Karanja v KCB Bank Kenya Limited (Cause E020 of 2022) [2023] KEELRC 2483 (KLR)
The bottom line
#Kenya's Employment Court ruled KCB unfairly and discriminatorily terminated a manager through a sham redundancy, awarding her over Kshs. 12 million plus staff-rate loans.
What this practically means
#Executive summary
#Key legal issues
#Whether the redundancy amounted to constructive dismissal
No. Employment was terminated by the respondent's redundancy notice; the claimant never resigned, so constructive dismissal cannot be inferred and reinstatement was not feasible.
The court distinguished the claimant's December 2021 proposal for 'involuntary retirement/settlement' from an actual resignation induced by intolerable conditions. Constructive dismissal requires the employee to terminate the contract in response to the employer's conduct. Here the respondent issued the notice of 1st March 2022 and employment ended at the employer's instance, so the claimant failed to address the constructive dismissal claim properly.
Whether the redundancy was justified and procedurally fair
No. The notice was wrongful, lacking due process under Sections 40 and 45(2) of the Employment Act, resulting in unfair termination.
Although an employer may reorganize its business, the redundancy notice did not disclose reasons and extent as required by Section 40(1). The claimant was locked out of the company system with her credentials reset, could not access the new structure, was not personally served with the general notice, and there was no service on the local Labour Officer. The role was allegedly abolished yet work remained and her junior took over her roles, making the redundancy a sham.
Whether the claimant was discriminated against
Yes. The 5-year salary freeze without appraisal, exclusion from training, deletion of her RM Code and being denied access to apply for new roles constituted direct discrimination and unfair labour practice.
From 2017 to 2022 her salary remained static while peers enjoyed reviews, increments and bonuses; no reason was given for the failure to appraise her. The burden shifted to the employer once a prima facie case was made, and the respondent gave no justification. Damages of Kshs. 5,000,000 were awarded, benchmarked against comparable discrimination awards.
Whether the mortgage and staff loan facilities could be converted to commercial rates
No. Because termination was by way of a fault-free redundancy, the loan facilities must remain on staff preferential rates until payment in full.
A redundancy arises where the role is abolished and the employee is not at fault. The demand to convert the loans to commercial rates six months after termination was an additional unfair labour practice and revealed the redundancy as a device. Absent records of redundancy insurance cushioning, the loans abide the terms secured during employment, with the 20% rebate and repayments commencing afresh from the judgment date.
Legal principles established
#- An employer has a legal duty under Section 40(1) of the Employment Act to give reasons for, and the extent of, an intended redundancy; redundancy is invalid where valid reasons are not given
- Where an employee is not a member of a trade union, the redundancy notice must issue personally in writing to the employee and to the local labour officer
- A redundancy cannot affect a single employee; singling out one employee from the entire workforce is unfair and amounts to unfair labour practice
- Treating an employee differently from others similarly situated is discrimination prohibited under Article 27 of the Constitution and Section 5(3) of the Employment Act
- In discrimination claims, once a prima facie case is established, the burden shifts to the employer to show discrimination did not occur
Court orders
#- 1.A declaration that the respondent unfairly terminated the claimant in her employment
- 2.A declaration that the respondent discriminated against the claimant
- 3.Compensation awarded at Kshs. 7,407,700 (10 months' gross salary)
- 4.General damages awarded at Kshs. 5,000,000
- 5.The claimant shall enjoy mortgage and loan facilities repayment rates on terms subsisting during her employment, with repayments and rebates offered on 30 March 2022 commencing as of 5 October 2023, with monthly repayments until payment in full on staff rates
- 6.Costs to the claimant
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction under the Employment and Labour Relations Court Act and Article 162(2) of the Constitution (employment and labour relations dispute; not expressly quoted in the judgment)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Karanja v KCB Bank Kenya Limited (Cause E020 of 2022) [2023] KEELRC 2483 (KLR)", Case Analysis (2023). Cause No E020 of 2022. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/2483/eng@2023-10-04
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.