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ELRCDismissedNot stated in the judgment· [2024] KEELRC 1955 (KLR)

Ali v SBM Bank (Kenya) Limited (Cause E010 of 2024) [2024] KEELRC 1955 (KLR)

Employment and Labour Relations Court
18 July 2024
3,817 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~15 min to read original · ~4 min brief

The bottom line

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A Mombasa court dismissed a bank manager's unfair termination claim, ruling her negligence in approving altered payments justified dismissal and she must repay her staff loan.

What this practically means

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Executive summary

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The claimant, formerly an operations manager at Fidelity Commercial Bank's Diani branch, was transferred with her employment to the respondent with effect from 11 May 2017 and accepted the transfer on 3 July 2017. Following a fraudulent transaction at the Diani branch in October 2022 involving a customer account in the name of Hans Ulrich Wanner, the claimant was issued a show cause notice, subjected to a disciplinary hearing, and her employment was terminated on 4 October 2023 for negligence in approving payments without following established procedures. She claimed declarations of unfair labour practice and unfair termination, 12 months' compensation, overtime pay, breakages compensation, service pay, costs and interest. The respondent denied unfairness, asserting valid reasons, due process, payment of terminal dues, and counterclaimed for an outstanding staff loan of Ksh.1,339,948.29. The court found no unfair labour practice, holding that the claimant had approved the revised contract, which carried superior terms including pension and medical benefits. Termination was held fair: the claimant approved altered vouchers without due diligence, breaching the trust essential in banking, and her record contained cautionary letters for negligence. The overtime claim failed for want of approval; the breakages claim failed for lack of specific proof; and service pay was unavailable given superior contractual benefits. The counterclaim succeeded as the loan was a benefit conditional on employment and unrebutted. The claim was dismissed with each party bearing its own costs, and the claimant was ordered to repay the loan with interest at staff rates within 30 days, failing which commercial rates apply from 4 October 2023.

Key legal issues

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01

Unfair labour practices in the transfer and revision of employment terms

Holding

No unfair labour practice; the claimant accepted the transfer of employment in writing and the 2019 contract had superior terms including pension and medical benefits

Reasoning

The court applied sections 10(5) and 13(6) of the Employment Act to the takeover of employment from Fidelity Commercial Bank by the respondent without a break in continuity. The claimant accepted the transfer on 3 July 2017. Comparing the 2010 and 2019 contracts, the latter contained superior benefits such as a pension and medical scheme, so the claim of degraded terms and unpaid service pay failed.

p. 6
02

Whether termination of employment was unfair

Holding

Termination was fair; the claimant facilitated fraudulent payments by approving altered vouchers without due diligence, and the respondent followed due process

Reasoning

The claimant, as operations manager, approved transactions on altered vouchers after failing to reach the customer, occasioning financial loss. She had prior cautionary letters for negligence. Bank employment demands utmost trust and confidence. Under section 43 there were valid reasons, process was followed, and under section 45(5) her poor work record disentitled her to compensation.

p. 6
03

Remedies: overtime, breakages and service pay

Holding

All auxiliary claims failed for want of approval, proof, or statutory threshold

Reasoning

Overtime required prior or post-approval within 24 hours under contract and policy, which was not obtained. The breakages claim resembled special damages lacking specific proof. Service pay was unavailable because the respondent's contract had superior terms with a pension, and the section 35(6) threshold was not met.

p. 7
04

Counterclaim on staff loan facility

Holding

Counterclaim allowed; claimant to repay Ksh.1,339,948.29 with interest

Reasoning

The claimant did not respond to the counterclaim nor show any effort to repay the staff loan advanced on preferential employee terms. The facility was conditional on employment, and the respondent was entitled to recover the outstanding amount with interest at staff rates, escalating to commercial rates on default.

p. 8

Legal principles established

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  • Banking employment demands full trust and confidence and due diligence by staff handling altered financial records
  • Under Section 10(5) of the Employment Act parties may revise employment contracts subject to the employee's written approval
  • Overtime must be approved under the contract and employer policy to attract payment
  • An employer may recover staff loan facilities advanced as a benefit of employment after termination

Court orders

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  1. 1.Claim dismissed; declarations, compensation, overtime pay, breakages and service pay not awarded
  2. 2.Claimant to repay Ksh.1,339,948.29 with interest at staff rates within 30 days of judgment
  3. 3.Failing payment within 30 days, interest to accrue at commercial rates from 4 October 2023
  4. 4.Each party bears its own costs

Authorities

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Legislation

  • Employment ActSection 10(5)
  • Employment ActSection 13(6) and (7)
  • Employment ActSection 35(6)
  • Employment ActSection 43
  • Employment ActSection 45(5)

Cases cited (5)

  • Banking, Insurance & Finance Union (Kenya) v Co-operative Bank of Kenya Ltd
    [2015] eKLR
  • Lawrence Onyango Oduori V Kenya Commercial Bank Limited
    [2014] eKLR
  • Violet Kadala Shitsukane v Kenya Post Savings Bank
    [2020] eKLR
  • Agnes Murugi Mwangi vs. Barclays Bank of Kenya Limited
    (2013) eKLR
  • Evans Kamadi Misango vs. Barclays Bank of Kenya Limited
    (2015) eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007

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, "Ali v SBM Bank (Kenya) Limited (Cause E010 of 2024) [2024] KEELRC 1955 (KLR)", Case Analysis (2024). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/1955/eng@2024-07-18

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