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ELRCPartially AllowedNot stated in judgment (Memorandum of Claim dated 16th August 2021)· [2025] KEELRC 32 (KLR)

Omache v National Bank of Kenya Limited (Cause E792 of 2021) [2025] KEELRC 32 (KLR)

Employment and Labour Relations Court
17 January 2025
4,329 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~17 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court ruled KCB constructively dismissed a manager by demoting his job grade after promotion, awarding him seven months' salary.

What this practically means

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Executive summary

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The Claimant, formerly employed by the Respondent bank as a Business Development Manager from March 2016, sued claiming constructive dismissal after resigning on 2nd June 2021. He had been invited to interview for the internally advertised position of Bancassurance Regional Sales Manager at grade MG8 and was successful, but the Respondent's 'Role Realignment' letter of 15th April 2021 maintained his salary within grade MG9. His complaints to the Director, Human Resources went unaddressed, and he was required to reapply for his old role, which he did unsuccessfully. He resigned and sued seeking reinstatement, June 2021 salary, back salary, and damages for frustration and harassment. The Respondent denied constructive dismissal, contending the resignation was voluntary, that the grade had been reviewed to MG9 for all Sales Managers due to business exigencies, and that the Claimant was paid all terminal dues. The court, framed with two issues (voluntary resignation versus constructive dismissal, and entitlement to reliefs), applied the Court of Appeal's test in Coca-Cola v Ligaga. It found the Respondent unilaterally varied the grade without consultation, breaching the Claimant's reasonable expectations and the essential terms of his contract, leaving him effectively no choice but to resign; hence constructive dismissal amounting to unfair and unlawful termination. Reinstatement was refused as impractical since the Claimant had found other employment. The court awarded compensatory damages of Kshs 654,768.94 (seven months' gross salary) under Section 49(1) of the Employment Act, with interest at court rates from the date of judgment, plus costs of the suit. Judgment delivered at Nairobi on 17th January 2025 by Stella Rutto, Judge.

Key legal issues

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01

Whether the Claimant was constructively dismissed

Holding

Yes. The Respondent unilaterally varied the job grade from the advertised MG8 to MG9 without consultation and without giving the Claimant an informed choice, amounting to a fundamental breach going to the root of the contract and breach of reasonable expectations; the Claimant was entitled to treat himself as constructively dismissed.

Reasoning

The Respondent advertised the Regional Sales Manager role at grade MG8 and interviewed the Claimant for it, but issued a 'Role Realignment' letter placing him at MG9, done unilaterally and not in consultation. The Respondent also required him to reapply for his old role, which he did unsuccessfully, leaving him a choice between accepting materially different terms or resigning. Applying Coca-Cola v Ligaga, this conduct was a fundamental breach of essential terms and frustrated the reasonable expectation created by the advertisement of a higher-grade position.

p. 8
02

Whether reinstatement should be granted

Holding

No. Reinstatement was impractical given the circumstances of the separation and the Claimant's new employment with an insurance company.

Reasoning

Section 49(4) of the Employment Act requires consideration of practicability, the rule against specific performance of contracts for service, and opportunities for comparable employment. The Court found reinstatement impractical in the circumstances preceding the resignation, and the Claimant admitted in cross-examination that he had secured alternative employment with an insurance company. Compensatory damages were therefore the appropriate remedy.

p. 8
03

Whether the Claimant is entitled to compensation and how much

Holding

Yes. Compensatory damages under Section 49(1) of the Employment Act equivalent to seven (7) months' gross salary, i.e. Kshs 654,768.94, taking into account the length of employment and circumstances of separation.

Reasoning

Having found unfair and unlawful termination on account of constructive dismissal, the Court invoked the compensatory remedy under Section 49(1). It fixed the award at seven months' gross salary, factoring in the length of the employment relationship (from March 2016 to June 2021) and the attendant circumstances of the separation. Interest at court rates from the date of judgment and costs of the suit were also granted.

p. 8

Legal principles established

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  • The key element in constructive dismissal is that the employee was entitled to leave without notice because of the employer's conduct, applying the unreasonable test or the contractual test.
  • Unilateral variation of terms the employee interviewed for, without consultation, may breach the employee's reasonable expectations and constitute fundamental breach going to the root of the contract.

Court orders

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  1. 1.The Claimant is awarded compensatory damages in the sum of Kshs 654,768.94 being equivalent to seven (7) months of his gross salary
  2. 2.Interest on the amount at court rates from the date of Judgment until payment in full
  3. 3.The Claimant shall also have the costs of the suit

Authorities

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Legislation

  • Constitution of Kenya, 2010Article 41(1)
  • Constitution of Kenya, 2010Article 159(2)(d)
  • Constitution of Kenya, 2010Article 48
  • Employment Act, 2007Section 49(1)
  • Employment Act, 2007Section 49(3)(a)
  • Employment Act, 2007Section 49(4)
  • Civil Procedure RulesOrder 21 Rule 1
  • Civil Procedure ActSection 1B

Cases cited (4)

  • Coca-Cola East & Central Africa Limited v Maria Kagai Ligaga
    [2015] eKLR
  • Kiprop vs Melchizedek Hospital Limited
    (Cause E134 of 2022) (2023) KEELRC 3090 (KLR)
  • Yattani vs Eco Oil Kenya Limited
    (ELRC cause 1575 of 2017) (2022) KEELRC 13293 (KLR)
  • Daniel Toroitich Arap Moi vs Mwangi Stephen Muriithi & another
    (2014) eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over employment disputes (Employment Act 2007; Article 41(1) of the Constitution of Kenya, 2010 pleaded by the Claimant)

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, "Omache v National Bank of Kenya Limited (Cause E792 of 2021) [2025] KEELRC 32 (KLR)", Case Analysis (2025). Not stated in judgment (Memorandum of Claim dated 16th August 2021). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/32/eng@2025-01-17

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