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ELRCPartially AllowedELRC Cause No. 1982 of 2015 (consolidated with ELRC Cause No. 1381 of 2016)· [2024] KEELRC 1143 (KLR)

Kioi v Consolidated Bank of Kenya Limited (Cause 1982 of 2015 & 1381 of 2016 (Consolidated)) [2024] KEELRC 1143 (KLR)

Employment and Labour Relations Court
30 April 2024
10,146 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~41 min to read original · ~4 min brief

The bottom line

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A Kenyan court ruled that suspending employees on half pay without justification and firing them without disclosing evidence was unfair, awarding them compensation.

What this practically means

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Executive summary

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This judgment resolves two consolidated ELRC causes (Nos. 1982 of 2015 and 1381 of 2016) by two Recoveries Officers of Consolidated Bank Kenya Limited who were placed on compulsory leave on half pay on 6th November 2014 and summarily dismissed on 3rd March 2016 following investigations into alleged irregular payments to auctioneers and receipt of money from service providers. The Court, per Ocharo Kebira J, framed three issues: the lawfulness of the suspension and half-pay, the fairness of the termination, and the reliefs. The Court held the suspension unjustified: the Respondent had already internally concluded beyond reasonable doubt that malpractice occurred before suspending the Claimants and could not justify their exclusion, and the 2016 HR Manual relied on for half-pay suspension was not in force at the material time, the 2011 edition having no such provision. On termination, the Respondent stated but failed to prove the reasons for dismissal, never producing the alleged offended credit policy or citing the specific provision breached, prompting an adverse inference. The dismissal was also procedurally unfair because the Claimants were denied access to files and details necessary to respond, and their counsel's letters were ignored; partial compliance with section 41 (notification, hearing, accompaniment) did not cure this. The Court declared the terminations unfair and unlawful and awarded each Claimant notice pay, the withheld half salary for 13 months, and compensation under section 49(1)(c) - three months' gross salary for Kioko and six months for Gikonyo - with interest and costs, plus certificates of service. Constructive dismissal, anticipatory earnings to retirement, unpaid leave and exemplary damages were all declined.

Key legal issues

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01

Lawfulness of the protracted suspension and withholding of 50% salary

Holding

The suspension was unjustified and the withholding of half salary lacked legal and contractual justification.

Reasoning

The Respondent had already internally investigated the matter and concluded beyond reasonable doubt that malpractice occurred before suspending the Claimants, and could not explain what changed to justify exclusion from the workplace. The 2016 HR Manual relied on for half-pay suspension only came into effect after the suspension; the 2011 version had no such provision. The Respondent therefore failed to discharge its burden.

p. 13
02

Whether the termination was substantively fair

Holding

The dismissal was not substantively fair; the Respondent failed to prove the reasons for dismissal under sections 43 and 45 of the Employment Act.

Reasoning

The Respondent alleged the Claimants used the wrong formula for auctioneer fees contrary to its credit policy, but never placed the policy before the Court nor cited the specific offended provision or stipulation, either in the disciplinary process or at trial. The Court drew an adverse inference that no policy or statutory provision supported the allegations, so the Respondent stated but did not prove the reasons for dismissal.

p. 17
03

Whether the dismissal was procedurally fair

Holding

Although the Respondent partially complied with section 41 (show cause letters, hearing, right of accompaniment), the dismissal was procedurally unfair because the Claimants were denied access to documents and details needed to respond, and their counsel's letter raising constitutional issues was ignored.

Reasoning

Procedural fairness requires notification, hearing and consideration. The hearing component was incomplete because the Claimants were denied the files and the details of the alleged M-Pesa payments, impeding their defence. The Respondent was also wrong to dismiss legal representation in disciplinary processes as improper; the post-2010 Constitution brings rights into the workplace. Partial adherence does not make the process fair.

p. 19
04

Remedies

Holding

The Claimants were entitled to notice pay, section 49 compensatory damages (3 months for the 1st Claimant and 6 months for the 2nd), the withheld half salary for 13 months, interest, costs, and certificates of service; constructive dismissal, anticipatory earnings, unpaid leave and exemplary damages were refused.

