Nderitu v Chase Bank (K) Limited (In Receivership) & 2 others (Cause 365 of 2017) [2023] KEELRC 3180 (KLR)
The bottom line
#A Kenyan court ruled a bank unfairly dismissed its teller because it could not prove the fraud allegations or show a fair disciplinary hearing took place.
What this practically means
#Executive summary
#Key legal issues
#Competency of the suit against an insolvent employer
The suit was competently before the court because the claimant's dues had not crystallised and his employment was not terminated due to insolvency.
The respondent argued that Sections 66-69 of the Employment Act mandate applications to the Cabinet Secretary where an employer is insolvent. The court held these provisions apply to employees owed dues or terminated due to insolvency. Here the dues had not crystallised, so the statutory route was not engaged and the court's jurisdiction was unaffected.
Substantive justification for termination
The respondent failed to prove a valid and fair reason for the dismissal; no notice to show cause, investigation report or evidence of fraud was produced.
Sections 43 and 45 place the burden on the employer to justify the grounds for termination. The dismissal letter alleged fraud, but the investigation report was never supplied to the claimant or the court, no notice to show cause was produced, and no evidence of the fraudulent transactions was adduced. The court could rely only on the dismissal letter and found the employer failed on a balance of probabilities.
Procedural fairness of the termination
The dismissal was procedurally unfair; the respondent did not prove that a disciplinary hearing was convened or that the claimant was heard.
Section 41 requires notification of grounds, a hearing, the right of accompaniment, and consideration of representations. Although the respondent asserted a hearing on 20th March 2014, no invitation, minutes or recommendations were availed; the liquidator witness could not confirm the committee's membership. This failure created the irresistible inference that no fair hearing occurred, breaching Section 41 and Section 45(2)(c).
Withdrawal of criminal charges under Section 87(a) CPC
The withdrawal of criminal charges did not itself decide the fairness of the dismissal, which turned on the employer's own proof of reason and procedure.
The claimant was charged with conspiracy to defraud and stealing by servant, but the charges were withdrawn under Section 87(a) of the Criminal Procedure Code. The respondent argued that criminal and disciplinary processes are distinct with different standards of proof. The court assessed the dismissal on the employer's evidence under Sections 41, 43 and 45 and found it had proved neither.
Quantum of relief
Claimant awarded one month's salary in lieu of notice, three months' gross salary as compensation under Section 49(1)(c), costs, interest, and a certificate of service.
Compensation under Section 49(1)(c) was assessed at three months' gross salary considering the short service of about 1 year 7 months, absence of warning letters, the lack of appeal and no expressed wish to continue in employment. Notice pay followed because the respondent adduced no evidence of compliance with Section 36. A certificate of service was mandatory under Section 51.
Legal principles established
#- An employer bears the burden of proving a valid and fair reason (substantive justification) and a fair procedure for termination
- Failure to produce the notice to show cause, investigation report, or disciplinary hearing minutes leads to an inference of no fair hearing
- Sections 66-69 of the Employment Act do not bar a claim where terminal dues have not crystallised at the time of filing
Court orders
#- 1.One month's salary in lieu of notice
- 2.Equivalent of 3 months gross salary as compensation
- 3.Costs of this suit
- 4.Interest at court rates from date of judgment till payment in full
- 5.Certificate of service to be issued within 30 days from the date of the judgment
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (first-instance unfair termination claim)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Nderitu v Chase Bank (K) Limited (In Receivership) & 2 others (Cause 365 of 2017) [2023] KEELRC 3180 (KLR)", Case Analysis (2023). Not stated in the judgment text provided. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/3180/eng@2023-12-04
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.