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ELRCPartially AllowedCause No E493 of 2021· [2024] KEELRC 868 (KLR)

Mwai v Family Bank Limited (Cause E493 of 2021) [2024] KEELRC 868 (KLR)

Employment and Labour Relations Court
5 April 2024
5,012 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 ruled a bank unfairly fired its employee because it couldn't prove misconduct and gave her too little time to defend herself.

What this practically means

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Executive summary

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The Claimant, formerly a Senior Branch Manager of the Respondent bank, challenged the termination of her employment on 22nd March 2021 following a disciplinary process over allegedly unclear transactions in her staff account and an alleged conflict of interest arising from her co-ownership of Dunmar Petroleum Limited. She sought a declaration that the termination was unfair, twelve months' salary as compensation, notice pay, unpaid March 2021 salary, leave allowance, a 2020 bonus, interest and costs. The Respondent maintained that the termination was for a justifiable cause and followed a fair process in accordance with the Employment Act and its policies. The Court framed three issues: valid and fair reason, fair process, and entitlement to reliefs. On substance, the Court held the Respondent failed to prove a valid and fair reason: it did not exhibit the Human Resource Policy and Code of Conduct allegedly breached, did not explain how the petroleum business conflicted with banking, and did not show in what way the account transactions were unclear. On procedure, the one-day notice of the disciplinary hearing and the short time to respond to the show cause letter were held insufficient given the gravity of the allegations, rendering the process procedurally unfair despite facial compliance with section 41 of the Employment Act. The Court declared the termination unfair, awarded six months' gross salary (Kshs 2,250,000) as compensatory damages and the 2020 bonus of Kshs 375,000, totalling Kshs 2,625,000 with interest at court rates from the date of judgment, plus costs of the suit. Claims for notice pay, leave allowance and salary for days worked were declined as the Claimant admitted receiving them.

Key legal issues

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01

Valid and fair reason for termination

Holding

The Respondent failed to prove a valid and fair reason; the termination was substantively unjustified

Reasoning

The Respondent alleged breach of clauses of its Human Resource Policy and Code of Conduct but did not exhibit those documents, so the Court could not assess the alleged misconduct against them. Further, the Respondent did not explain how the petroleum business conflicted with its banking business, and RW1 admitted the two are not in conflict. Nor did the Respondent explain in what way the account transactions were unclear. The alleged reason was therefore not proved under sections 43(1) and 45(2)(a) and (b) of the Employment Act.

p. 8
02

Fairness of the disciplinary process

Holding

The process was procedurally unfair due to insufficient notice and vague accusations

Reasoning

The Claimant was required to respond to the show cause letter by close of business the following day and was given one day's notice of the disciplinary hearing. The Court held that what amounts to reasonable notice depends on the circumstances; given the gravity of the allegations, the notice was insufficient and impaired her ability to prepare, including psychologically. The accusations were also made in general terms, further impairing her defence.

p. 9
03

Entitlement to reliefs

Holding

Compensation of six months' gross salary and the 2020 bonus were awarded; notice pay, leave and March salary claims were declined

Reasoning

Having found the termination substantively unjustified and procedurally unfair, the Court awarded six months' gross salary as compensatory damages, considering the length of the employment and the circumstances of termination. The bonus claim succeeded because the Claimant was on the payroll as at 30th September 2020 and there was no evidence her performance disentitled her. Claims for notice pay, leave and salary for days worked failed as she admitted receiving them.

p. 10

Legal principles established

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  • An employer must exhibit the policies alleged to have been breached; absent the policy documents, the court cannot evaluate whether the reason for termination was fair and valid
  • The law does not prescribe a timeframe for notice of a disciplinary hearing; reasonableness depends on the circumstances of each case, and inadequate notice renders the process procedurally unfair
  • Compliance with section 41 at face value is insufficient; the spirit of the provision must be fulfilled for the process to be fair

Court orders

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  1. 1.A declaration that the termination of the Claimant's employment was unfair
  2. 2.The Claimant is awarded compensatory damages in the sum of Kshs 2,250,000.00 being equivalent to six (6) months of her gross salary
  3. 3.The Claimant is awarded bonus pay for the year 2020 being the sum of Kshs 375,000.00
  4. 4.The total award is Kshs 2,625,000.00
  5. 5.Interest on the amount in (d) at court rates from the date of Judgment until payment in full
  6. 6.The Claimant shall also have the costs of the suit

Authorities

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Legislation

  • Employment ActSection 43(1)
  • Employment ActSection 45(2)(a) and (b)
  • Employment ActSection 45(2)(c)
  • Employment ActSection 41(1)
  • Employment ActSection 42(1)
  • Constitution of KenyaArticle 159(2)(d)
  • Constitution of KenyaArticle 48
  • Civil Procedure ActSection 1B
  • Civil Procedure RulesOrder 21 Rule 1

Cases cited (4)

  • Margaret Auma Ingwe v Kenya Power and Lighting Company Limited
    (2015) eKLR
  • Evans Angwenyi v Nairobi City Water & Sewerage Company Limited
    [2020] eKLR
  • Postal Corporation of Kenya v Andrew K. Tanui
    (2019) eKLR
  • Nebert Mandala Ombajo vs Institute of Certified Public Accountants of Kenya (ICPAK)
    Nakuru Civil Appeal No. 62 of 2018
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act (employment relationship between the parties)

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, "Mwai v Family Bank Limited (Cause E493 of 2021) [2024] KEELRC 868 (KLR)", Case Analysis (2024). Cause No E493 of 2021. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/868/eng@2024-04-05

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