Reasoning

Section 35 read with section 36 entitled them to notice pay since no notice was issued. Compensation under section 49(1)(c) is discretionary; the Court considered length of service, expectation to serve until retirement, the Respondent's lack of substantive justification and procedural lapses. Leave had been paid and exemplary damages were not proved.

p. 20

Legal principles established

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  • A decision to suspend an employee requires prima facie grounds for believing serious misconduct and an objectively justifiable reason for excluding the employee from the workplace, and the employer bears the burden of proving it.
  • There is no inherent right to suspend an employee without pay; any such power must arise from the terms of the contract.
  • In a claim of unfair termination, the employee bears the initial burden of proof, which shifts to the employer to justify the grounds and the procedural fairness of the termination.
  • Procedural fairness embodies notification, hearing and consideration, and the hearing component is incomplete where the employee is denied adequate material to prepare a defence.
  • Anticipatory earnings to retirement age are not payable as damages for wrongful termination because no employment is permanent.

Court orders

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  1. 1.Declaration that the termination of the Claimants' employment was unfair and unlawful
  2. 2.1st Claimant to be paid one month's salary in lieu of notice (Kshs. 170,000/-)
  3. 3.1st Claimant to be paid compensation for unfair termination being 3 months' gross salary (Kshs. 510,000/-)
  4. 4.1st Claimant to be paid the withheld half salary for the 13 months of suspension
  5. 5.2nd Claimant to be paid one month's salary in lieu of notice (Kshs. 162,000)
  6. 6.2nd Claimant to be paid compensation for unfair dismissal (Kshs. 810,000)
  7. 7.2nd Claimant to be paid the withheld half salary for the 13 months of suspension
  8. 8.Interest on the above at court rates from the date of judgment until payment in full
  9. 9.Respondent to pay costs of the suit
  10. 10.Respondent to issue the Claimants certificates of service within 30 days of the judgment

Authorities

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Legislation

  • Employment Actsections 35, 36, 41, 42(1), 43, 44(3), 44(4), 45, 45(2), 47(5), 49(1)(c), 51; Third Schedule (by analogy via Judicial Service Act discussion)
  • Constitution of Kenya, 2010Articles 41, 47, 48, 50, 159(2)(d)
  • Auctioneers Actfees computation provisions
  • Consumer Protection Actnotification of auctioneer and valuation fees
  • Consumer Protection Guidelines (CBK/PG/22)Management of Debt Collection
  • Judicial Service Actparagraph 17 of the Third Schedule
  • Civil Procedure RulesOrder 21 Rule 1; Section 1B of the Civil Procedure Act
  • Human Resource Policies and Procedures Manual (Consolidated Bank)clause 10.5 (2016 edition); 2011 2nd edition

Cases cited (13)

  • Fredrick Saundu Amalo v Principal Namanga Mixed Day Secondary School
  • Mogothle v Premier of the North West Province & another
    [2009] 4 BLLR 331 [LC]
  • In the Matter of the Chief Justice and President of the Supreme Court of Kenya & Judicial Service Commission v Bryan Mandila Khaemba
  • James Njuguna Muchiri v Armed Forces Canteen Organization (AFCO)
    [2016] eKLR
  • Aviation and Allied Workers Union vs Kenya Airways Limited
    [2012] eKLR
  • Pius Machafu Isundu v Lavington Security Guards Limited
    [2017] eKLR
  • Kenfreight (E. A) Limited vs Benson K. Nguti
    [2016] eKLR
  • D.K. Marete vs Teachers Service Commission
    [2020] eKLR
  • Elizabeth Wakanyi Kibe v Telkom Kenya Ltd
    [2014] eKLR (Civil Appeal No. 25A of 2013)
  • Engineer Francis N. Gachuri v Energy Regulatory Commission
    [2013] eKLR (Industrial Cause No. 203 of 2011)
  • Rookes vs Bernard
    (1964) 1 ALL ER 367
  • Haria Industries vs P.J. Products Limited
    (1970) E.A 367
  • Obongo & Another vs Municipal Council of Kisumu
    (1971) E.A. 91
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over employment disputes; reliefs anchored on sections 35, 36, 41, 43, 45, 49 and 51 of the Employment Act, 2007 and Articles 41, 47 and 50 of the Constitution

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, "Kioi v Consolidated Bank of Kenya Limited (Cause 1982 of 2015 & 1381 of 2016 (Consolidated)) [2024] KEELRC 1143 (KLR)", Case Analysis (2024). ELRC Cause No. 1982 of 2015 (consolidated with ELRC Cause No. 1381 of 2016). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/1143/eng@2024-04-30

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