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ELRCDismissedCause No E090 of 2023· [2025] KEELRC 816 (KLR)

Ong’era v SBM Bank (Kenya) Limited (Cause E090 of 2023) [2025] KEELRC 816 (KLR)

Employment and Labour Relations Court of Kenya
26 February 2025
DMD. K. Njagi Marete
3,913 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~16 min to read original · ~4 min brief

The bottom line

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The Employment Court upheld a bank employee's redundancy as lawful and ordered him to repay over KES 2.18 million in outstanding staff loans.

What this practically means

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Executive summary

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The Claimant, employed from 2014 and rising to Assistant Branch Manager (Service Delivery Manager), was terminated in April 2022 on account of redundancy via a letter dated 17th March 2022 and a backdated notice dated 7th December 2021, issued while he was hospitalized after a road traffic accident of 21st November 2021. He claimed unfair and unlawful termination disguised as redundancy, alleging violation of constitutional provisions (Articles 22(1), 23(1), 27(5), 28, 41(1), 47), sections 40, 43 and 45 of the Employment Act and section 4(2) of the Fair Administrative Actions Act, and sought a declaration of unlawfulness, 12 months' salary as damages, general damages, costs and interest. The Respondent denied the claim, asserting a genuine restructuring following acquisition of two defunct banks, with all section 40 notices issued and a scoring matrix under which the Claimant scored 70% (below the 75% threshold); it counterclaimed for outstanding personal and car loans of KES 1,705,739.95 plus interest. The court framed three issues: whether due process was followed in declaring redundancy; whether the Respondent was entitled to the counter claim; and whether the Claimant was entitled to relief. It found a lawful and procedural redundancy, held the ELRC had jurisdiction over the counter claim as a dispute arising out of employment, and dismissed the main claim while allowing the counter claim. The Claimant was ordered to pay KES 2,181,360.45 as at 16th November 2023, with interest at court rates until payment in full, and each party was ordered to bear their own costs of the claim and counter claim.

Key legal issues

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01

Whether due process was pursued in declaring redundancy

Holding

The court found a lawful and procedural termination on account of redundancy

Reasoning

The Respondent narrated an elaborate redundancy process following the acquisition of two defunct banks and closure of branches, with notices to employees, the labour officer and inter partes correspondence, all admitted by the Claimant. Selection criteria based on seniority, skill, ability and reliability were applied and the Claimant scored 70%, below the 75% threshold. The court found the Respondent's case self-propelling on a preponderance of evidence and the Claimant failed to controvert it.

p. 8
02

Whether the Respondent is entitled to the counter claim

Holding

Yes - the court found the Respondent entitled to the counter claim as prayed, holding the court had jurisdiction over the counter claim as arising out of employment

Reasoning

The Claimant argued the counter claim fell outside employment disputes, but the Respondent submitted the dispute arose out of the employer-employee relationship. The court found the Claimant liable for the sums he willingly borrowed and continued to enjoy, and awarded the outstanding loan amounts with interest at court rates.

p. 8
03

Whether the Claimant is entitled to the relief sought

Holding

No - having failed to prove unfair termination, the Claimant was disentitled to all relief

Reasoning

Since the court found the redundancy lawful and procedural, the foundation for the declaratory and damages reliefs collapsed. The dismissal of the main claim followed directly from the finding on the first issue.

p. 8

Legal principles established

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  • Notices under section 40 of the Employment Act are mandatory and procedural requirements for a valid redundancy
  • An employer bears the burden of proving the reason for termination; failure renders termination unfair under section 45

Court orders

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  1. 1.The claim is dismissed and the counter claim is allowed, with each party bearing their own costs of the claim and counter claim.
  2. 2.The Claimant is ordered to pay the Respondent Kshs.2,181,360.45 as at 16th November, 2023.
  3. 3.The counter claim shall continue to accrue interest at court rates till payment in full.

Authorities

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Legislation

  • Constitution of Kenya, 2010Articles 22(1), 23(1), 27(5), 28, 41(1), 47
  • Employment Act No. 11 of 2007Sections 40(1)(b)(c), 43(1)(2), 45(2)
  • Fair Administrative Actions Act No. 4 of 2015Section 4(2)

Cases cited (2)

  • KUDHEIHA v the Aga Khan University Hospital Nairobi
    Cause No. 815 of 2015
  • Bernard Misawo Obora v Coca Cola Juices Kenya Limited
    (2015) eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over disputes arising out of employment, including the counterclaim ('a dispute relating to or arising out of employment inter partes')

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, "Ong’era v SBM Bank (Kenya) Limited (Cause E090 of 2023) [2025] KEELRC 816 (KLR)", Case Analysis (2025). Cause No E090 of 2023. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/816/eng@2025-02-26

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