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ELRCPartially AllowedCause No 1621 of 2017· [2023] KEELRC 2588 (KLR)

Kaleli v Kingdom Bank (Cause 1621 of 2017) [2023] KEELRC 2588 (KLR)

Employment and Labour Relations Court
5 October 2023
5,921 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court ruled a bank unfairly sacked its branch manager without proof of wrongdoing or a hearing, but awarded only four months' salary.

What this practically means

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Executive summary

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The Claimant, employed by the Respondent bank on 1st September 2016 as Branch Manager (Machakos, later Ngong Road Branch), was summarily dismissed by letter dated 11th August 2017 on allegations that he introduced customers (Pole Star Mining Limited, Pole Star Merchandising and Shreeji Merchandising Company Limited) whose accounts were confirmed fraudulent, and that credit facilities were irregularly approved under his supervision, exposing the bank to Ksh. 23,705,764. He claimed unfair and unlawful dismissal and violations of constitutional rights, seeking declarations, special damages of about Ksh. 24.9 million for the unexpired term of service, general and punitive damages, and costs. The Respondent maintained that the dismissal was for gross misconduct, procedurally fair and compliant with its policies and the Employment Act. The court framed two principal issues: valid reason and fair procedure. On evidence, RW1 conceded the Claimant's duties excluded approval of credit and that no audit or investigation report was produced; he also admitted no hearing was held. The court found no valid reasons for termination and a breach of section 41, declaring the dismissal unfair under section 45(2). It declined to entertain the constitutional claims, holding statutory remedies sufficient. Under section 49 it awarded compensation of four months' gross salary (Ksh. 680,000), dismissing the unproved special damages, general damages and punitive damages claims. The Respondent was ordered to pay the Claimant's costs with interest from the date of judgment. Judgment dated 5th October 2023, Eldoret.

Key legal issues

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01

Whether the Respondent proved valid reasons for the summary dismissal

Holding

No valid reasons were proved; the Respondent did not establish that the Claimant was responsible for approving the credit facilities or introducing fraudulent accounts as alleged in the dismissal letter

Reasoning

The dismissal letter accused the Claimant of introducing fraudulent accounts and of breaching credit policy by irregularly approving facilities under his supervision. However, RW1 conceded that the Claimant's duties did not include approval of credit, and the Respondent produced no audit or investigation report linking the Claimant to the exposure. The exposure arose from unsecured credit and cheque accommodation approved at Head Office.

p. 10
02

Whether the Respondent accorded the Claimant fair procedure under section 41 of the Employment Act

Holding

No; the Claimant was never informed of the charges or given an opportunity to defend himself before dismissal

Reasoning

The Claimant was summoned to Head Office ostensibly on other business, kept waiting, and handed a dismissal letter on the spot. When he asked for reasons he was referred to the appeal clause in the letter. RW1, while insisting the dismissal was procedurally fair, admitted there was no hearing before dismissal.

p. 11
03

Whether the Claimant's alleged constitutional violations warranted constitutional remedies

Holding

No; the statutory employment framework provides sufficient remedies and recourse to the Constitution was unnecessary

Reasoning

The court reiterated that rights regulated by private law should not be elevated to the constitutional pedestal where statutory provisions provide sufficient remedy, and held that the Claimant's contractual and statutory rights under employment legislation were adequate for the remedies he sought.

p. 12
04

What remedies flow from the finding of unfair termination

Holding

Compensation of 4 months' gross salary under section 49 of the Employment Act; the unproved special and general damages claims were dismissed

Reasoning

The court considered the Claimant's length of service, the circumstances of dismissal and the relevant factors under section 49(4), awarding Ksh. 680,000. The claimed 132 months' salary, allowances, commissions, general damages for loss of legitimate expectation and punitive damages were all unproved and were dismissed.

p. 12

Legal principles established

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  • For a termination to be fair there must be both substantive justification (valid reason) and procedural fairness
  • An employer bears the burden of justifying the grounds for termination, and must inform the employee of the charges and accord a hearing before dismissal
  • Employment rights regulated by private law should not be elevated to the constitutional pedestal where statutory provisions provide sufficient remedy
  • Where an employer fails to prove valid grounds and denies the employee a hearing, the dismissal is unfair under section 45(2) of the Employment Act

Court orders

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  1. 1.A declaration/holding that the dismissal of the Claimant was unfair in terms of section 45(2) of the Employment Act
  2. 2.Compensation under section 49 of the Employment Act at the rate of 4 months gross salary, being Ksh. 680,000 (Ksh. 170,000 x 4)
  3. 3.Dismissal of the prayers for special damages (basic salary and allowances for the unexpired term, commissions) for lack of proof
  4. 4.Dismissal of the prayers for general damages for breach and loss of legitimate expectation and punitive damages for embarrassment, stress and psychological torture for lack of proof
  5. 5.Respondent to pay the Claimant's costs of the suit
  6. 6.Interest at court rates from the date of Judgment

Authorities

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Legislation

  • Constitution of Kenya, 2010Articles 25(c), 27, 28, 43(3), 47(1) and (2), 50(2), 236(a) and (b)
  • Employment Act, 2007Sections 4 (per Fair Administrative Action Act reference), 41, 43, 44, 45(2), 47(5), 49, 49(4), 5
  • Fair Administrative Action Act, 2015Section 4(1)(2)(3) and (4)
  • Companies ActRegistration of the Respondent

Cases cited (16)

  • Walter Ogal Anuro v Teachers Service Commission
    [2013] eKLR
  • Kenya Union of Commercial Food and Allied Workers v Meru North Farmers SACCO Limited
    [2013] eKLR
  • Dancan Mbathi Mulevi v Wanandege Cooperative Savings and Credit Society Limited
    [2018] eKLR
  • Kenfreight (EA) Ltd v Benson K. Nguti
    [2016] eKLR
  • Galgalo Jarso Jillo v Agricultural Finance Corporation
    [2019] eKLR
  • Kenya Revenue Authority v Reuwel Waithaka Gitahi & 2 others
    (2019) eKLR
  • Evans Kamadi Misango v Barclays Bank of Kenya Limited
    [2015] eKLR
  • British Leyland UK Ltd v Swift
    (1981) I.L.R. 91
  • Lawrence Onyango Oduori v Kenya Commercial Bank Limited
    [2014]
  • Communication Commission of Kenya & 25 Others v Royal Media Services Limited & 5 others
    [2014] eKLR
  • Anarita Karimi Njeru v Republic
    (1979) KLR 154
  • Japheth Ododa Origa v Vice Chancellor University of Nairobi & 2 Others
  • Patrick Mbau Karanja v Kenyatta University
  • Bernard Murage v Fine Serve Africa Ltd & Others
  • Godfrey Paul Okutoyi & Others v Habil Olaka & Another
  • Abraham Kaisha Kanziku v Government of Central Bank & Others
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (unfair termination and wrongful dismissal complaint under sections 41, 43, 45 and 47)

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, "Kaleli v Kingdom Bank (Cause 1621 of 2017) [2023] KEELRC 2588 (KLR)", Case Analysis (2023). Cause No 1621 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/2588/eng@2023-10-05

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