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ELRCPartially AllowedCause No E022 of 2021· [2024] KEELRC 1038 (KLR)

Waikwa v Absa Bank Kenya PLC (Cause E022 of 2021) [2024] KEELRC 1038 (KLR)

Employment and Labour Relations Court
18 April 2024
OMOnesmus N Makau
5,104 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Employment Court ruled a bank unfairly fired an employee over unproved policy reasons, but she still had to repay her staff loan.

What this practically means

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Executive summary

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The claimant, employed by the respondent bank since 2008 and serving as SME Banker (Relations Manager) at Nanyuki Branch, was summarily dismissed on 2nd March 2021 on grounds of gross misconduct: failure to contact a customer to fund her accounts despite notification from the Voucher Processing Centre, leading to two unpaid cheques, and dishonesty in claiming she was out of the office. She alleged her dismissal was orchestrated by her Branch Manager after she rebuffed sexual advances and reported him to HR. The respondent maintained the dismissal was for valid reasons and followed fair procedure, and counterclaimed for an outstanding staff loan of Kshs.1,307,843.00. The court framed three issues: unfairness of dismissal, entitlement to reliefs, and the counterclaim. It found the reasons invalid: the duty to contact the customer arose from an internal circular concerning authorised excess, but the circular was not produced and no authorised excess or account opening terms were proved; the customer bore sole responsibility for issuing cheques without funds. The dishonesty claim also failed since CCTV evidence showed the claimant was partly out of the office. However, procedurally the dismissal complied with section 41 of the Employment Act, the claimant having been given a show cause letter and a hearing. The court upheld its jurisdiction over the counterclaim as an employment-related staff loan, which the claimant admitted. Judgment was entered for both sides: notice pay, ten months' compensation and leave days to the claimant, and the counterclaim sum to the respondent at staff-rate interest, with no order as to costs.

Key legal issues

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01

Whether the reasons for dismissal were valid and fair

Holding

The reasons were not valid and fair. No authorised excess was proved, so the claimant had no duty to contact the customer, and the dishonesty allegation failed because CCTV evidence showed she was partly out of the office

Reasoning

The dismissal rested on an internal circular requiring Relations Managers to follow up customers to regularise authorised excess. The circular was not produced as an exhibit and no account opening documents proved an authorised excess or such term. The investigator confirmed the claimant was out of the office for some hours, making her statement not a lie. The customer was solely to blame for issuing cheques without funds.

p. 9
02

Whether the procedure followed was fair under section 41 of the Employment Act

Holding

The procedure was fair; the claimant was served with a show cause letter, accorded a hearing before a committee and given an opportunity to defend herself

Reasoning

Although the substantive reasons failed, section 41 was satisfied: the claimant received the show cause letter dated 16th December 2020, responded, attended a disciplinary hearing on 22nd February 2021 and was heard. The court distinguished the validity of reasons from the fairness of process, satisfying sections 41 and 45 on procedure only.

p. 9
03

Whether the court has jurisdiction over the counterclaim

Holding

The court has jurisdiction because the loan was advanced to the claimant as a member of staff and the dispute relates to their separation

Reasoning

The claimant argued the ELRC lacked jurisdiction over commercial matters under Article 162(2)(a). The court rejected this, holding the staff loan was intertwined with the employment relationship, and noted a prior ruling on jurisdiction dated 16th September 2022. The claimant having admitted the loan balance, the counterclaim was allowed.

p. 10
04

What reliefs flow from the finding of unfair termination

Holding

Declaration of unfair termination, one month's notice pay, ten months' gross salary compensation and two leave days, subject to statutory deductions

Reasoning

Section 49(1) entitles the unfairly terminated employee to damages. The court awarded one month's notice since the contract specified no notice period, and ten months' compensation considering her long service from 2008 and dismissal without valid and fair reason, in addition to two leave days offered in the termination letter.

p. 9

Legal principles established

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  • Termination of employment must be based on a valid and fair reason and a fair procedure, failing which it is unfair under section 45 of the Employment Act
  • Where the employer's claimed duty rests on an internal policy or circular, the employer must prove the existence of that policy and the factual predicate for the duty; unproved, the reason for dismissal is invalid
  • The primary duty to ensure an account has sufficient funds to clear issued cheques rests with the customer; an employee's failure to alert the customer cannot ground dismissal where the employer has not proved the employee was contractually obliged to do so
  • An ELRC counterclaim arising from a staff loan advanced in the employment relationship is within the court's jurisdiction

Court orders

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  1. 1.Declaration that the termination of the claimant's contract by the respondent was unfair and unlawful
  2. 2.One month's salary in lieu of notice of Kshs. 109,661.00
  3. 3.Ten months' gross salary as compensation for unfair termination, Kshs. 1,096,610.00
  4. 4.Two leave days, Kshs. 7,310.73, the total award to the claimant being Kshs. 1,213,581.73 with interest at court rates from the date of judgment, less statutory deductions
  5. 5.Judgment for the respondent on its counterclaim of Kshs. 1,307,581.73 plus interest at staff rates
  6. 6.No costs awarded, each party having succeeded in part

Authorities

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Legislation

  • Constitution of KenyaArticle 47
  • Constitution of KenyaArticle 50
  • Constitution of KenyaArticle 162(2)(a)
  • Employment Act, 2007Sections 41, 43, 44(3) and (4), 45(1) and (2), 49(1)
  • Fair Administrative Actions Act, 2025Not specified (pleaded by claimant)
  • Evidence ActSection 48
  • ELRC (Procedure) RulesRule 28(3)

Cases cited (2)

  • Ken freight (EA) Limited v Benson K. Nguti
    [2016] eKLR
  • Pius Machafu Isindu v Lavington Security Guards Limited
    [2017] eKLR
Jurisdiction invoked
Article 162(2)(a) of the Constitution (dispute arising from an employment relationship, including the counterclaim for a staff loan)

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, "Waikwa v Absa Bank Kenya PLC (Cause E022 of 2021) [2024] KEELRC 1038 (KLR)", Case Analysis (2024). Cause No E022 of 2021. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/1038/eng@2024-04-18

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