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ELRCPartially AllowedCause No E228 of 2022· [2024] KEELRC 451 (KLR)

Cheruiyot v The Co-operative Bank of Kenya Ltd (Cause E228 of 2022) [2024] KEELRC 451 (KLR)

Employment and Labour Relations Court
21 February 2024
2,095 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan bank's sloppy performance appraisal process made an employee's dismissal unfair, earning him ten months' salary as compensation.

What this practically means

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Executive summary

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The claimant, a unionised bank employee engaged as a casual worker in August 2013 and made permanent in November 2015, rose to Personal Banker and was terminated on grounds of poor performance by letter dated 24th September 2019 after a performance improvement process. He claimed the termination was unfair and unlawful: performance targets were issued late, sometimes after the appraisal period had closed, contrary to the respondent's own performance management policy; he received no written warning of the consequences of poor performance; and he was never accorded a hearing or an opportunity to defend himself, contrary to Sections 41, 43 and 45 of the Employment Act, 2007 and Clause A(5) of the CBA. He sought a declaration of unfair termination, reinstatement, notice pay, leave pay, twelve months' salary as compensation and general damages of Kshs.1,500,000. The respondent defended the termination as a proper appraisal process and counterclaimed for Kshs.2,567,307.91, an outstanding staff loan. The court framed four issues and found the appraisal exercise sloppy and the termination an ambush, holding it unfair, unprocedural and unlawful. It also found the counterclaim proved and unrebutted. The court declared the termination invalid, awarded one month's notice pay of Kshs.113,688.85 and ten months' compensation of Kshs.1,136,888.5, and ordered each party to bear their own costs. Reinstatement, the full twelve months' compensation and general damages were not granted. Judgment was delivered by D. K. Njagi Marete, Judge, on 21st February 2024.

Key legal issues

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01

Whether termination on grounds of poor performance was wrongful, unfair and unlawful

Holding

The termination was unfair, unprocedural and unlawful because the performance evaluation was sloppy: targets were issued late, sometimes after the appraisal period, and the claimant was not warned of the consequences nor heard before termination

Reasoning

The court found the claimant demonstrated that performance targets and guidelines were not issued on time, in some instances being notified towards the close of the performance period, contrary to the respondent's own policy. The claimant was given no warning of the implications of the appraisal and was ambushed with a termination letter, with no opportunity to discuss the evaluation or defend himself. On a preponderance of evidence, the claimant's case overwhelmed the respondent's, establishing unlawful termination contrary to Sections 41, 43 and 45 of the Employment Act, 2007.

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02

Whether the Respondent is entitled to its counterclaim for the outstanding loan

Holding

Yes; the counterclaim was well documented and unrebutted, and was allowed

Reasoning

The counterclaim concerned an outstanding staff loan of Kshs.2,567,307.91 which continues to earn interest. The respondent documented and evidenced the loan, and the claimant did not rebut it. The court therefore found for the respondent on the counterclaim.

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Whether the claimant is entitled to the relief sought

Holding

Yes; having succeeded on unlawful termination, the claimant was awarded a declaration, one month's notice pay and 10 months' compensation

Reasoning

Entitlement to relief followed from the finding of unfair termination. The court exercised its discretion to award one month's salary in lieu of notice (Kshs.113,688.85) and ten months' salary as compensation (Kshs.1,136,888.5), totalling Kshs.1,250,577.35, rather than the twelve months and general damages sought.

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Legal principles established

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  • Performance targets and guidelines must be issued to an employee in a timely manner and the employee warned of the consequences of poor performance before termination on grounds of poor performance; a defective appraisal process renders termination unfair
  • An unrebutted, well-documented counterclaim succeeds even where the main claim succeeds

Court orders

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  1. 1.A declaration that the termination of employment of the claimant by the Respondent was unfair, unprocedural and unlawful and therefore invalid
  2. 2.One month salary in lieu of notice of Kshs.113,688.85
  3. 3.10 months' compensation for unlawful termination of employment of Kshs.1,136,888.5
  4. 4.Each party shall bear their own costs of the Claim

Authorities

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Legislation

  • Employment Act, 2007Section 41
  • Employment Act, 2007Section 43
  • Employment Act, 2007Section 45
  • Employment Act, 2007Section 8

Cases cited (2)

  • National Bank of Kenya v Antony Njue John
    Nairobi Civil Appeal No. 117 of 2017
  • Jane Wairimu Machari v Mugo Waweru and Associates
    [2012] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over a claim of unfair termination under the 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, "Cheruiyot v The Co-operative Bank of Kenya Ltd (Cause E228 of 2022) [2024] KEELRC 451 (KLR)", Case Analysis (2024). Cause No E228 of 2022. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/451/eng@2024-02-21

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