditionally issue a departing employee a certificate of service.
Court orders
#- 1.A declaration that the dismissal of the Claimant by the Respondent was fair and lawful
- 2.The Claimant is awarded Kshs.802,656/= comprising salary arrears of Kshs.688,000/= and leave pay of Kshs.114,656/=
- 3.The Respondent is ordered to deliver to the Claimant through his counsel a certificate of service within 14 days of the judgment
- 4.The Claimant is awarded one half costs of the cause
- 5.All the other claims are denied
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction under the Employment Act and related labour laws (not expressly cited in the judgment)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Kaguo v Equity Bank (Kenya) Ltd (Employment and Labour Relations Cause 480 of 2016) [2023] KEELRC 1379 (KLR)", Case Analysis (2023). Not stated in the judgment as provided. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/1379/eng@2023-05-31
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.