1. The Claimant through a Memorandum of Claim dated 8th October, 2020 pleaded inter alia: -
a) On or about the 14th December, the Respondent offered the Claimant employment as a Graduate Clerk.
b) The claimant's good performance, hard work and commitment to his job saw him rise through the ranks to the position of Business Banker-Small Enterprises. In the year 2017, the claimant notably ranked position 3 in the central region (immediate former Central and Eastern provinces) for outstanding performance.
c) The Claimants employment was subject to the Collective Bargaining Agreement between Kenya Bankers Association and Banking Insurance and Finance Union (Kenya)-for the entire period he was in employment with the defendant, the Employment Act 2007, the Constitution of Kenya 2010 and all other provisions of law.
d) Throughout the Claimants 10 years, 1 month & 22 days in employment by the respondent, the claimant had never received any warning letters over his performance or subjected to any disciplinary proceedings by the respondent herein regarding unsatisfactory or poor performance.
e) In the year 2019, a move calculated to label the claimant as a non-performer with an ulterior motive/intention of terminating his employment was hatched by the respondent whereby:
i) The claimant's deposits portfolio was changed at around mid-June 2019 to make him appear not to have achieved the deposits targets whose base was as at 31/12/2018 and the claimant's effort to have his targets rebased or deposits returned or have this factored in as a contextual factor affecting his achievements with both his supervisor and HR business partner fell on deaf ears. No action was taken and that prejudiced our client amounting to discrimination and unfair administrative action in that the members of staff who received the said deposit portfolio were made to appear as high performers and the claimant as a non-performer.
ii) The claimant's loan book was reduced by transfer of a portion of his portfolio to a newly transferred staff from another branch to the claimant's branch and this was never considered/factored in or his targets rebased to accommodate these changes. Again, the claimant's effort to have his loan book rebased or have these factors put into consideration were not considered again labelling the recipient staff as high performer to the detriment of the claimant.
iii) There was a huge loan write-back of about 48 million from a client who had stopped servicing their loan with the respondent. There were also other loans cleared by respondent's clients following improvement of their economic status-a factor which the claimant had no control of as it is the right of every borrower to clear outstanding loan(s) with a financier before maturity of their loan(s) and the employee managing such a client ought not to be punished because of clients exercising the aforesaid right The claimant requested his supervisor/branch manager and Human resource business partner to consider the same all in vain. It's worth noting that the claimant was only about one year old at this work station (branch) after being transferred from Nkubu branch thus he was still in the process of cementing strong business relationship with respondent's client as well as acquiring new clients in the new business market¬ business relationships are built over time.
f) To our client's shock and dismay, and in blatant and outright breach of our client's constitutional and employment rights, the respondent maliciously and with no reasonable cause issued a letter of termination to our client dated 17th February 2020 dismissing him from employment for alleged "unsatisfactory performance".
g) The said termination was based on clause A5 of the Collective Bargaining Agreement for Bankers for the year 2019/2020 (hereinafter referred to as the "CBA"). The allegation of "unsatisfactory performance" is envisioned in clause 5A (2) of the said CBA which provides that dismissal may be effected after 2 warnings in writing, with dismissal being effected on the third offence being committed. This should be done if after due investigation by the management concerned the employee is considered guilty. The claimant was neither issued with any warning letters nor were there any investigations conducted that found him guilty.
h) Further, it has been the claimant's practice to issue written warning letters to actual and genuine low performers before terminating their employment in accordance to the CBA and its Staff manual. This was not done in the claimant's case amounting to discrimination.
i) Further, the claimant was neither issued with a Notice to show Cause letter nor was he subjected to a disciplinary hearing as provided for under section 41 of the Employment Act. The termination was therefore against the principles of natural justice as the claimant was not given an opportunity to be heard as provided under the Constitution of Kenya 2010 and the International Labor Organization (ILO) Termination of Employment Convention, 1982 (No.158).
j) The claimant was discriminated against based on the claimant's experience, age, ethnicity and monthly pay since other staff members with similar performance as that of the claimant didn't have similar action taken against them. It's worth noting that majority of staff members had a similar performance achievement and it was communicated severally by the team leader (branch manager) but they were not treated the way the claimant was treated. The portfolios of other employees (both deposits and loan book) were never changed and if there was any change, rebasing was done or this was considered in gauging their performance thus they were not prejudiced by the respondent the way the claimant was prejudiced.
k) Further, section AB20 of the CBA provides for a maximum working period of 41 hours per week or 164 hours in any 28 days working cycle. For the entire period that the claimant was in employment of the respondent, he worked for an extra 51 hours per every 28 days cycle. The claimant was and is therefore entitled, Pursuant to section AB21 of CBA to payment of the entire amount of the accrued overtime at the rate of 1.5 times per hour for the entire period that the claimant was employed by the respondent The claimant is therefore not only entitled to overtime, but is also entitled to interest on the accrued overtime.
l) The respondent refused to remit terminal benefits to the claimant for the unutilized leave days to his account contrary to sections 17, 18 & 19 of Employment act 2007.
