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ELRCPartially AllowedCause No E144 of 2022· [2024] KEELRC 1732 (KLR)

Kaugi v Absa Bank Kenya PLC (Cause E144 of 2022) [2024] KEELRC 1732 (KLR)

Employment and Labour Relations Court
9 July 2024
7,376 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 Absa fairly dismissed its branch manager for poor performance, but still owed her pay for skipping its own disciplinary steps.

What this practically means

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Executive summary

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The Claimant, employed by the Respondent bank from 1988 and risen to Branch Manager, sued for wrongful and unlawful termination following her dismissal on 14th October 2021 for poor performance after successive Performance Accelerator Plans in 2019, 2020 and 2021. She sought reinstatement, a declaration of discrimination, constitutional, exemplary and unfair-treatment damages, and Kshs.33,037,664 comprising notice pay, accrued leave, 12 months' compensation and salary shortfall to retirement. The Respondent admitted the employment and termination but maintained it was for valid reason and with due process. The court framed four issues: existence of a performance rating system, discrimination, fairness of termination, and reliefs. It found the Respondent had a Performance Management Policy and rating system. The claims of discrimination and constitutional violation failed for want of evidence. Substantively, the court held the Respondent had a valid and fair reason, applying the partly subjective test under Section 43(2) and the range of reasonable responses. Procedurally, however, the Respondent breached its own policy: the final PAP ran only one month against a policy minimum of three, a notice to show cause was issued three days into the PAP before any agreed review, and an expired warning letter was relied upon. The termination was therefore procedurally unfair. Reinstatement, the declaration, constitutional, exemplary and unfair-treatment damages, notice pay, accrued leave and the anticipatory salary-shortfall claim were all declined. The court awarded compensation under Section 49(1)(c) equivalent to three months' gross salary, with each party bearing its own costs. Judgment was delivered virtually at Nairobi on 9th July 2024 by Dr. Jacob Gakeri, Judge.

Key legal issues

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01

Existence of a performance management and rating system

Holding

The Respondent had a Performance Management Policy, Score Rating System, appraisals and PAP mechanism

Reasoning

The Claimant admitted on cross-examination that the Respondent rated employees annually on agreed targets. Uncountradicted evidence from RWI explained the rating bands, and scores were accessible on the Dashboard. Given 33 years of service rising from Bank Clerk to Branch Manager, the Claimant could not be presumed unaware of the rating system.

p. 9
02

Discrimination and constitutional violation

Holding

Not proved on a balance of probabilities

Reasoning

The particulars of discrimination pleaded in the statement of claim were not supported by evidence of being treated differently from comparable colleagues. The written statement was silent on discrimination, and no constitutional right was particularised or shown to have been violated.

p. 10
03

Substantive fairness of termination for poor performance

Holding

Substantively fair - valid reason established

Reasoning

Applying Section 43(2)'s partly subjective test and the range of reasonable responses, the court found sustained underperformance (2018, second half 2020, first half 2021 at 65.4%/64%) after multiple PAPs and warnings. The Respondent genuinely believed performance would not improve.

p. 12
04

Procedural fairness of termination

Holding

Procedurally unfair - employer breached its own policy

Reasoning

The Disciplinary, Capability and Grievance Policy required a minimum three-month PAP with reasonable timescales, yet the Claimant was placed on a one-month PAP; a notice to show cause was issued three days into the PAP and before the agreed reviews, and an expired warning letter was relied upon. This rendered the termination procedurally flawed.

p. 14

Legal principles established

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  • For a termination to be fair there must be both a valid and fair reason and a fair procedure; substantive justification without procedural fairness is insufficient
  • Where poor performance is the reason for termination, the employer bears a higher level of proof and must demonstrate the evaluation measures and efforts to address the poor performance
  • An employer who does not follow its own disciplinary and performance-improvement policy acts procedurally unfairly

Court orders

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  1. 1.Judgment entered in favour of the Claimant against the Respondent for the equivalent of 3 months' gross salary under Section 49(1)(c) of the Employment Act, 2007 as compensation for procedurally unfair termination
  2. 2.Each party to bear their own costs

Authorities

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Legislation

  • Employment Act, 2007Section 5(2) and (3), 5(8)(c), 8, 41, 43(2), 45, 49(1)(c), 49(3)(a), 49(4)
  • Constitution of Kenya, 2010Article 27(4); also Articles 159(2)(d) and 48 in the delivery order
  • Employment and Labour Relations Court Act, 2011Section 12(3)(vii)
  • Civil Procedure ActSection 1B
  • Civil Procedure RulesOrder 21 Rule 1

Cases cited (21)

  • Ol Pejeta Ranching Ltd V David Wanjau Muhoro
    (2017) eKLR
  • National Bank of Kenya V Samuel Nguru Mutonya
    (2019) eKLR
  • Kenya Revenue Authority V Reuwel Waithaka Gitahi & 2 others
    (2019) eKLR
  • Jane Wairimu Machira V Mugo Waweru and Associates
    (2012) eKLR
  • Naima Khamis V Oxford University Press (EA) Ltd
    (2017) eKLR
  • Alois Makau Maluvu V Citi Trust Kenya Ltd & 6 others
    (2018) eKLR
  • Isdor Rachuonyo V Brava Food Industries Ltd
    (2021) eKLR
  • D. K. Njagi Marete V Teachers Service Commission
    (2020) eKLR
  • Nyarangi & others V Attorney General
    (2008) KLR 688
  • Peter K. Waweru V Republic
    (2006) KLR
  • Andrews V Law Society of British Columbia
    (1989) 1 SCR 321
  • Walter Ogal Anuro V Teachers Service Commission
    (2013) eKLR
  • Jane Samba Mukala V Ol Tukai Lodge Ltd
    (2013) eKLR
  • Bamburi Cement Ltd V William Kilonzi
    (2016) eKLR
  • Pius Machafu Isindu V Lavington Security Guards Ltd
    (2017) eKLR
  • Postal Corporation of Kenya V Andrew K. Tanui
    (2019) eKLR
  • Kenya Airways Ltd V Aviation & Allied Workers Union Kenya & 2 others
  • Rookes V Barnard
    (1964) A.C. 1129
  • Obonyo V Municipal Council of Kisumu
    (1971) EA 91
  • Grinyamwaya V Nairobi City Commission
    (1985) eKLR
  • Elizabeth Wakanyi Kibe V Telkom Kenya Ltd
    (2014) eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over employment disputes (Sections 12(3)(vii) ELRC Act and 45, 49 Employment Act, 2007 invoked)

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, "Kaugi v Absa Bank Kenya PLC (Cause E144 of 2022) [2024] KEELRC 1732 (KLR)", Case Analysis (2024). Cause No E144 of 2022. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/1732/eng@2024-07-09

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