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ELRCPartially AllowedNot stated in the judgment (Employment and Labour Relations Court Cause)· [2023] KEELRC 2594 (KLR)

Okeyo v Diamond Trust Bank (K) Ltd (Cause 1 of 2019) [2023] KEELRC 2594 (KLR)

Employment and Labour Relations Court of Kenya
25 October 2023
1,683 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~7 min to read original · ~4 min brief

The bottom line

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What this practically means

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Executive summary

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The claimant, a former employee of Diamond Trust Bank (K) Ltd, sued for unfair termination following summary dismissal on 10 July 2018 for alleged absence without communication. The respondent resisted the claim on the basis of a discharge the claimant signed on 31 August 2018 acknowledging Kshs 237,083/- in full and final settlement. The court framed four issues: waiver, unfair termination, breach of contract, and remedies. On waiver, the court held that although discharges ordinarily waive the right to sue, the employee's vulnerability at termination requires the employer to show that the legal consequences of the discharge were explained before execution; in the absence of such evidence, the claimant did not freely waive his right to sue. On procedural fairness, certificates of posting of the show-cause and hearing invitations were never produced, no explanation was given for not serving the notices at the workplace despite knowledge of the claimant's arrest, and the claimant's testimony that he reported daily to his supervisor went uncontroverted. On substantive fairness, the unchallenged evidence of police reporting obligations and daily reporting to work defeated the allegation of absence, so the dismissal was not for valid or fair reasons. On remedies, house allowance and post-separation salary claims were declined; notice pay, five months' compensation and leave were awarded, totalling Kshs 491,999/-. Costs were denied to the claimant for late filing of submissions. Judgment delivered virtually in Kisumu on 25 October 2023.

Key legal issues

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01

Whether the discharge signed by the claimant waived his right to sue

Holding

The claimant did not freely waive the right to sue; the employer failed to show that the consequences of the discharge were explained to him

Reasoning

Discharge agreements normally waive the right to sue, but employees are vulnerable at termination due to loss of income and emotional turbulence. Considering this power imbalance, fairness requires the employer to show mutual engagement and explanation of legal consequences before requiring execution of a discharge. The respondent adduced no such evidence, so the discharge did not bar the claim.

p. 3
02

Procedural fairness of the summary dismissal

Holding

The claimant was not afforded an opportunity to be heard before dismissal

Reasoning

Although show-cause and hearing invitations were allegedly posted to the claimant's Nairobi postal address, certificates of posting were never produced in court. The respondent knew the claimant had been arrested, yet did not serve notices through his supervisor or at the workplace. The claimant's uncontroverted testimony that he reported to his supervisor daily until instructed to stop was not rebutted, and the supervisor was not called to testify.

p. 3
03

Substantive fairness of the summary dismissal

Holding

The dismissal was not for valid or fair reasons

Reasoning

Under sections 43 and 45 of the Employment Act the employer must prove valid and fair reasons for termination. The alleged reason was absence without communication. However, the claimant's uncontroverted evidence showed he was arrested, released on condition of daily police reporting, and reported to his supervisor every morning until early July 2018 when told not to report, negating the allegation of absence.

p. 4

Legal principles established

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  • When determining whether a release or discharge agreement is vitiated, the trial court should consider whether it was freely and willingly executed and whether the employee was seized of all the relevant information and knowledge
  • Given the power imbalance in employment, an employer should place before the court evidence that the legal consequences of a discharge were explained to the employee before execution

Court orders

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  1. 1.Declaration that the summary dismissal of the claimant was unfair
  2. 2.Declaration that the claimant is entitled to commuted accumulated leave
  3. 3.Award of salary in lieu of notice of Kshs 70,669/-
  4. 4.Award of compensation of Kshs 415,705/- (equivalent of 5 months' gross wages)
  5. 5.Award of leave of Kshs 5,625/-
  6. 6.Total award of Kshs 491,999/- to the claimant
  7. 7.Denial of costs to the claimant
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over employment disputes (Employment Act, ss 10(3), 43 and 45 applied)

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, "Okeyo v Diamond Trust Bank (K) Ltd (Cause 1 of 2019) [2023] KEELRC 2594 (KLR)", Case Analysis (2023). Not stated in the judgment (Employment and Labour Relations Court Cause). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/2594/eng@2023-10-25

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