2. The Claimant in the upshot sought several prayers including:
i) A declaration that COOPERATIVE BANK OF KENYA LIMITED unfairly and unprocedurally terminated the employment of ISAIH KARIUKI NGUU
ii) A declaration that the respondent's actions were in breach of the Claimants Constitutional Rights as to fair administrative action and non¬discrimination in the work place.
iii) An order for Compensation for Kshs.2,707,800 for unfair termination Pursuant to Section 45 of the Employment Act 2007 and Article 21 of the Constitution of Kenya 2010 (gross salary -Kshs.225,650 times 12 months)
iv) An order for Compensation for unfair administrative action, discrimination in the place of work and violation/ infringement of constitutional rights as enshrined in the bill of rights pursuant to article 23 of 2010 constitution, at an appropriate amount to be determined by this honourable Court.
v) An order for payment of Kshs.11,909,917.43 overtime plus interest thereof plus damages for denial/non-payment of this entitlement i.e freedom from forced labour, slavery & servitude as per article 30 of 2010 constitution of Kenya calculated as follows;
51hrs X 121.7857 months X 1.5 X 209,650/164 =Ksh 11,907,077
vi) An order for payment of Unpaid salary & allowances of Kshs 1,353,900 plus attendant interest thereof. - calculated as follows;
225,650 x 6 (April 2020 to September 2020)
3. The Respondent in response filed a Response to the Memorandum of Claim & Counterclaim dated 2nd December, 2020 and averred inter alia:-
I. In answer to paragraph 8 of the Statement of Claim, the Respondent only admits that there was a change of the Claimant’s job profile/code but all the other allegations contained therein are vehemently denied and the Claimant is put to strict proof thereof.
II. In further answer to paragraph 8 of the Statement of Claim, the
Respondent avers that:-
a) pursuant to the said change, the Claimant’s profile/code changed from small and THI Banker to Small Enterprises Banker;
b) Upon change of the profile/Code, rebasing is done automatically and therefore the Claimant’s allegations contained at paragraph 8(a) is baseless and without any merits whatsoever;
c) the allegations contained at sub-paragraph 8(b) are vehemently denied and the Claimant put to strict proof thereof.
d) the averment contained at sub-paragraph 8|cj has no merits whatsoever in that it is a normal business operation for loan write-backs and therefore the write-back of Kshs.48,000,000/- pleaded thereat was not expected to affect the Claimant’s portfolio and at any rate, Bankers including the Claimant are encouraged and advised to diversify their loan book so as to cushion themselves against such write-backs.
e) Further, the Claimant was not new in the role as he had already served in that capacity for a year.
III. Save for the fact that the Claimant’s employment was terminated on 17th February, 2020 on account of unsatisfactory performance, all the other allegations contained at paragraph 9 of the Statement of Claim are vehemently denied and the Claimant’s put to strict proof thereof.
IV. In further answer to paragraph 9 of the Statement of Claim, the Respondent avers that:-
a) the Claimant failed to meet the Bank’s performance standards for the 2nd and 3rd quarter of 2019 respectively and after being taken through a robust performance improvement plan and provided with the necessary support and coaching, he failed to improve, full particulars of which are well within the Claimant’s knowledge.
b) Subsequent thereto, the Claimant was vide a letter dated 9th January', 2020 invited for a performance improvement programme review meeting of 17th January, 2020;
c) As scheduled, the Claimant attended the performance improvement programme of 17th January , 2020 and after being given a hearing, he was unable to give any satisfactory reason as to why he was unable to meet his targets and hence the summary dismissed. In the circumstances, the Claimant’s allegation that the termination of his employment was malicious and with no reasonable cause is without any merits whatsoever.
V. In answer to paragraph 10 of the Statement of claim, the Respondent only
Admits that the termination of the claimant’s employment was based on Clause A5 of the collective Bargaining Agreement (CBA) for unsatisfactory performance as provided thereafter but all the other allegations therein are denied and the Claimant is thus put to strict proof thereof.
VI. In answer to paragraph 11 of the Statement of Claim, the Respondent avers that:-
i) the Claimant’s performance was correctly assessed as stipulated in the Respondent’s Performance Management Policy Manual contrary to the allegations made thereat;
ii) the Claimant’s change of profile as pleaded hereabove did not in any way affect his key performance indicator [targets]and therefore his alleged set backs are purely intended to hoodwink this Honourable Court.
iii) the Claimant was taken through a robust performance improvement plan and coached and therefore his allegation that he was never coached when he was a member of staff is without any merits whatsoever.
iv) the allegations contained at sub-paragraph [c] is denied.
v) in answer to sub-paragraphs [d], [e] and [f], the Respondent avers that the Claimant’s termination was for a good reason and procedural contrary’ to his allegations.
VII. The allegation contained at paragraph 12 of the Statement of Claim is untrue in that the Claimant was paid one month’s salary in lieu of notice in accordance of the provisions of Clause A5 of the CBA.
VIII. In answer to paragraph 14 of the Statement of Claim, the Respondent avers that prior to the termination of the Claimant’s employment, he was invited to a Performance Improvement Review Meeting and therefore his allegation that he was not given an opportunity’ to be heard as provided under the Constitution of Kenya, 2010 and the International Labour Organization [ILO] Termination Of Employment Convention, 1982[No. 158] is not true.
