Naliaka v Diamond Trust Bank Limited (Employment and Labour Relations Cause E059 of 2021) [2024] KEELRC 1748 (KLR)
The bottom line
#A Kenyan employer that skips the fair-hearing steps in the Employment Act risked over Kshs 1.5 million in damages after failing to defend its case in court.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the termination of the claimant's employment was for a valid reason
- 2.Whether the termination followed fair procedure under section 41 of the Employment Act
- 3.Whether the claimant is entitled to notice pay, severance pay and compensation under section 49
- 4.Whether the Respondent's counterclaim on the staff loan is proved
Key legal issues
#Fairness of termination under sections 41 and 45 of the Employment Act
The termination was unfair and unjustified as the Respondent, having not appeared, adduced no evidence of valid reason or fair procedure
Section 41 requires an employer, before terminating for misconduct, to explain the reasons to the employee and hear representations. Section 45(2) places the burden on the employer to prove a valid reason, a fair reason, and adherence to fair procedure. The matter proceeded exparte after service, leaving the claim uncontroverted. With no evidence of compliance, the court found the termination unfair and awarded notice pay and maximum-range compensation of 10 months' salary.
Notice pay
The claimant was awarded one month's salary in lieu of notice, per the employment contract, rather than the three months claimed
The claimant sought three months' salary in lieu of notice, but the Respondent's pleadings indicated the contract provided only one month's notice, and the court awarded notice strictly per the contract at the monthly salary of Kshs 139,888.
Legal principles established
#- An employer bears the burden of proving a valid reason and fair procedure for termination; absent evidence to the contrary, the employee was entitled to due process
Court orders
#- 1.Award of 1 month's salary in lieu of notice of Kshs 139,888
- 2.Compensation equivalent to 10 months' salary for unfair termination of Kshs 1,398,880
- 3.Total award of Kshs 1,538,786 less statutory deductions
- 4.Respondent to pay costs of the suit plus interest at court rates from the date of judgment
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (sections 35, 41, 44, 45 and 49 invoked)
Relief refused
#Severance pay for 3½ years of Kshs 2,937,648
Not addressed in the award; no finding that the claimant was declared redundant
Costs
The Respondents will pay costs of this suit plus interest at court rates with effect from the date of this judgment.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
In the circumstances of the case, the termination of the Claimant was unfair and unjustified as per Section 45 (2) of the Employment Act 2007
I therefore find for the Claimant and find for her and award her as follows:
Compensation equivalent to 10 months’ salary for unfair and unlawful termination – 10 x 139,888 = 1,398,880/=
The Respondents will pay costs of this suit plus interest at court rates with efiect from the date of this judgment.
Issues in the judgment
#Judgment refers to the claimant inconsistently as both male and female ('he was summarily dismissed' / 'her services was terminated'); and states 3½ years' service yet employment ran April 2015 to November 2018
The Respondent's counterclaim for the outstanding staff loan of Kshs 1,427,464.17 is neither addressed nor expressly dismissed in the judgment's final orders
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Naliaka v Diamond Trust Bank Limited (Employment and Labour Relations Cause E059 of 2021) [2024] KEELRC 1748 (KLR)", Case Analysis (2024). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/1748/eng@2024-07-11
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.