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ELRCPartially AllowedCause No 581 of 2019· [2023] KEELRC 3205 (KLR)

Mwangi v Faulu Microfinance Bank Limited (Cause 581 of 2019) [2023] KEELRC 3205 (KLR)

Employment and Labour Relations Court
5 December 2023
JGJacob Gakeri
5,024 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 upheld a bank employee's dismissal but still paid her notice money because the employer skipped proper notice.

What this practically means

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Executive summary

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The Claimant, formerly Head of Bancassurance with the Respondent, sued alleging unfair termination of employment on 16th June 2019 following two Performance Management Improvement Plans, two show-cause notices and a disciplinary hearing. She sought a declaration of unfair termination, reinstatement, or alternatively notice pay, severance, 12 months' compensation, leave dues and pension benefits. The Respondent maintained the termination was for poor performance and breach of policies through irregular on-boarding of sales consultants and irregular payment of retainers. The court framed two issues: whether termination was unfair and whether reliefs were due. On substance, it found the Claimant missed PMIP targets but held that the Respondent's failure to deploy the facilitation promised under the PMIP vitiated poor performance as a ground; however, the Respondent proved on a balance of probability the Claimant's pivotal role in irregularly on-boarding sales consultants and paying retainers to unqualified persons, satisfying Section 43. On procedure, the court found the disciplinary process fair; the appeal failed because the Claimant appeared with external counsel contrary to the Human Resource Manual and abandoned the appeal. Termination was thus held not unfair. The declaration, reinstatement, severance, leave dues and 12 months' compensation were declined; the court awarded two months' salary in lieu of notice (Kshs.906,400) and a certificate of service, bound the Respondent to its 10th June 2019 letter on final dues, and ordered each party to bear own costs. Judgment delivered virtually at Nairobi on 5th December 2023 by Dr. Jacob Gakeri, Judge.

Key legal issues

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01

Substantive justification for termination

Holding

Respondent proved substantive justification for the irregular on-boarding of Sales Consultants and payment of retainers, though poor performance ground was vitiated by failure to provide agreed PMIP support

Reasoning

The court found the Claimant missed PMIP targets (Kshs.83 million against Kshs.116 million) but the Respondent failed to honour promised facilitation. However, evidence showed the Claimant prepared payment documents and played a pivotal role in irregular on-boarding and retainer payments to unqualified consultants. Applying Section 43(2) and the balance-of-probability test, the employer's genuine belief sufficed.

p. 8
02

Procedural fairness

Holding

Respondent complied with Section 41; the Claimant's appeal stalled because she appeared with external counsel contrary to the HR Manual

Reasoning

The Claimant received two show-cause notices, responded in writing, attended a disciplinary hearing and could be accompanied by an employee of her choice. Minutes confirmed a fair hearing. Her appearance with an advocate at the appeal, contrary to clause 8.2.4.3 of the Human Resource Manual, scuttled the hearing, and she failed to pursue the written avenue suggested.

p. 10
03

Notice pay under Section 36

Holding

As termination was not summary, the Claimant was entitled to 3 months' notice; she was awarded 2 months having received one month gratuitously

Reasoning

The disciplinary committee did not recommend summary dismissal, and the termination letter took effect the same day. The Respondent's payment of one month's salary acknowledged it had not accorded contractual notice. The shortfall of two months was awarded.

p. 11

Legal principles established

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  • Employer need only prove reasons it genuinely believed to exist, on a balance of probability
  • Reasonableness test for dismissal within a band of reasonableness
  • Employees are bound by internal policies, procedures and rules forming part of their employment package
  • Failure to honour promised PMIP support vitiates performance evaluation as a ground for dismissal

Court orders

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  1. 1.Claimant's suit for unlawful termination dismissed
  2. 2.Claimant awarded two (2) months' salary in lieu of notice of Kshs.906,400
  3. 3.Claimant to be issued with a certificate of service
  4. 4.Each party to bear own costs
  5. 5.Respondent bound by its letter dated 10th June 2019 as it relates to the Claimant's final dues

Authorities

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Legislation

  • Employment Act, 2007Section 45
  • Employment Act, 2007Section 43(1)
  • Employment Act, 2007Section 43(2)
  • Employment Act, 2007Section 41
  • Employment Act, 2007Section 36
  • Employment Act, 2007Section 40
  • Employment Act, 2007Section 49(3)(a)
  • Employment Act, 2007Section 51
  • Employment and Labour Relations Court Act, 2011Section 12(3)(vii)
  • Civil Procedure RulesOrder 21 Rule 1
  • Civil Procedure ActSection 1B
  • Constitution of KenyaArticle 159(2)(d)
  • Constitution of KenyaArticle 48

Cases cited (10)

  • Walter Ogal Anuro V Teachers Service Commission
    (2013) eKLR
  • Fredrick Saundu Amolo V Principal, Namanga Mixed Day Secondary School & 2 others
    (2014) eKLR
  • National Bank of Kenya V Samuel Nguru Mutonya
    (2019) eKLR
  • Jane Samba Mukala V Ol Tukai Lodge Ltd
    (2013) eKLR
  • British Leyland UK Ltd V Swift
    (1981) I.R.L.R 91
  • Joseph Mwaniki Nganga V United Millers Ltd
    (2022) eKLR
  • Galgalo Jarso Jillo V Agricultural Finance Corporation
    (2021) eKLR
  • Kenya Revenue Authority V Reuwel Waithaka Gitahi & 2 others
    (2019) eKLR
  • Pius Machafu Isindu V Lavington Security Guards Ltd
    (2017) eKLR
  • Postal Corporation of Kenya V Andrew K. Tanui
    (2019) eKLR
Jurisdiction invoked
Employment and Labour Relations Court Act, 2011; Employment Act, 2007

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, "Mwangi v Faulu Microfinance Bank Limited (Cause 581 of 2019) [2023] KEELRC 3205 (KLR)", Case Analysis (2023). Cause No 581 of 2019. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/3205/eng@2023-12-05

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