IX. In answer to paragraph 15 of the Statement of Claim, the Respondent reiterates that the termination of the Claimant’s employment was on account of unsatisfactory performance and therefore his allegation of discrimination allegedly based on his experience, age, ethnicity and monthly pay is baseless, untenable and without any merits whatsoever.
X. In answer to paragraph 18 of the Statement of Claim, the Respondent denies the Claimant's allegation that for the entire period of his employment, he worked for an extra 51 hours per every 28 days circle is a blatant falsehood and he is thus put to strict proof thereof. In the circumstances, the Claimant claim for an order for payment of Kshs.l 1,909,917.43 as overtime has no basis in law and the same is untenable.
XI. In further answer to paragraph 18 of the Statement of Claim and without prejudice to the foregoing, the Respondent avers that even if the Claimant worked the alleged overtime- but which is hereby vehemently denied- the same is not payable in that as per the Respondent’s Overtime Policy, a claim for overtime ought to be lodged not later than 2 months upon the overtime being worked.
XII. In answer to paragraph 19 of the Statement of Claimant, the Respondent avers that the Claimant was paid all his terminal benefits including unutilized leave days all amounting to Kshs. 105,150.55 by crediting the same into his Co-op Sacco account to offset his outstanding Sacco loan, full particulars whereof are well within the Claimant’s knowledge.
XIII. In answer to paragraph 21 of the Statement of Claim, the Respondent avers that it has since re-issued the Claimant with a fresh Certificate of Service including the courses he attended as per the records maintained by the Bank.
XIV. The Respondent avers that in the course of the Claimant’s employment, it made and/or advanced to the Claimant a loan facility on account of house loan and personal loan [FBT INT] and in respect of which a sum of Kshs.5,901,933.58 and Kshs.302,349.65 respective, all amount to Kshs.6,204,283.23 was due and owing, full particulars of which arc well within the Claimant’s knowledge.
XV. The Respondent avers that at the time of termination of the Claimant’s employment, a sum of Kshs. 6,204,283.23 on account of the aforesaid loan facilities was due and owing to the Respondent as particularized hereunder:
Kshs.
a) House Loan 5,901.933.58
Personal Loan 302,349.65
6,204,283,23
XVI. In view of the matters pleaded at the preceding paragraphs of the Response and the Counterclaim, the Respondent Counterclaims against the Claimant the said sum of Kshs. 6,204,283.23 with interest at the Respondent’s commercial lending rate of 13%p.a. on reducing balance from 17th February, 2020 until full payment.
4. The Respondent in the upshot prayed as against the Claimant that the Claimant’s suit be dismissed with costs and judgment against the claimant on the counterclaim for Kshs. 6,204,283.23 with interest at Respondent’s Commercial lending rate of 13% p.a on reducing balance from 17th February, 2020 until payment if full.
5. The claimant in response to the defence and counterclaim stated:
i) In response to paragraph 5 of the Respondents Statement of Defense the
Claimant avers that;
a. The change of the Claimant's portfolio as per paragraph 4 (a) and 4 (b) of the Respondent's statement of defense highly prejudiced the claimant as he lost very many deposits and this was never put in to consideration in determining his performance.
b. In further response to paragraph 4 (b) of the Respondent's Statement of Defense, the claimant reiterates the contents of paragraph 8 (a) of the Statement of Claim and further states that the assertion that rebasing is done automatically is a blatant lie.
c. In response to paragraph 4(c) of the Respondents Statement of Defense, the claimant reiterates the contents of paragraph 8(b) of the Statement of Claim.
d. In response to paragraph 4(d) of the Respondents Statement of Defense, the claimant states that the said write-back greatly prejudiced the claimant taking in to account that the Ksh.48 Million was a bad debt written off but recovered through the hard work of the claimant as the officer managing the portfolio.
e. In response to paragraph 4(e) of the Respondent's Statement of Defense and Counterclaim, the claimant states that he had just been transferred to a new branch and his portfolio changed.
ii) In responses to the paragraph 6 of the Respondents Statement of Claim;
a. The claimant denies the contents of paragraph 6 (a) of the Respondent's Statement of Defense and Counterclaim.
b. The contents of paragraph 6(b) of the Statement of Defense are admitted save to reiterate the fact that after the Performance Review Meeting, the claimant was not subjected to a disciplinary hearing as envisioned in section 10.9 of the Respondent's Staff Manual.
c. The claimant denies the contents of paragraph 6(c) of the Respondent's Statement of Defense and further states that he explained all the setbacks that he had encountered in the course of his employment during the said Performance Review Meeting and the concerns were never taken into account. The meeting was merely for purposes of procedure with the sole intent of dismissing the claimant without following due process.
iii) In response to paragraph 7 of the Respondents statement of defense, the claimant reiterates the contents of paragraph 10 of the statement of claim and particularly that he was never issued with any warning letters on account of unsatisfactory Performance.
iv) The claimant reiterates the contents of paragraph 14 of the Statement of Claim in response to paragraph 11 of the Respondent's statement of defense and particularly states that the Performance Improvement Review Meeting did not and cannot in any way be a substitute for issuance of a Notice to show cause letter and subjection to a Disciplinary hearing as provided for in the Respondents Staff Manual, the Employment Act, the Constitution of Kenya 2010 and the International Labour Organization (ILO) Termination of Employment Convention 19782 (NO 158).
