Ngure v Co-operative Bank of Kenya Limited

d) The claimant be paid for physical and emotional damages emanating from loss of his career and suffering of his young family. e) Cost of the suit. f) Any other relief. 2. The Respondent opposed the Claim through its Statement of Response and Counterclaim dated 15th March 2021. The Respondent maintains that the termination of the Claimant’s employment was lawful, fair and founded on a valid reason, having been undertaken in accordance with Clause A5(b) of the Collective Bargaining Agreement (CBA) and paragraph 22.16 of the Staff Manual governing performance improvement. On that basis, the Respondent has asked the Court to dismiss the Claim with costs. 3. In its Counterclaim, the Respondent avers that during the subsistence of the employment relationship, it advanced the Claimant various staff loan facilities. It contends that under the terms governing those facilities, the preferential staff interest rates would cease upon termination of the Claimant’s employment, whereupon the outstanding loan balances would attract interest at the prevailing commercial rates until payment in full. Consequently, the Respondent seeks Kshs. 4,096,198.13, being the alleged outstanding loan balance as at 15th March 2021, together with interest at the 2

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rate of 13% per annum from 16th March 2021 until payment in full, as well as the costs of the Counterclaim. 4. The matter proceeded to trial on diverse dates, during which both parties adduced oral evidence in support of their respective cases. Claimant’s Case 5. The Claimant testified in support of his case and for starters, he adopted his witness statement to constitute his evidence in chief. He further produced the documents filed together with the Memorandum of Claim as his exhibits. 6. The Claimant testified that in April 2016, he was transferred to the Respondent’s Murang’a Branch where he served as a Teller and Service Champion. He stated that on 11th July 2017, the Branch Manager informed him that his role had been enriched from Teller to Sales and Service Advisor. According to the Claimant, although his responsibilities changed, he was neither trained nor inducted into the new role before being assigned sales targets commensurate with it. 7. He further testified that on 17th November 2017, he received an invitation to attend a performance review meeting to discuss his performance for the 2 nd quarter of 2017. 3

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8. The Claimant further stated that on 22nd November 2017, he received an email from the Branch Manager reminding him that his 4 th quarter 2017 performance targets were due to lapse within one month and directing him to sign the document and return it. 9. According to the Claimant, he was again invited to a performance review meeting scheduled for 15th February 2018. He testified that on 28 th February 2018, he received the minutes of that meeting, which he contended did not accurately reflect the discussions that had taken place. He further stated that the Branch Manager instructed him to sign the minutes without making any amendments. 10.The Claimant further testified that he subsequently received a letter terminating his employment on the ground of poor performance. According to him, the termination came as a surprise, as he had not anticipated that the performance review process would culminate in disciplinary action. 11.It was the Claimant’s evidence that he was neither issued with a notice of disciplinary proceedings nor served with any warning letters in relation to his alleged poor performance before his employment was terminated. 4

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12.The Claimant further testified that although he lodged an appeal against the decision to terminate his employment, the Respondent did not accord him an opportunity to present his case during the appeal process. 13.He added that he reported the dispute to his union (Banking Insurance and Finance Union), and participated in several conciliation meetings. According to the Claimant, the Ministry of Labour recommended his reinstatement, but the Respondent declined to implement that recommendation. Respondent’s Case 14.The Respondent called Leah Kerich (RW1) its Employee Relations Advisor to testify on its behalf. Similarly, she adopted her witness statement to constitute her evidence in chief and produced the Respondent’s list and bundle of documents as exhibits before the Court. 15.RW1 confirmed that the Claimant was transferred from the Respondent’s Umoja Branch to the Murang’a Branch with effect from 23 rd March 2016 together with his role profile. 16.She further testified that by a letter dated 3 rd July 2017, the Claimant’s role was enriched from that of a Teller to that of a Sales and Service Advisor, 5

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which she described as an agile and hybrid role encompassing both sales and customer service responsibilities. 17.RW1 further stated that the Claimant was issued with a 1 st warning letter dated 10th July 2017 for using a mobile phone while serving customers, contrary to the Respondent’s Operating Manual. She added that he received a 2nd warning letter on 15th July 2017 for reporting to work late. 18.She also testified that on 9th October 2017, the Claimant was issued with a verbal warning after misposting a customer's cheque deposit, contrary to the Respondent’s operating procedures. 19.According to RW1, the Respondent operates a comprehensive annual performance management system under which employees are assigned quarterly performance targets that are reviewed at the end of each quarter. She explained that employees whose performance falls below the expected standard are placed on a Performance Improvement Programme (PIP), during which they receive coaching and support from their team leaders with a view to improving their performance. 6

