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ELRCPartially AllowedCause not stated in judgment (nine claimants' amended memorandum of claim dated 20th December 2018)· [2023] KEELRC 1543 (KLR)

Banking, Insurance & Finance Union (K) v Consolidated Bank of Kenya Ltd (Employment and Labour Relations Cause 2330 of 2017) [2023] KEELRC 1543 (KLR)

Employment and Labour Relations Court
16 June 2023
AMAnna Ngibuini Mwaure
3,459 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~14 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court ruled Cooperative Bank unfairly fired nine junior staff as scapegoats for major fraud, awarding them millions in compensation and costs.

What this practically means

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Executive summary

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The Banking Insurance Finance Union (Kenya) sued Cooperative Bank of Kenya on behalf of nine junior staff (cashiers and tellers) summarily terminated on 7th May 2018 following a massive cheque-diversion fraud. Fraudsters opened accounts styled 'Lavington Guard Services' at the bank's Koinange, Harambee Avenue and River Road branches and diverted cheques payable to Lavington Security Services Ltd, which had no account with the bank, resulting in losses running into hundreds of millions of shillings. The nine claimants received the cheques at the counter and were dismissed for flouting deposit procedures. The court framed two issues: whether the terminations were lawful, and entitlement to remedies. It found the dismissals lacked both substantive justification and procedural fairness. The claimants were lax but naively acted under instructions of superiors, including the branch manager who approved the accounts, and were scapegoats in a wider conspiracy; the disciplinary process was trumped up and denied them a representative of their choice, with no minutes availed. Relying on sections 41, 44, 45 and 49 of the Employment Act and its precedents, the court held the terminations unfair and unlawful. It awarded each claimant pay in lieu of notice plus four to six months' compensation, but declined leave pay and general/pecuniary damages as unproved. Awards totalled between Kshs 377,230/- and Kshs 890,694/-, each with costs of the suit and interest at court rates from the date of judgment till full payment.

Key legal issues

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01

Whether the respondent had valid and fair reasons to terminate the claimants' employment

Holding

The court found no valid reasons: the claimants were junior staff acting under instructions, and the dismissals were a trumped-up process to cover a wider conspiracy including senior staff.

Reasoning

The court reviewed the fraud investigation report showing massive losses spanning three branches and approved accounts opened with the branch manager's introduction. The claimants, as cashiers and tellers, were lax but acted naively under instructions of their bosses. The managers who approved the account were also dismissed. Section 45(1) of the Employment Act requires valid and fair reasons, which were absent here.

p. 5
02

Whether the disciplinary process complied with section 41 of the Employment Act

Holding

The process was procedurally unfair: at the second hearing on 4th May 2018 the claimants were denied a representative of their choice and forced to accept one chosen by the respondent; minutes were not captured or availed.

Reasoning

The claimants testified that the person they invited was not accepted, and that Rose Mwashimba/Machaba was the respondent's choice who did not present their case. Given the sensitivity of the matter, junior staff needed support at the hearing. Lack of minutes and denial of the representative of their choice rendered the hearing non-compliant with section 41.

p. 2

Legal principles established

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  • Termination must be both substantively justified and procedurally fair; if either is lacking, the termination is flawed.
  • The employer bears the burden of proving valid and fair reasons for termination under section 45(1) of the Employment Act.
  • Compliance with section 41 requires the employer to explain the reasons to the employee, allow a fellow employee or shop floor union representative of choice, and hear and consider explanations.

Court orders

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  1. 1.Declaration that the claimants' terminations were unfair, unlawful and procedurally flawed, judgment rendered in their favour
  2. 2.Jane Ikapesi: Kshs 890,694/- total (pay in lieu Kshs 127,242/- and six months' notice/compensation Kshs 763,452/-) plus costs and interest at court rates from date of judgment till full payment
  3. 3.Yolan K. Limo: Kshs 851,165/- total (pay in lieu Kshs 121,595/- and six months' compensation Kshs 730,170/-) plus interest and costs
  4. 4.Victor Mbiri: Kshs 464,495/- total (notice pay Kshs 92,899/- and four months' compensation Kshs 371,596/-) plus interest and costs
  5. 5.Judy Mueni: Kshs 464,495/- total (notice pay Kshs 92,899/- and four months' compensation Kshs 371,596/-) plus interest and costs
  6. 6.Truphosa Apondi: Kshs 557,394/- total (notice pay Kshs 92,899/- and compensation Kshs 464,495/-) plus interest and costs
  7. 7.Helidy Waturi: Kshs 416,865/- total (notice pay Kshs 83,373/- and four months' compensation Kshs 333,492/-) plus interest and costs
  8. 8.Lorraine Ochawade: Kshs 414,365/- total (notice Kshs 82,873/- and four months' compensation Kshs 331,492/-) plus interest and costs
  9. 9.Pharis Ayah: Kshs 389,870/- total (notice pay Kshs 77,974/- and four months' compensation Kshs 311,896/-) plus interest and costs
  10. 10.Angeline Apolo: Kshs 377,230/- total (notice pay Kshs 75,446/- and four months' compensation Kshs 301,784/-) plus interest and costs

Authorities

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Legislation

  • Employment Actsection 45(1)
  • Employment Actsections 44(1) and (2)
  • Employment Actsections 41 and 49(1)(c)
  • Employment Actsection 12
  • Constitution of KenyaArticle 159(2)(d)
  • Constitution of KenyaArticle 48
  • Civil Procedure Actsection 1B
  • Civil Procedure RulesOrder 21 Rule 1

Cases cited (3)

  • Pius Machafu Isinu vs Lavington Security Guards Limited
  • Banking Insurance Finance Union (Kenya) vs Cooperative Bank of Kenya
    Cause No. 864 of 2014
  • Loice Otieno vs Kenya Commercial Bank Limited
    Cause 1050 of 2011
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act (sections 41, 44, 45 and 49 invoked); original cause jurisdiction

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, "Banking, Insurance & Finance Union (K) v Consolidated Bank of Kenya Ltd (Employment and Labour Relations Cause 2330 of 2017) [2023] KEELRC 1543 (KLR)", Case Analysis (2023). Cause not stated in judgment (nine claimants' amended memorandum of claim dated 20th December 2018). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/1543/eng@2023-06-16

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