v) In response to paragraph 16 and 17 of the Respondent's Statement of Defense, the Claimant reiterates the content of paragraph 18 of the Statement of Claim and further states as follows;
a. The Respondent is in possession of all Overtime Records and Attendance sheets and the same cannot be accessed by the Claimant.
b. Overtime Records are to be forwarded to the Human Recourses Department by Heads of Departments and Branch Managers of the Respondent and not the claimant as per the Respondents Policy on Overtime.
c. The Heads of Departments and Branch Managers always denied any application for overtime as they were under strict instructions from the respondent on cost management.
d. It is the same Heads of Departments and Branch Managers who would call for Staff Meetings before and after working hours and would thereafter refuse to forward overtime records to the Human Resource Department for payment in blatant breach of the Collective Bargaining Agreement and the Respondent's own staff manual.
vi) In response to paragraph 18 of the Respondents Statement of Defense, the claimant reiterates the contents of paragraph 19 of his Statement of Claim and particularly states that his dues were not remitted to him but were credited to Co-operative Sacco Account in Breach of the Employment Act 2007.
vii) In response to paragraph 20 of the statement of claim, the claimant admits that a fresh Certificate of Service has been issued in the course of these proceedings pursuant to this Honorable Court's order made on 17th November 2020.
viii) The claimant admits the contents of paragraph 25,26 and 27 of the
Counterclaim in as far as they are merely the loan amounts advanced
to the claimant and the amounts owing the Bank (the Respondent) at
the time of the Claimant's termination.
ix) In further response to paragraph 25,26 and 27 of the counterclaim the claimant states that;
a. The house loan was advanced to the claimant at a lending rate of 6.0 % per annum on a reducing balance and to date that is the interest rate that the claimant has been paying.
b. The personal loan was also advanced to the claimant at the lending rate of 6.0 % per annum on a reducing balance and to date the claimant has been paying the loan at the said interest.
c. That it was an express agreement that since the claimant had been in the Respondent's Employment for over 10 years, the interest rate would not be revised after termination.
x) In response to paragraph 28 of the Respondent's counterclaim, the claimant states that the respondent's claim for the sum of Kshs 6, 204, 283.23 with interest at the lending Rate of 13% on a reducing balance is malicious with no reasonable cause and is without any merits whatsoever in law.
xi) In further response to paragraph 28 of the Respondents counterclaim, the claimant avers that his termination from employment was unlawful and unprocedural and the Respondent cannot use this Honorable Court to advance its ill doing against the claimant by using the court to revise the interest Rate from 6.0% per annum to 13% per annum.
EVIDENCE
2. At the oral hearing, the Claimant stated that he recorded a witness statement on 18th October, 2020 which he relied on as his evidence in chief. He also relied on his documents filed with the claim, supplementary documents dated 23rd November, 2020 and further documents dated 16th December, 2020. It was his evidence that he was employed by the respondent on 14th December, 2009 and that he was terminated on account of unsatisfactory performance. According to the claimant, he was never issued with any warning letter prior to the termination and that he was not taken through any disciplinary hearing. Concerning hours of work, it was his evidence that he used work from 7.00 a.m and leave sometimes late at night and that they used work about 10 hours per day. The CBA provided for 41 hours a week and actual working hours could average 220 to 230 per month. He stated that he was never paid overtime.
3. The claimant further stated that he was employed by the respondent for slightly over 10 years and that the loan was issued in accordance with the staff manual. It was secured by a charge and he has not been servicing the loan since he had not secured any employment.
4. In cross-examination he stated that he was employed in December, 2009 and that the contract provided for one month’s notice of termination or salary in lieu. It was his evidence that the respondent transferred his deposit portfolio to his colleagues so they could seem to be performing better than him. It was further his evidence that his ethnicity, age and earnings were reasons for discrimination. The respondent knew his ethnicity. The claimant stated that he was promoted in the course of his employment and that his ethnicity was known during the promotions and that promotions were on account of dedicated and consistent performance.
5. Concerning warning, he reiterated that he was not given any warning letter prior to termination but admitted that he had two previous warning letters about three years back and that he never responded to the same. According to him, the warning letters did not imply he lacked integrity. He was accused of flouting the Bank’s procedures. The claimant stated that the respondent had targets and that there was weekly performance dashboard and that inputting on the dashboard was by the employer but the employee could question the input.
6. Concerning performance appraisal, the claimant stated that he attended the appraisal meeting and that he signed the minutes found at page 36-37 of RBD. He however complained via email to HR about the issues. He denied saying he could not meet his targets. The claimant further stated that he was appraised by his line manager and that there was self-appraisal and then discussion with one’s supervisor. According to the claimant, there was change in portfolio that affected his performance. He complained through email about the change of portfolio.
7. Regarding the loan, it was his evidence that he did not dispute taking it and that the low interest was a privilege to employees. He denied that interest would convert to commercial rates upon termination of employment. The claimant admitted being put on PIP but denied he never met his targets. Regarding termination letter, it was his evidence that the termination letter gave reasons for the termination and that he never appealed the termination. His terminal dues were computed and deposited on his SACCO account. He admitted owing the SACCO some money at the time of termination. He was paid his pension dues and signed for them.
