Mwanyolo v SBM Bank Limited [Formerly Fidelity Commercial Bank Limited] & 2 others (Cause 132A of 2023) [2025] KEELRC 1178 (KLR)
The bottom line
#A Kenyan bank unfairly dismissed an employee over fraud allegations because it never gave her a hearing, but the court refused damages for malicious prosecution.
What this practically means
#Executive summary
#Key legal issues
#Whether the summary dismissal without notice and hearing was wrongful and unlawful
Yes - the dismissal was unfair and unlawful because the claimant was never invited to a disciplinary hearing and the mandatory process under Section 41(2) of the Employment Act was not followed
Section 44 permits summary dismissal, but the employee retains the right to notice and hearing under Section 41(2) even for gross misconduct. Arrest and prosecution of the employee is no substitute for an internal disciplinary process; the two are governed by separate legal regimes. The employer, despite possessing the internal audit report, made no effort to invite the claimant to a disciplinary hearing. Payment of terminal dues did not cure the procedural lapse.
Whether the claimant was entitled to compensation for unfair termination
Yes - awarded 8 months' gross salary (Ksh. 640,000) after examining the employee's work record under Section 45(5), including the 2011 warning
The claimant had served 8 years but had received a warning in 2011 for a loss of Ksh. 200,000 due to procedural failures, which was not denied. Although the termination lacked both procedural and substantive fairness, the work record justified a compensation award of 8 months rather than the 12 months claimed, at a gross salary of Ksh. 80,000 per month.
Whether the arrest and prosecution of the claimant were malicious, entitling her to general, punitive and exemplary damages
No - the acquittal under Section 210 of the Criminal Procedure Code does not infer a violation of the law or constitution by the respondents, and no malice was established
The arrest arose from a report lodged by the 1st respondent after an internal audit established a loss of about Ksh. 4.5 million which the claimant could not justify. The 1st respondent was duty-bound to report suspected fraud, and the police had a constitutional and legal duty to investigate, which does not cease where fraud arises from an employment relationship. A Section 210 acquittal follows the trial court's assessment of evidence and does not demonstrate malice in initiating the prosecution.
Legal principles established
#- Section 41(2) of the Employment Act mandates notification and a hearing before termination on grounds of misconduct or gross misconduct, including summary dismissal under section 44(3); an employer's policy cannot negate this mandatory statutory process.
- A criminal charge or acquittal under Section 210 of the Criminal Procedure Code is regulated under a separate regime of law from employment relations and does not excuse the employer from adhering to the mandatory procedural protections of Sections 41, 43 and 45 of the Employment Act.
- An acquittal under Section 210 of the Criminal Procedure Code does not, by itself, establish malice in the arrest, investigation or commencement of criminal charges.
Court orders
#- 1.Judgment entered for the claimant against the respondent with an award of compensation at Ksh. 640,000 (8 months' gross salary at Ksh. 80,000 per month) for unfair termination of employment
- 2.Each party to bear its own costs
- Jurisdiction invoked
- Original jurisdiction of the Employment and Labour Relations Court over employment and labour relations claims (claim for wrongful termination and malicious prosecution founded on Sections 41, 43 and 45 of the Employment Act and Articles 51(2) and 52(1) of the Constitution)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Mwanyolo v SBM Bank Limited [Formerly Fidelity Commercial Bank Limited] & 2 others (Cause 132A of 2023) [2025] KEELRC 1178 (KLR)", Case Analysis (2025). Not stated in the judgment as provided. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/1178/eng@2025-04-24
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.