Okoth v Rafiki Micro-Finance Bank Kenya Ltd (Employment and Labour Relations Cause 200 of 2018) [2023] KEELRC 2772 (KLR)
The bottom line
#A Kenyan court ruled that firing an employee for poor performance without a hearing and proof of support was unfair, awarding him compensation and costs.
What this practically means
#Executive summary
#Key legal issues
#Procedural fairness of the termination
The termination violated section 41 of the Employment Act: no disciplinary hearing was conducted and the Claimant was not given a chance to make representations or be accompanied.
Section 41 prescribes a mandatory procedure: notification of grounds, an opportunity to prepare and defend oneself, the right of accompaniment, and consideration of representations. The Respondent's own witness admitted under cross-examination that no disciplinary proceedings were carried out and no document evidenced a hearing. Counsel's submissions to the contrary ignored the post-2010 human rights approach to employment disputes countering inequality of bargaining power.
Substantive justification for termination on grounds of poor performance
The termination was substantively unfair: the Respondent failed to show a proper performance evaluation triggering the PIP, consultation in target-setting, support given, or that failure was within the Claimant's control.
The employer bears the burden under sections 43 and 45 to prove fair and valid reasons. The Respondent failed to show an appraisal that triggered the PIP, when and how targets were set jointly, or proof of support. The Claimant's explanations - that recovery of loans depended on other departments and the parent bank's receivership depressed deposits - were plausible and never disabused.
Compensation and terminal dues
Claimant awarded 8 months' gross salary compensation, one month's salary in lieu of notice, and house allowance limited to the period not statute-barred.
Compensation under section 49(1)(c) is discretionary; the court considered the length of service, the doubly unfair and rushed termination and the Respondent's inequitable conduct in awarding 8 months. Salary in lieu of notice followed from sections 35 and 36. House allowance was limited to 36 months preceding filing under section 90, and to 11 months after crediting payments already made.
Claims that failed for want of proof or admission
Overtime, leave, January 2018 salary, NSSF/NHIF, service pay and constitutional damages claims all failed.
Overtime failed on burden of proof; leave and January salary were admitted paid; NSSF/NHIF were shown deducted on payslips; service pay is barred for NSSF members under section 35(5); constitutional damages failed because the pleading lacked the requisite precision on how the violations occurred.
Legal principles established
#- Both substantive justification and procedural fairness are required for a fair termination; either is incomplete without the other.
- For termination on grounds of poor performance, the employer must prove known performance standards, seriousness of failure, provision of support, and that failure was due to the employee's own inability and not external factors.
- Where consolidation of salary including house allowance is alleged, the basis for the consolidation must be demonstrated; no clause need be assumed.
- Before termination for poor performance the employee must be called and allowed to defend himself in the presence of another employee of his choice.
Court orders
#- 1.A declaration that the termination of the Claimant's employment was both procedurally and substantively unfair.
- 2.8 months' gross salary as compensation under section 49(1)(c) of the Employment Act 2007 - Kshs. 320,000.00.
- 3.One month's salary in lieu of notice - Kshs. 40,000.00.
- 4.House allowance for 11 months worked - Kshs. 146,666.67.
- 5.Interest on the sums awarded at court rates from the date of judgment till full payment.
- 6.Costs of the suit to the Claimant.
- 7.The Respondent to issue the Claimant with a Certificate of Service pursuant to section 51 of the Employment Act 2007.
- Jurisdiction invoked
- Employment and labour relations dispute under Article 162(2) of the Constitution and the Employment Act 2007 (court's jurisdiction as ELRC; judgment does not cite a specific jurisdictional provision)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Okoth v Rafiki Micro-Finance Bank Kenya Ltd (Employment and Labour Relations Cause 200 of 2018) [2023] KEELRC 2772 (KLR)", Case Analysis (2023). Not stated in judgment (Memorandum of Claim dated 21st February 2018, amended 18th July 2019). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/2772/eng@2023-09-28
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.