8. In reexamination he stated that reasons for discrimination was unequal treatment and that at the time of termination, there was no recent warning letter and that warning letters had nothing to do with her termination. The claimant stated that after the PIP meeting he was never subjected to any disciplinary hearing.
9. The respondent’s witness Ms. Leah Kerich informed the Court that she was the Respondent’s Employee Relations Manager and that she recorded a witness statement on 4th December, 2020 which she adopted as a her evidence in chief. She also relied on the bundle of documents filed with the response dated the same date as her exhibits in the case and further bundle of documents dated 11th March, 2024.
10. According to Ms. Kerich, the claimant was warned. The warnings had nothing to do with the claimant’s termination of employment. She denied there was any discrimination against the claimant. Performance management applied to all staff and not only the claimant. He was taken through the PIP. The targets were set by the respondent together with the claimant. It was her evidence that the dashboard was where the employer could monitor employee’s performance and that employees were free to raise any questions or grievance on the displays on the dashboard.
11. Regarding appraisal, the staff appraises themselves first and that there was a performance rating scale. Performance below “Met” was considered unsatisfactory and that an employee needed two “need improvement” before being put on PIP but “Unsatisfactory” was only once. The claimant was classified as “unsatisfactory” twice before being put on PIP. There was support provided. It was her evidence that the claimant did not improve even after PIP. He was therefore invited for a Performance Review Hearing which was a disciplinary hearing. According to the witness, the claimant had no reason not to turn around his performance. A decision was therefore made to terminate his service. Concerning accounts, it was Ms. Kerich’s evidence that no account was taken away from the claimant and that the claimant never complained of being wrongly appraised. Other employees were also take through the appraisal process. She denied there was any discrimination against the claimant.
12. Concerning overtime, she denied the claimant worked overtime and that there was overtime policy (page 60-68 Staff Manual). The claim for overtime had to be submitted within two months yet the claimant never made any such claim meaning there was no overtime. Concerning interest on loans, it was her evidence that staff rates only applied to serving staff and that upon termination commercial rates applied.
13. In cross-examination, Ms. Kerich stated that the claimant was terminated on account of poor performance and that no warning letter was issued to him prior to the termination. It was her evidence that she was familiar with the CBA and that it provided for termination of employment. Dismissal was to take place after three warning letters. She stated that she could not remember if the claimant was issued with a notice to show cause and that there was none on record. She further stated that the claimant was called for a performance review meeting and terminated thereafter.
14. Regarding overtime, it was her evidence that the Team Leader approves and submits the same. Overtime could not be processed unless approved by the Team Leader. It was further her evidence that time should be available for one to take off-days. She however had nothing before the Court to show the claimant took off-days. Further, employees had room to raise grievances if overtime is not paid. No such grievance was raised by the claimant. She stated that all meetings were held before 8:00 am or after 5:00 pm and that they were on selected days and no one was forced to attend and that all staff concerned agreed to this and that no one claimed overtime.
15. Concerning terminal dues, it was her evidence that these were paid to the claimant. The payments were deposited in the claimant’s SACCO account to offset his loans.
16. In re-examination she stated that the claimant had SACCO loans. The SACCO was the Bank’s SACCO and served its employees. The Bank therefore was obligated to recover loans to members on behalf of the SACCO. On overtime, the arrangement to report at 7:30 am or 5:00 did not qualify as overtime. It was actually for work planning for the benefit of staff and management. Concerning the Review Meeting, she stated that the letter of invitation to the meeting qualified as an invitation to a disciplinary hearing. It guided the employee about the nature and consequence of the meeting. Employees are asked to present evidence and come with a member of Central Staff Union Representative or another member of staff.
CLAIMANTS’ SUBMISSIONS
17. The Claimants’ Advocate Ms. T.J Michael submitted among others that during the 2nd quarter appraisal, the claimant discovered that there was significant drop in his deposit portfolio as a number of deposit accounts had been transferred to other Bankers in the Branch and this contributed to his low performance and the same was brought to the attention of his supervisor and Human Resource Business Partner but no action was taken. Further on or about August, 2019 the claimant was placed under three months’ performance improvement program (PIP) with no support or assistance whatsoever being accorded to him during the period. The claimant was thereafter invited for a performance review meeting on 17th January, 2020 to debate his alleged unsatisfactory performance for 3rd quarter of 2019. On 17th February, 2020 the claimant received a termination letter on account of unsatisfactory performance.
18. According to counsel, from the chronology of events set out above, the claimant was not subjected to any disciplinary hearing prior to his termination. Further, the respondent’s witness Ms. Leah Kerich confirmed that the claimant was not issued with any warning letter prior to his termination and was not invited to show cause as to why a disciplinary process should not be instituted against him. In this regard, Counsel relied on the case of Gichuru v. Package Insurance Brokers Ltd [2021] KESC 12 (KLR) and the case of Jane Samba Mukala v. Ol Tukai Lodge Ltd [2013]eKLR.
