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ELRCPartially AllowedMemorandum of Claim dated 27th November 2017· [2024] KEELRC 1683 (KLR)

Njogu v Daraja Micro-Finance Bank Ltd (Employment and Labour Relations Cause 2369 of 2017) [2024] KEELRC 1683 (KLR)

Employment and Labour Relations Court
27 June 2024
2,737 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~11 min to read original · ~4 min brief

The bottom line

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A Kenyan court ruled an employee's dismissal unfair because she was never given a proper disciplinary hearing, despite valid reasons for termination.

What this practically means

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Executive summary

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The Claimant, employed as Branch Manager at Dagoretti Corner from February 2015 on a monthly salary of Kshs 170,000 and later promoted to Business Development Manager, was sent on compulsory leave on 27th June 2017 to allow an audit and investigation of her branch. Following an audit report dated 4th August 2017 raising queries over a Kshs 960,000 asset finance loan disbursed to one Christabel Barasa without requisite documentation and over interference with debt recovery, she received a letter dated 14th August 2017 terminating her services. She sued for compensation, alleging she was never accorded a disciplinary hearing. The Respondent maintained she was heard, that her responses were unsatisfactory, and that the termination followed her contract permitting termination on one month's notice or payment in lieu. The court framed three issues: substantive justification, procedural fairness, and entitlement to reliefs. On substance, applying Sections 43 and 45 of the Employment Act and the 'genuinely believed reasons' test, the court held the Respondent proved valid reasons for termination. On procedure, however, the court found a breach of the mandatory Section 41 requirements: the Claimant was neither invited to a disciplinary hearing nor informed of her right to be accompanied by an employee or representative of her choice, and after her written response the next thing she received was the termination letter. The termination was accordingly unlawful and unfair. On reliefs, notice pay, salary for 14 days worked, leave days and the providence fund were declined as paid or not owed. Considering the Claimant's negligence, the court awarded only one month's salary as compensation (Kshs 170,000), plus costs of the suit and interest at court rates from the date of judgment until payment in full.

Key legal issues

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01

Whether the termination was substantially justified

Holding

The court found the Respondent proved valid reasons - the Claimant, as Branch Manager, was negligent, interfered with debt recovery and allowed irregular loan disbursement, per the audit report of 04/08/2017

Reasoning

Applying Sections 43 and 45 of the Employment Act, the court held the employer need only prove reasons it genuinely believed existed on a balance of probability, citing Galgalo Jarso Jillo v Agricultural Finance Corporation and Kenya Revenue Authority v Reuwel Waithaka Gitahi. The audit report laid down the reasons for termination, and the evidence of negligence and interference with debt collection satisfied that test.

p. 5
02

Whether the termination was procedurally fair

Holding

The termination was procedurally unfair because the Respondent failed to comply with Section 41 - the Claimant was not invited to a disciplinary hearing nor informed of her right to be accompanied by an employee or representative of her choice

Reasoning

Section 41 is a mandatory requirement: the employer must explain the reasons and hear the employee's representations, with a companion of her choice present. The Claimant only had a brief conversation with the CEO and internal auditor, was not told it was a disciplinary hearing, and the Respondent produced no evidence of an invitation or of her right to representation. The mandatory procedure was therefore breached.

p. 6
03

Whether the Claimant is entitled to the reliefs sought

Holding

Partially: only one month's salary (Kshs 170,000) as compensation, plus costs and interest; notice pay, leave days and providence fund claims were declined as paid or not owed

Reasoning

Having found the termination unfair, the court assessed reliefs against the Claimant's own testimony. She had been paid notice salary, 14 days' wages and her providence fund, and had taken her leave. Because the court found her negligent in her duties, it exercised discretion to award only one month's salary as compensation rather than the full twelve months' maximum under Section 49.

p. 6

Legal principles established

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  • An employer must, before terminating employment on grounds of misconduct, explain the reasons to the employee and permit the employee to have another employee or shop floor union representative of their choice present, and must hear and consider the employee's representations
  • Substantive justification under Section 43 turns on whether the employer genuinely believed the matters informing termination existed at the time, on a balance of probability

Court orders

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  1. 1.Judgment entered in favour of the Claimant on the finding that her termination was procedurally unfair
  2. 2.Award of one month's salary as compensation for unfair termination in the sum of Kshs 170,000/-
  3. 3.Costs of the suit awarded to the Claimant
  4. 4.Interest at court rates from the date of judgment until full payment
  5. 5.Prayers for salary in lieu of notice, 14 days worked, leave days and the providence fund declined

Authorities

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Legislation

  • Employment ActSection 43
  • Employment ActSection 45
  • Employment ActSection 41
  • Employment ActSection 42(1) (referred to in Section 41)
  • Constitution of KenyaArticle 159(2)(d)
  • Constitution of KenyaArticle 48
  • Civil Procedure Act (Chapter 21, Laws of Kenya)Section 1B
  • Civil Procedure RulesOrder 21 Rule 1

Cases cited (2)

  • Galgalo Jarso Jillo v Agricultural Finance Corporation
    [2021] eKLR
  • Kenya Revenue Authority v Reuwel Waithaka Gitahi & 2 others
    [2019] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act (Sections 41, 43 and 45 applied); Article 159(2)(d) and Article 48 of the Constitution referenced in the virtual-delivery order

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, "Njogu v Daraja Micro-Finance Bank Ltd (Employment and Labour Relations Cause 2369 of 2017) [2024] KEELRC 1683 (KLR)", Case Analysis (2024). Memorandum of Claim dated 27th November 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/1683/eng@2024-06-27

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