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20.RW1 testified that the Claimant’s performance fell below the Respondent’s expectations, having been rated unsatisfactory for three (3) consecutive quarters. 21.She stated that the Claimant was consequently placed on a PIP and provided with the necessary coaching and support. 22.It was RW1’s testimony that the Claimant was invited to a PIP review meeting on 21st November 2017 to review his 3rd quarter performance, during which he undertook to improve his performance in the 4 th quarter. However, according to RW1, his performance at the end of the 4 th quarter of 2017 remained unsatisfactory. 23.RW1 further testified that before the PIP review meeting of 21 st November 2017, the Claimant had already been notified of his poor performance through a letter dated 1st September 2017. 24.She denied the Claimant’s assertion that the 2017 performance targets had not been shared, discussed and agreed upon at the beginning of each quarter, maintaining that the targets formed the basis upon which his performance was assessed and ultimately rated unsatisfactory. 7

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25.RW1 further testified that the Claimant was invited to a subsequent PIP review meeting held on 15th February 2018. She stated that he was informed of his right to be accompanied by a fellow employee or a representative of the staff union and was also afforded an opportunity to present documentary evidence regarding his performance. 26.According to RW1, the Claimant attended the meeting accompanied by a union representative, Kennedy Mwangi. She further testified that during the meeting, the Claimant acknowledged that he was aware that continued unsatisfactory performance could result in the termination of his employment. 27.RW1 testified that the Respondent thereafter terminated the Claimant’s employment on 9th March 2018 pursuant to Clause A5 of the CBA, which she maintained was done through a fair and lawful process. 28.She further stated that the Claimant appealed the decision through a letter dated 26th March 2018 and that the Respondent duly considered and responded to the appeal. 8

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29.RW1 further testified that following the termination of the Claimant’s employment, the Respondent computed and credited his terminal dues to his account and processed his pension benefits. 30.With regard to the Counterclaim, RW1 testified that the Claimant remained indebted to the Respondent in the sum of Kshs. 1,572,959.99, being the outstanding balance on the staff loan facilities advanced to him. Submissions 31.It was submitted on behalf of the Claimant that there were no valid grounds for terminating his employment on account of unsatisfactory performance. In this regard, it was argued that the Claimant was not provided with the requisite training following his change in role from Teller to Sales and Service Advisor, that the performance targets were neither discussed with nor agreed upon by him, and that the targets set were unrealistic and unachievable. 32.It was further contended that the Respondent failed to follow a fair procedure in terminating the Claimant's employment, in that it neither issued him with a Notice to Show Cause nor afforded him an opportunity to be heard at a capability hearing before dismissing him. 9

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33.In support of the Claimant’s submissions, reliance was placed on the case of Walter Ogal Anuro v Teachers Service Commission (2013) eKLR and Jane Samba Mukala v Oltukai Lodge Ltd (2013) eKLR. 34.On the other hand, it was submitted by the Respondent that it had established a valid and fair reason for terminating the Claimant's employment, and had therefore satisfied the threshold set out in the case of Jane Samba Mukala v Ol Tukai Lodge Ltd [supra]. 35.It was further contended that the Respondent did not comply with fair procedure when it dismissed the Claimant from employment as he was not issued with a notice to show cause and was not invited to a capability hearing. 36.Referencing the case of National Bank of Kenya v Mutonya (Civil Appeal 118 of 2017) [2019] KЕСА 404 (KLR) (6 August 2019) (Judgment), the Respondent further posited that termination of the Claimant's employment was procedurally fair. 37.It was further submitted that the Respondent had proved its Counterclaim and established that the Claimant was indebted to the Bank in respect of the outstanding staff loans, thereby entitling it to the reliefs sought in the Counterclaim. 10