19. Ms. Michael further submitted that an employee who is terminated on grounds of poor performance following performance review should be called again in presence of another employee of their choice and be given a clear explanation for their dismissal. The claimant was never summoned again after the performance review meeting held on 17th January, 2020 alleging unsatisfactory performance. The procedure for termination was therefore flawed. In this regard counsel relied on the case of National Bank of Kenya v. Samuel Nguru Mutonya [2019] eKLR. Counsel further relied on clause A5(b) of the CBA on circumstances when dismissal for poor performance can take place. The offence must be committed three times within a period of twelve months and warnings in writing issued. According to Counsel, the respondent therefore breached its own procedures set out in the CBA and Staff Manual.
20. Counsel further submitted that despite the fact that the claimant had served the respondent for over ten years, no alternative disciplinary measures such as reassignment to another role as outlined in section X of the Staff Manual was considered before reaching the decision to terminate.
21. On the issue whether the performance review meeting could be considered as a disciplinary hearing, Counsel submitted that a performance review meeting is typically used to assess an employee’s performance over a specific period and provide feedback on areas that need improvement. It can serve as an opportunity for employees to reflect on their accomplishments and identify areas for growth and development. During the meeting, an employee and their supervisor can discuss the employee’s performance, strengths and weakness as well as set goals and objectives for the next review period.
22. According to counsel, the claimant was not informed that performance review meeting held on 17th January, 2020 was a disciplinary hearing. The claimant attended the meeting believing it to be a performance review, where his performance would be evaluated and discussed. The failure by the respondent to properly notify the claimant that the performance review meeting was in fact a disciplinary hearing violated basic principles of fairness and due process. Counsel contended that at page 36 of the respondent’s bundle of documents under minutes of the performance review meeting, the claimant was reminded that he was attending a performance review meeting and not a disciplinary hearing. Further respondent did not communicate with the claimant over what was discussed after the meeting until a month later when he was issued with a termination letter. Counsel relied on the case of Jasper Mwenda Ikiara v. HFC Limited [2015]eKLR. Counsel emphasized that the performance review meeting of 17th January, 2020 could not be a substitute for issuance of a notice to show cause letter and disciplinary hearing as provided under the respondent’s staff manual, the Employment Act, the Constitution and ILO Termination of Employment Convention 1982 (No. 58).
23. On the issue of discrimination, counsel submitted that the claimant provided in oral testimony that he experienced discrimination as he was not issued with any warning letter prior to his termination while another employee who had demonstrated poor performance received one. In that regard counsel cited the case of Telkom Kenya Ltd v. John O. Ochanda [2013] eKLR. Further, the respondent transferred the claimant’s deposit portfolio to other Bankers in the same branch and a part of his loan portfolio allocated to a newly transferred staff member making his achievement in appraisal unfairly low.
24. Ms. Michael further submitted that the claimant was subjected to unfair labour practice and servitude when all his computed dues were used to offset an outstanding loan with the SACCO. According to Counsel, the respondent did not provide any loan policy requiring that loans be recalled prematurely and offset using employee’s terminal benefits. According to counsel, loan agreements were distinct and independent from employment contracts hence the claimant’s rights as an employee and borrower were independent as he obtained the loan as a member of the SACCO. Counsel on this score relied on the case of Jane Kennedy Kiriro v. Equity Bank [2019]eKLR and Alice Ndaani & 5 Others v. Mwalimu National SACCO [2021] eKLR
25. On the Counterclaim, Counsel submitted that the Court lacked jurisdiction to entertain the same and grant the prayers sought. According to counsel, the purview of the Court related to employer-employee relationship yet the counterclaim invited the court to interpret and enforce the terms of a loan secured through a charge. Counsel sought reliance on the case of Thomas Mutuku Kasue v. HFC Limited & Another [2021]eKLR and Kisimani Holdings Ltd & Another v. Fidelity Bank Ltd [2013]eKLR. In the alternative counsel argued that the agreement between the claimant and the respondent was that the lending rate would remain fixed at 6% per annum on reducing balance. The respondent had promised to retain the lending rate in view of the claimant’s long service but had unilaterally revised the interest rate to 13% per annum. The revision according to counsel was in breach of the agreement and had caused the claimant financial hardship.
26. On the question whether the claimant was subjected to a fair PIP, Counsel relied on the case of Naumy Jemutai v. Unilever Tea Ltd [2020]eKLR. Kenya and submitted that PIP was a tool for providing training, guidance and assistance to an employee where an employee lacks the skill and knowledge or competencies to meet the employer’s performance standards. Counsel submitted that before placing an employee on PIP the employer must communicate this decision to the employee to enable them give details on the same. At page 61 of the respondent’s staff manual it was indicated that an employee who is placed on PIP should sign the PIP forms after a discussion and copies submitted within 7 days. This did not happen in the claimant’s case.
27. Further, an employee on PIP should be availed means and opportunities such as counselling, training, mentorship and coaching to help the employee achieve the desired results. According to counsel all laid down rules and procedures under section 4 of the staff manual were not followed in the claimant’s case. Ms. Michael submitted that there was nothing against the claimant to justify placing him on PIP. She further stated that the respondent did not produce any material showing any tool or system relied upon to measure the claimant’s performance. No evidence was laid before the court of warning, appraisal reports or other record of poor performance that may have prompted placing the claimant on PIP. In this respect Counsel relied on the case of Francis Ndeke Kyalo v. Cosmos Limited [2021] eKLR and Jane Samba Mukala v. Ol Tukai Lodge Ltd [2013]eKLR.
