Gachukia v Equity Bank (K) Ltd (Cause 307 of 2015) [2024] KEELRC 564 (KLR)
The bottom line
#A Kenyan court found Equity Bank had valid reason to fire an employee for conflict of interest, but still ruled the dismissal unfair because he was never heard.
What this practically means
#Executive summary
#Key legal issues
#Whether the employer had a valid reason to summarily dismiss the Claimant
Yes - the Claimant's purchase of a motor vehicle securing a non-performing loan of a customer he was pursuing, without settling the loan, amounted to a conflict of interest justifying termination
The Claimant admitted buying a motor vehicle that was security for a customer's loan while serving as credit officer responsible for recovering the arrears. Instead of collecting the outstanding funds for the bank, he used his position for personal benefit and failed to settle the loan as agreed. The court applied Black's Law Dictionary's definition of conflict of interest and found his conduct incompatible with his duties to employer and customer.
Whether the dismissal procedure was fair under section 41 of the Employment Act
No - the Respondent did not give the Claimant a hearing after investigations as required by section 41
Section 41 requires an employer to explain reasons and hear the employee's representations before termination or summary dismissal. The Claimant was only asked to explain himself before suspension; after investigations the bank summarily dismissed him without a hearing. Compliance with section 45(2) requires both substantive and procedural fairness; failure of the latter rendered the termination unfair.
What remedies flow from the finding of unfair termination
One month's pay in lieu of notice, three months' nominal compensation, and pay for the period between suspension and dismissal
Although the termination was unfair, the employee's misconduct contributed to it, so only nominal compensation of three months' salary was awarded under section 49(4). Notice pay was awarded as of right upon a finding of unfair termination. The dismissal letter dated 5th July 2012 took effect on receipt, entitling the Claimant to salary from suspension to dismissal.
Legal principles established
#- Fair termination requires both substantive justification and procedural fairness under section 45 of the Employment Act
- A letter of termination takes effect from the date it is received by the employee, not the date printed on it
- An employee who is not a union member and whose terms of service are not based on a CBA cannot claim benefits under that CBA
Court orders
#- 1.One month's salary in lieu of notice of Kshs. 46,274
- 2.Compensation of three months' salary of Kshs. 138,822
- 3.Payment to the Claimant of salary between the date of suspension and the date of summary dismissal if the same was not paid
- 4.Respondent to pay Claimant's costs
- 5.Interest at court rates from date of judgment
- Jurisdiction invoked
- Employment and labour relations jurisdiction (Employment Act 2007); matter instituted by Statement of Claim dated 4th March 2015
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Gachukia v Equity Bank (K) Ltd (Cause 307 of 2015) [2024] KEELRC 564 (KLR)", Case Analysis (2024). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/564/eng@2024-03-07
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.