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Analysis and Determination 38.Having considered the pleadings, the evidence on record and the parties’ respective submissions, the Court finds that the following issues fall for determination: a) Whether the Respondent has established a valid and fair reason for terminating the Claimant’s employment on the ground of unsatisfactory performance. b) Whether the termination of the Claimant’s employment was effected in accordance with the requirements of procedural fairness. c) Whether the Claimant is entitled to the reliefs sought. d) Whether the Respondent has proved its Counterclaim. Valid and fair reason? 39.Sections 43 and 45(2)(a) and (b) of the Employment Act place the burden on an employer to prove the reason for terminating an employee’s employment and to demonstrate that the reason was valid and fair. More importantly, such reason must relate to the employee’s conduct, capacity or compatibility, or be founded on the employer’s operational requirements. 40.In the present case, the Respondent terminated the Claimant’s employment on the ground of unsatisfactory performance. Specifically, the Respondent has maintained that the Claimant had failed to improve his performance 11

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between the 2nd and 4th quarters of 2017, his performance having consistently been rated as unsatisfactory. 41.The record bears that following the Claimant’s performance appraisal for the 2nd quarter of 2017 (1st April to 30th June 2017), he was placed on a PIP after being rated as having performed below the expected standard. 42.The evidence further reveals that the Claimant was placed on a three-month PIP commencing on 20th July 2017 and ending on 20th October 2017. The PIP identified specific key result areas as being teller queue time, teller transactions, channel migration, product holding, sales referrals and behaviour. The PIP also set out the detailed actions required to improve performance, key performance indicators, the specific support and guidance to be provided, and the timelines for achieving the required improvements. The PIP document indicates that it was discussed and agreed upon by the Claimant and his Team Leader on 28 th July 2017 and subsequently reviewed and signed by the Human Resource Business Partner on 31st July 2017. 43.Upon review of the Claimant’s performance for the 3 rd quarter of 2017 (1st July to 30th September 2017), his overall performance rating had declined to 60.4%. His immediate supervisor observed that his performance had deteriorated despite the PIP, while the secondary reviewer attributed the poor 12

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performance to indiscipline, lack of focus and insufficient commitment to critical performance areas, including sales, teller transactions and customer experience. The reviewer further noted that these shortcomings persisted despite the support accorded to the Claimant under the PIP. 44.The Claimant’s performance for the 4th quarter of 2017 (1st October to 31st December 2017) was subsequently assessed and yielded an overall score of 76.3%. Although this reflected some improvement, the secondary reviewer observed that the Claimant remained unfocused, required close supervision and continued to present management challenges in relation to both conduct and productivity. The reviewer further noted that despite the support provided through the PIP, the Claimant had failed to achieve the desired improvement and that customer complaints regarding slow service persisted. 45.On his part, the Claimant has contended that following the enrichment of his role from Teller to Sales and Service Advisor, effective 3 rd July 2017, he was neither trained nor inducted into the new responsibilities before being assigned sales targets. 46.In support of his position, the Claimant has referenced Clause 22.13 of the Respondent’s Staff Manual, which exempts employees who have served in a new role for less than six (6) months from being placed on a PIP. 13

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47.That argument, however, is not plausible for the reason that the Claimant had already been rated as having performed unsatisfactorily following the 2nd quarter performance appraisal covering the period from 1st April to 30th June 2017, prior to the enrichment of his role to include sales and service responsibilities. 48.In addition, the evidence demonstrates that the enrichment of the Claimant’s role did not replace his duties as a Teller. Indeed, the key result areas against which his performance was assessed under the PIP, specifically teller queue time, teller transactions, channel migration and behaviour, remained substantially the same as those used in evaluating his performance during the 2nd quarter, prior to the enrichment of his role. 49.Similarly, the key result areas against which the Claimant was assessed during the 3rd and 4th quarters of 2017 remained substantially unchanged, including channel migration, teller queue time, sales, teller transactions and behaviour. 50.It is also notable that in both the 3rd and 4th quarter performance reviews, the Claimant identified selling skills as one of the competencies that enabled him to achieve his key performance indicators. The only area in which he 14