28. Counsel further submitted that the setbacks encountered by the claimant at his place of work starting with the transfer of his deposit portfolio to others and reduction of his loan book by transfer of a portion to a newly transferred staff from another branch were never considered. Ms. Michael contended that the questionable assessment coupled with failure to consider the setbacks raised serious concerns about the fairness and validity of the respondent’s appraisal process.
29. Concerning overtime pay, it was submitted that the claimant worked overtime and had never been compensated for the entire period of his employment. The respondent requested its employees through email, to work before and after normal working hours. Counsel submitted that although the respondent’s witness Ms. Kerich testified that overtime claim should be submitted within two months period by relying on overtime processing memo dated 15th September, 2009 addressed to all Heads of Departments and Branch Managers, however no evidence was produced to show the memo was shared with the claimant who was employed 14th December, 2009, three months after the memo was issued.
30. Concerning medical insurance, counsel submitted that both parties contributed to the insurance policy. However section 28 of Employment (General) Rules, 2014 provided that medical treatment shall be provided at the expense of the employer. Counsel therefore urged the court to order the respondent pay the medical insurance contributed by the claimant through deduction from his salary. Concerning exemplary damages, counsel submitted that the claimant was entitled to the same on account of discrimination that was evident in the claimant’s unlawful dismissal.
RESPONDENT’S SUBMISSIONS
31. Mr. Kimondo Mubea for the respondent on the other hand submitted that the termination of the claimant’s service was fair and relied on the case of Nugi Kahiga v. Access Kenya Group Ltd [2022] eKLR and KRA v. Reuwel Waithaka Gitahi. According to Counsel the standard of proof under section 41 of the Employment Act was on a balance of probability not beyond reasonable doubt. All the employer was required to prove was that the reasons were genuinely believed to exist causing the termination. Counsel also relied on the cases of NBK v. Samuel Nguru Mutonya and Jane Samba Mukala v. Ol Tukai Lodge Ltd earlier relied on by counsel for the claimant concerning termination on account of poor performance.
32. According to counsel, in 2019 the claimant failed to meet his assigned targets for the 2nd and 3rd Quarters of 2019 as required by the respondent’s Performance Management Policy. The objective of the policy included setting targets at the beginning of each financial year and quarterly alignment of the same and assessing performance of employees in terms of what they have achieved against set objectives in the financial year. As a result of unsatisfactory performance, the claimant was taken through PIP for three months. During which the respondent offered the necessary support and coaching with the expected outcome being his performance rating to meet the expectation of the respondent. Despite being put on PIP the claimant’s poor performance persisted as his rating still failed to meet the respondent’s expectation. The respondent consequently invited the claimant for PIP Review meeting and at the said meeting the claimant was given an opportunity to explain the reasons for his continued poor performance. From the foregoing, counsel submitted that the respondent had discharged its burden of proof that it had a valid reason for terminating the claimant’s service on account of poor performance.
33. On the issue whether the termination was procedurally fair, Mr. Kimondo submitted that the claimant was subjected to a PIP program as result of his persistent poor performance in 2019. He was as a result invited for PIP Review meeting on 9th January, 2020 where he was informed of his right to have another member of staff of his choice present. According to Counsel, the claimant confirmed to the Review Panel that he was aware of the Bank’s performance policy on the consequences of unsatisfactory performance and the contents of the letter dated 9th January, 2020. Counsel submitted that as an express term of the respondent’s PIP policy, when a meeting for staff members who have not achieved the required standards of performance during the performance period is convened by the respondent’s Human Resource Division, their termination of employment may be considered.
34. Counsel submitted that at the meeting the claimant was put to task to explain why he had not met his targets for 2019 as per his commitments. It was therefore evident that the claimant was accorded an opportunity to make representations over his poor performance and that he understood the consequences of persistent poor performance as per the Bank’s PIP policy. According to counsel the claimant stated during the meeting that he could not at any rate meet his performance targets as he was unlucky and that he was busy assisting other staff to open accounts thereby affecting his performance. Having found the claimant’s responses unsatisfactory, a decision was reached to terminate his service. In the circumstances, the claimant was accorded an opportunity to be heard prior to his dismissal from employment. In this respect counsel relied on the case of Moreno v. Credit Bank Ltd [2024] KEELRC2371(KLR).
35. On the issue of discrimination on account of his experience, age and ethnicity, counsel noted that the claimant complained that the respondent deliberately changed his portfolios and that he never received any notice for termination unlike other underperformers who were issued with warning letters. According to counsel however, the claimant underwent the entire performance cycle and was given ample opportunity to improve his performance and explain reasons for his persistent poor performance in the course of 2019. The claimant therefor failed to demonstrate any form of discrimination directed against him besides the claimant while at the Performance Review meeting never raised the issue of the alleged discrimination. The claim that other members of staff who were underperforming were issued with warning letters prior to termination was without merit and that the warning letter adduced by the claimant concerned a staff member in a different department from the claimant performing different roles as such evaluation of performance was materially different.
