Tolo v Rafiki Microfinance Bank Ltd & another (Cause 630 of 2017) [2023] KEELRC 3356 (KLR)
The bottom line
#A Kenyan court ruled firing for poor performance can still be unfair if the employer skips warnings and a proper hearing before termination.
What this practically means
#Executive summary
#Key legal issues
#Whether termination for poor performance was substantively justified
Yes - although no signed Balance Score Card existed, the Claimant knew the targets, met only 2 of 8, and the Respondent proved a valid reason under Section 43(2).
The court acknowledged the Respondent failed to prove appraisals on mutually agreed targets, but the Claimant himself admitted meeting only 2 of 8 targets, being supported to improve, and that performance was required to remain in employment. On a balance of probabilities, the Respondent had a reasonable and genuine belief that performance was poor, satisfying Section 43(2).
Whether the termination procedure was fair under Section 41
No - no warning, notice to show cause, hearing or disciplinary process was afforded; the termination was procedurally flawed and unfair under Section 45(2).
RWII confirmed no warning or notice was issued and no disciplinary hearing took place. The meeting of 21st April 2015 was not alleged to be a disciplinary hearing, and no minutes or attendee list were produced. The Claimant was therefore denied the opportunity to be heard and to be accompanied by a representative of his choice, rendering the termination procedurally unfair.
Whether the Claimant was entitled to house allowance
Yes - the contract did not state salary was consolidated and the payslip had no housing allowance component, so 15% of basic salary was awarded under Section 31.
RWI admitted the contract did not state the salary was consolidated and the payslip lacked a housing allowance entry. Sections 31 and 20 of the Employment Act require provision of housing or an allowance and an itemised pay statement. Having failed to demonstrate payment of housing allowance, the Respondent was liable for 15% of basic salary for the duration served.
Liability of the 2nd Respondent
None - the suit against the 2nd Respondent was dismissed with costs as no act or omission was alleged against it.
The Claimant neither accused the 2nd Respondent of any act or omission nor adduced evidence implicating it in the termination. The court found no basis for the suit against it and dismissed it with costs.
Legal principles established
#- For termination to be fair under Section 45(2) of the Employment Act, the employer must prove both a valid and fair reason and adherence to fair procedure.
- Compliance with Section 41 of the Employment Act is mandatory; termination without such compliance is irregular.
- A refusal by an employee to acknowledge receipt of a termination letter whose contents they have read does not negate the termination.
Court orders
#- 1.Declaration that termination of the Claimant's employment by the Respondent was unfair
- 2.Housing allowance at 15% of basic salary, Kshs.331,800.00
- 3.Equivalent of two months' salary Kshs.220,000
- 4.Costs of this suit
- 5.Interest at court rates from the date of judgement till payment in full
- 6.Certificate of service to issue within 30 days
- 7.Suit against the 2nd Respondent dismissed with costs
- Jurisdiction invoked
- Employment and labour relations jurisdiction (Employment Act, 2007; Employment and Labour Relations Court Act)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Tolo v Rafiki Microfinance Bank Ltd & another (Cause 630 of 2017) [2023] KEELRC 3356 (KLR)", Case Analysis (2023). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/3356/eng@2023-12-18
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.