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requested further support was credit appraisal. Notably, he did not indicate that he lacked the training or capacity to perform in the identified key result areas. 51.The Claimant also contended that he was only issued with his performance targets on 17th November 2017, barely one month before the end of the review period. The documentary evidence on record does not support that assertion. Quite the contrary, the record shows that the Claimant acknowledged and signed the PIP targets on 28th July 2017, shortly after the commencement of the PIP, and again on 27th October 2017. Indeed, it was against these targets that the Claimant’s performance for the 3 rd and 4th quarters was evaluated. 52.The Claimant further argued that some of the performance targets, particularly those relating to channel migration, were unrealistic given the rural setting of the Murang’a Branch, where many customers continued to prefer over-the-counter banking and lacked access to smartphones and online banking platforms. He also maintained that the teller queue time targets were impracticable, as he could not sacrifice quality customer service merely to achieve shorter waiting times. 53.In light of the Claimant's assertions, the Court notes that he neither indicated nor suggested that the performance targets were applied selectively to him, 15

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to the exclusion of other employees serving in the same position. In any event, several of the key performance indicators against which the Claimant was assessed, including teller transactions, teller queue time and workplace behaviour, had been in place even before his role was enriched. 54.What’s more, the Claimant did not raise any of these concerns in his letter dated 21st November 2017, wherein he provided an explanation regarding his performance appraisal for the 2nd and 3rd quarters. On the contrary, he acknowledged that he had not put sufficient effort into meeting his key performance indicators as he had focused on the long wins. Although he attributed some of his challenges to what he perceived as a harsh working environment and unfair treatment by his manager, citing, among other things, a warning letter issued after he had taken his wife to hospital, he nevertheless undertook to improve his performance and focus on achieving quick wins. Notably, he did not contend that the performance targets themselves were unrealistic or incapable of being achieved. 55.All things considered, the Court is persuaded that the Respondent has proved, on a balance of probabilities, that the Claimant’s performance consistently remained below the expected standard during the 2 nd, 3rd and 4th quarters of 2017. Consequently, the Respondent has established that it had a 16

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valid and fair reason to terminate the Claimant’s employment on account of unsatisfactory performance. Procedural fairness? 56.Section 45(2)(c) of the Employment Act obliges an employer to demonstrate that, before terminating an employee’s employment, it complied with the requirements of procedural fairness. 57.The specific procedural safeguards are set out under Section 41 of the Employment Act. In this regard, an employer is required to notify an employee of the reasons for which termination is being contemplated and to accord the employee an opportunity to respond to those allegations. In doing so, the employee is entitled to be accompanied by a fellow employee or a shop floor union representative of his or her choice. 58.The Claimant contends that the Respondent failed to comply with these statutory requirements, maintaining that he was neither issued with a Notice to Show Cause nor invited to a capability hearing before his employment was terminated. 59.The record bears that while the Claimant was still undergoing the PIP, the Respondent issued him with a letter dated 1st September 2017 requiring him 17

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to explain his poor performance in relation to sales and referral updates and to indicate the support he required to improve. 60.In his response, the Claimant explained that although he had been updating his referrals on the lead system, many had not translated into actual sales because some customers failed to meet one or two conditions. He further undertook to be more proactive in engaging both customers and the relevant officers to improve conversion rates and to address any barriers that impeded performance. 61.Thereafter, the Claimant was invited to a PIP review meeting held on 21 st November 2017. He was informed through a letter dated 11th December 2017 that his performance would be reviewed again at the end of the 4 th quarter, following which the Respondent would make an appropriate determination based on the outcome of that review. 62.Following the 4th quarter evaluation, the Claimant was invited to a further PIP review meeting scheduled for 15th February 2018. The invitation informed him that he had not achieved the required improvement during the 4th quarter and expressly notified him that, under the Respondent’s policy, continued poor performance could result in the termination of his employment. He was further advised of his right to be accompanied to the meeting by a fellow employee or a central staff union official and was 18

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invited to submit a written explanation together with any representations regarding his performance. 63.It is apparent that after the said meeting of 15 th February 2018, the Respondent proceeded to terminate the Claimant’s employment. 64.In light of the foregoing, the Court is persuaded that the Respondent substantially complied with the requirements of procedural fairness under Section 41 of the Employment Act. This is for the reason that through the letters dated 1st September 2017 and 11th December 2017, the Claimant was notified that his performance had fallen below the expected standard. In particular, the letter of 1st September 2017 required him to explain his poor performance, and he duly responded through his letter dated 4th September 2017. 65.Further, the Claimant was invited to two PIP review meetings. In particular, the invitation to the meeting scheduled for 15 th February 2018 reminded him that his performance had remained below the required standard and expressly informed him that continued poor performance could result in the termination of his employment. 66.In addition to this, the Claimant was advised of his right to be accompanied by a fellow employee or a union representative. The record further indicates 19

