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ELRCPartially AllowedCause No 80 of 2022· [2023] KEELRC 1717 (KLR)

Muchora v National Bank of Kenya Limited (Cause 80 of 2022) [2023] KEELRC 1717 (KLR)

Employment and Labour Relations Court
29 June 2023
MMM Mbarũ
2,284 words in judgment
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The bottom line

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A Kenyan court ruled that firing an employee for poor performance is unfair unless the employer first holds a proper hearing under the Employment Act, awarding nearly a million shillings.

What this practically means

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Executive summary

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The claimant, employed by the respondent bank on May 8, 2006 and promoted through the ranks to salesperson earning Ksh 95,399, was terminated on April 30, 2014 on the ground of unacceptable performance, having been rated below 50% and placed on a performance improvement plan without improvement. He sought reinstatement, salary arrears, two months' notice pay, May 2014 salary, leave pay and costs, contending he was given no notice, no fair hearing and that there was no justifiable cause. The respondent maintained it had a contractual and policy right to terminate, that it followed due process, and that an appeal heard on May 22, 2014 confirmed the decision. The court held that even where poor performance is established, termination remains subject to the mandatory process in Section 41 of the Employment Act: notification of grounds and a hearing with a representative of the employee's choice. Supervisory assessments and an appeal are not equivalent to the Section 41 hearing, and the appeal hearing is a distinct right under Section 45(5)(a). The termination was therefore substantively and procedurally unfair. Reinstatement was refused as unviable after more than nine years. Two months' notice pay, leave pay and May 2014 salary were refused as unsupported or already accounted for. Compensation of ten months' gross salary, Ksh 953,990, was awarded, payable within 60 days with interest thereafter, with costs to the claimant. Judgment delivered at Mombasa on June 29, 2023 by M Mbarũ, Judge.

Key legal issues

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01

Procedural fairness in termination for poor performance

Holding

Termination was procedurally unfair because the claimant was not issued notice and accorded a hearing in terms of Section 41 before the termination letter

Reasoning

Even where an employer appraises an employee and places him on a PIP, those administrative measures remain subject to the mandatory provisions of the Act. Section 41 requires notification of the grounds, a hearing in the presence of a fellow employee or representative of choice, and consideration of representations. Supervisory assessments and an appeal afterwards do not satisfy this threshold; the appeal under Section 45(5)(a) is a distinct right.

p. 3
02

Reinstatement as primary remedy

Holding

Reinstatement refused as unviable given the lapse of over nine years

Reasoning

Employment ended on April 30, 2014 and judgment came over nine years later; the changed work environment and time lapse make reinstatement unjust. The court therefore treated compensation as the appropriate remedy.

p. 4
03

Quantum of compensation

Holding

Ten months' gross salary awarded as compensation under Section 49

Reasoning

The claimant worked past the termination date hoping his appeal would succeed, putting him in good standing. He had served well from 2006 to 2014 with no other adverse record, justifying ten months' compensation at Ksh 95,399 per month.

Legal principles established

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  • Before termination on account of poor performance, the employer must take the employee through the due process under Section 41 of the Employment Act, regardless of appraisals or a PIP
  • Supervisory meetings or an appeal hearing are not equivalent to the hearing envisaged under Section 41
  • An appeal hearing under Section 45(5)(a) is separate from the initial Section 41 hearing

Court orders

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  1. 1.A declaration that the respondent terminated the claimant's employment unfairly
  2. 2.Compensation awarded at Ksh 953,990
  3. 3.The award shall be paid within 60 days after which it shall be due with interests from the date of judgment until paid in full
  4. 4.Costs of the suit to the claimant

Authorities

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Legislation

  • Employment Act, 2007Section 43
  • Employment Act, 2007Section 44(4)(c)
  • Employment Act, 2007Section 41
  • Employment Act, 2007Section 41(2)
  • Employment Act, 2007Section 45(5)(a)

Cases cited (5)

  • Santin Oluoch Nyunja v Embassy of the Kingdom of Sweden & another
    Cause E6486 of 2020
  • Peter Muriithi Njoka & 4 others v Style Industries Limited
    Cause No.699 of 2017
  • Walter Ogal Anuro v Teachers Service Commission
    [2013] eKLR
  • Pamela Nelima Lutta v Mumias Sugar Co. Limited
    [2017] eKLR
  • Oyombe v Eco Bank Limited (Civil Appeal 185 of 2017)
    [2022] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007

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, "Muchora v National Bank of Kenya Limited (Cause 80 of 2022) [2023] KEELRC 1717 (KLR)", Case Analysis (2023). Cause No 80 of 2022. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/1717/eng@2023-06-29

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