Nguru v Co-operative Bank of Kenya Limited (Cause E044 of 2022) [2023] KEELRC 2836 (KLR)
The bottom line
#A Kenyan bank employee fired for inflating a loan valuation won his salary and leave dues but lost his unfair termination claim and must repay Kshs. 2.8 million in staff loans.
What this practically means
#Executive summary
#Key legal issues
#Whether summary dismissal for fraudulent loan application was unfair
Summary dismissal was justified; the claimant received funds from a fraudulent overvaluation and failed to give satisfactory responses at the disciplinary hearing
The court found the property valued at Kshs. 1,000,000 by Sterling Valuers, not Kshs. 2,300,000. The claimant received Kshs. 500,000 and Kshs. 468,300 into his KCB account in July 2021 during subsisting employment, undermining his claim that the account was opened only for pension dues after exit. He produced no sale agreement to justify the higher purchase price, and section 44(3) and (4)(g) of the Employment Act permitted summary dismissal on reasonable suspicion of a criminal offence against the employer's property.
Whether claims for 19 days' salary and 23 leave days were merited
Both claims justified - Kshs. 67,050.90 for 19 days worked and Kshs. 81,166.89 for 23 pending leave days
The respondent produced no record showing the claimant had exhausted his leave days, and salary for days worked up to termination was payable. These dues were to be set off against the counterclaim debt.
Whether the counterclaim for outstanding loans was merited
Counterclaim allowed - Kshs. 2,815,830.38 due with court-rate interest from 19 July 2023
The loans were advanced on staff terms which lapsed on termination; the respondent had the right to demand repayment, and the claimant offered no plausible response or repayment proposal. Section 19(1)(h) permitted set-off against terminal dues.
Legal principles established
#- An employer may summarily dismiss an employee suspected on reasonable and sufficient grounds of committing a criminal offence to the detriment of the employer, under section 44(3), (4) and (4)(g) of the Employment Act
- An employer may deduct amounts due under a written loan agreement from wages payable under section 19(1)(h) of the Employment Act, capped at fifty percent of wages
- Preferential staff loan interest rates lapse upon termination of employment
Court orders
#- 1.Judgment entered for the claimant for Kshs. 67,050.90 being 19 days' salary worked
- 2.Judgment entered for the claimant for Kshs. 81,166.89 being payment for 23 leave days
- 3.Counterclaim allowed - respondent entitled to Kshs. 2,815,830.38 with interests at court rates from 19 July 2023 until paid in full
- 4.Claimant's terminal dues, being lower than the counterclaim debt, applied to offset the counterclaim
- 5.Each party to bear own costs
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction over employment disputes (Employment Act, 2007; termination and counterclaim for loan recovery)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Nguru v Co-operative Bank of Kenya Limited (Cause E044 of 2022) [2023] KEELRC 2836 (KLR)", Case Analysis (2023). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/2836/eng@2023-11-09
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.