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that he attended the meeting in the company of a union representative, Kennedy Mwangi. 67.Accordingly, although the meeting of 15th February 2018 was described as a PIP review meeting rather than a disciplinary hearing, it embodied the essential requirements contemplated under Section 41 of the Employment Act. 68.As to the Claimant's contention that he was not served with a Notice to Show Cause, the Court is of the respectful view that Section 41 of the Employment Act does not prescribe any particular form of the notice through which an employee is informed that termination is under consideration. 69.The critical consideration is whether the employee was made aware of the allegations against him, informed that termination was being considered, and afforded a reasonable opportunity to respond in the presence of a fellow employee or a union representative of his choice. The Court finds that the Respondent satisfied those requirements in the present case. 70.Accordingly, the Court is unable to fault the process applied by the Respondent in effecting the Claimant’s termination from employment. Reliefs? 20

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71.Having found that the Respondent has proved, on a balance of probabilities, that the Claimant’s employment was terminated for a valid and fair reason and that the termination was effected in accordance with the procedural requirements envisaged under Section 41 of the Employment Act, the remedies of reinstatement, compensation for unfair termination and damages cannot be sustained. Merit in the Counterclaim? 72.In its Counterclaim, the Respondent initially sought Kshs. 4,096,198.13, being the alleged outstanding balance on the loan facilities advanced to the Claimant during the subsistence of his employment. However, during the hearing, the Respondent revised the amount claimed to Kshs. 1,572,959.99, explaining that part of the outstanding debt had since been recovered through the sale of the charged property. 73.The Claimant did not adduce any evidence to demonstrate that the outstanding loan balance had been settled or to otherwise controvert the Respondent's claim. 74.In the absence of any evidence to the contrary, the Court is satisfied that the Respondent has proved its Counterclaim on a balance of probabilities. 21

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75.Accordingly, the Court finds in favour of the Respondent on this issue, and its Counterclaim succeeds to the tune of Kshs 1,572,959.99. Orders 76.In the final analysis, the Claimant’s claim is dismissed in its entirety with an order that each party shall bear its own costs in respect of the Claim. 77.Judgment is entered in favour of the Respondent on its Counterclaim in the sum of Kshs. 1,572,959.99, being the outstanding balance of the loan facilities advanced to the Claimant. The said amount shall attract interest at the applicable rate from the date of this judgment until payment in full. 78.Although the Respondent has succeeded in its Counterclaim and would ordinarily be entitled to an award of costs, the Court declines to make such an award. This is because the Respondent proceeded to sell the charged property in disregard of the orders issued by the Court on 2 nd December 2024. In the circumstances, the Respondent is denied the costs of the Counterclaim. DATED, SIGNED and DELIVERED at NYERI this 31st day of July 2026 ……………………………… STELLA RUTTO 22

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JUDGE In the presence of: For the Claimant Ms. Kubai For the Respondent Ms. Mwangi instructed by Mr. Kimondo Court Assistant Ndati ORDER In view of the declaration of measures restricting court operations due to the COVID-19 pandemic and in light of the directions issued by His Lordship, the Chief Justice on 15th March 2020 and subsequent directions of 21st April 2020 that judgments and rulings shall be delivered through video conferencing or via email. They have waived compliance with Order 21 Rule 1 of the Civil Procedure Rules, which requires that all judgments and rulings be pronounced in open court. In permitting this course, this court had been guided by Article 159(2)(d) of the Constitution which requires the court to eschew undue technicalities in delivering justice, the right of access to justice guaranteed to every person under Article 48 of the Constitution and the provisions of Section 1B of the Civil Procedure Act (Chapter 21 of the Laws of Kenya) which impose on this court the duty of the court, inter alia, to use suitable technology to enhance the overriding objective which is to facilitate just, expeditious, proportionate and affordable resolution of civil disputes. STELLA RUTTO 23

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JUDGE 24

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