Ndunyu v Choice Microfinance Bank Ltd & another (Employment and Labour Relations Cause 1201 of 2018) [2025] KEELRC 1156 (KLR)
The bottom line
#A Kenyan court ruled a bank unfairly fired its CEO after his probation lapsed without confirmation, awarding modest compensation instead of reinstatement.
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 parties were in a contract of employment and on what terms
- 2.Whether and when the contract of service was terminated
- 3.Whether the termination was fair in substance and procedure
- 4.What remedies are due to the claimant and what is due to the respondent on the counterclaim
Key legal issues
#Existence and terms of the employment contract
The claimant was employed as CEO effective 01.12.2017 on three months' probation, terminable thereafter on two months' notice or pay in lieu
The court found no dispute that the parties were in a contract of employment. The contract provided for probation of three months, monthly salary of Kshs.320,000 plus Kshs.100,000 upon completion of twelve months or upon the bank breaking even, and termination by two months' notice or pay in lieu.
Effective date of termination
Termination was effective 17.07.2018 per the letter of non-confirmation and termination, which the court found was issued and received
Although the claimant denied receiving the letter titled 'Notice of non-confirmation and termination of employment', he pleaded claims up to 17.07.2018 and relied on the letter, so the court held it was issued and received and termination took effect on that date.
Fairness of the termination
The termination was unfair in both substance and procedure
The alleged reason (unauthorised reorganisation) was rebutted by absence of board minutes; no evidence supported staff-management allegations; the belated appraisal after lapse of probation was misconceived; and the CBK surcharge was attributable to pre-employment transactions. Sections 43 and 45 of the Employment Act were not satisfied.
Remedies and set-off
Two months' salary (Kshs.620,000) awarded for unfair termination, offset against the claimant's admitted liabilities of Kshs.401,980, netting Kshs.218,020 to the claimant
The court applied section 49 factors, upheld the respondent's computation of final dues and liabilities including sitting allowances and loans, but rejected the CBK penalty claim as an afterthought. Reinstatement was unavailable due to the section 12 ELRC Act limitation and impracticability.
Legal principles established
#- Where the agreed probationary period lapses without extension, the employee is constructively confirmed and a belated appraisal and non-confirmation is procedurally unfair
- A reason for termination must exist and be fair as at the date of termination under sections 43 and 45 of the Employment Act, 2007
Court orders
#- 1.Declaration that the termination was unfair
- 2.Respondent to pay the claimant Kshs. 218,020.00 less PAYE by 31.05.2025, failing which interest at court rates from date of judgment till full payment
- 3.Each party to bear own costs of the suit including the counterclaim
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
- Jurisdiction invoked
- Employment and Labour Relations Court Act, 2011, section 12; Employment Act, 2007 (sections 43, 45, 49)
Relief refused
#Reinstatement
Limitation period of three years under section 12 of the ELRC Act had lapsed and respondent had hired another CEO, making reinstatement impracticable
Claimant's claim for two months' pay in lieu of notice, salary arrears and 12-months compensation as separately pleaded
Court instead awarded two months' salary (Kshs.620,000.00) offset against the claimant's established liabilities to the respondent
Respondent's counterclaim for the Kshs.1,000,000 CBK penalty
Mutual evidence showed the surcharge related to transactions before the claimant's employment
Costs
Each party to bear own costs of the suit including the counterclaim.
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.
The termination is found to have been unfair in procedure and substance.
It appears to the Court that as at 05.07.2018 the claimant had constructively got confirmed in appointment because the three months of probationary service had lapsed and there was no contractual provision to extent the three months
Reinstatement is not available in view of the lapsed three years of limitation attached to grant of the order per section 12 of the Employment and Labour Relations Court Act, 2011.
The respondent to pay the claimant Kshs. 218,020.00 less PAYE by 31.05.2025 failing interest to run thereon at court rates from the date of this judgment till full payment.
Each party to bear own costs of the suit including the counterclaim.
Issues in the judgment
#Holding (a) of paragraph 18 contains an internal contradiction in wording: 'That reason for termination is found to exist not to exist as at termination'
Prayer for rescission and permanent injunction not expressly addressed in the final orders; only the declaration and monetary award were granted
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Ndunyu v Choice Microfinance Bank Ltd & another (Employment and Labour Relations Cause 1201 of 2018) [2025] KEELRC 1156 (KLR)", Case Analysis (2025). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/1156/eng@2025-04-24
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.