36. On the Counterclaim, counsel submitted that the Court had jurisdiction to entertain the same and relied on the case of Gisemba v. Tausi Assurance Company [2022]KECA380(KLR) where the Court of Appeal held that ELRC has jurisdiction to hear cases arising from charges and mortgages provided they arise from employment relationship. As to the merit of the counterclaim, Mr. Kimondo submitted that as at the time the claimant was terminated he was indebted to the respondent in the sum of Kshs. 6,204,283.23 and that the loan agreement provided that upon leaving the Bank’s service for any reason other than retirement, a commercial rate of interest would be charged. The claimant was therefore in the termination letter informed that his loan would henceforth attract interest at commercial rate being 13%. According to counsel, the claimant has not disputed that he took loans while in employment. He only disputed the change in the interest rate payable. In the circumstances the respondent had proved its claim against the claimant.
37. Concerning overtime claimed by the claimant, counsel submitted that the claimant did not place any material before the court to demonstrate that he was entitled to overtime and that the same was due to him. Besides, it was in the claimant’s knowledge that policy on overtime required that the claim be made within 2 months of the overtime worked. The claimant only made a statement of fact that he was entitled to overtime and computed the same but did not provide any evidence to show he applied for overtime but was denied.
38. Concerning medical insurance, counsel submitted that it was trite law that when employment is terminated, relationship between the parties end therefore cannot exist any obligation on the respondent to pay the claimant’s medical insurance. Concerning exemplary damages, counsel submitted that the claimant having failed to prove any discrimination was not entitled to such damages besides the claimant has not proved nay egregious act on the part of the respondent to warrant such an award.
DETERMINATION
39. The Court has reviewed and considered the pleadings, testimonies and submissions by both counsel in support and opposition to the case. The Court has also considered authorities relied on by counsels and is of the view that the issues for determination are;
a) Whether the respondent had sufficient evidence to terminate the claimant on account of poor performance and whether termination was carried out through a fair procedure.
b) If the answer to (a) is in the negative, what are the appropriate remedies due to the claimant.
c) Whether the respondent is entitled to judgment on the counterclaim as prayed.
Whether the respondent had sufficient evidence to terminate the claimant on account of poor performance and whether termination was carried out through a fair procedure.
40. It was not contested that the respondent had an annual Performance Management System for all its employees where each employee is assigned quarterly targets and are reviewed quarterly. It was further not in dispute that employees whose performance fell below the expected standards were placed on PIP where team leaders provided accelerated coaching and support to ensure turn around to good performance.
41. According to the respondent, the claimant’s performance was found to have fallen short of the Bank’s expectations and his performance for quarter 2 and 3 for the year 2019 was rated as “unsatisfactory”. The claimant was therefore placed on PIP and according to the respondent, provided with necessary support and coaching. The claimant did not deny these facts. His reaction to the allegations against him was to offer reasons why he thought his performance failed to meet expectations. As outlined in evidence, the claimant attributed his poor performance to transfer of his deposit portfolio to others and reduction of his loan book by transfer of a portion to a newly transferred staff from another branch.
42. It would seem the respondent was not satisfied with the explanations offered by the claimant over his deteriorating performance despite having been placed on PIP. The respondent consequently invited the claimant to Performance Review Meeting on 17th January, 2020. From the minutes of the Review Meeting found at page 36 of the respondent’s bundle of documents, it is recorded that as follows:
“ Isaiah was invited to the meeting room and introduced to the Panel and he was reminded of his right to be accompanied by another member of staff to which he stated that he was aware of his right to be accompanied and he informed the Panel that he chose to attend the meeting without any representative. He was also reminded that he was attending Performance Review Meeting and not a disciplinary hearing.
43. It is further recorded (page 37) that the claimant understood the contents of the letter inviting him to the Performance Review Meeting (PRM) and the purpose of the PIP was to help an employee turn around their performance and the consequences of “unsatisfactory performance” or two “needs improvement” as per the Bank’s policy was termination of an employee’s contract. The claimant is further recorded to have attributed his alleged poor performance to loss of accounts with deposits worth 76 million. The Panel asked the claimant why he raised the issue of wrong figures late after the appraisal had been done yet there was weekly performance dashboard which showed individual performance and target on a weekly basis.
44. From the foregoing and as already observed, the claimant did not deny that he was underperforming. He had reasons for this happening which reasons the respondent seem not to have agreed with hence the termination. Under section 43(2), the reasons for the termination of a contract are matters that the employer at the time of termination of the contract genuinely believed to exist and which caused the employer to terminate the service of an employee. Further, a reading of section 47(5) places the burden of justifying the grounds for the termination of employment on the employer. This implies that in any claim where the validity of the reason for termination is contested, the employer is required as a matter of law, to provide evidence justifying the termination. In a sense, the Court is therefore called upon to do a merit review of an employer’s decision to terminate an employee’s contract. The Court in so doing has to be careful not delve too much into what falls squarely into the purview of management or replace its own view of what it thinks constitutes a valid reason for termination.
45. In the now often cited English case of British Leyland UK Ltd v. Swift [1981]IRLR 91 Lord Dening stated:
The correct test is: Was it reasonable for the employers to dismiss him? If no reasonable employer would have dismissed him, then the dismissal was unfair, but if a reasonable employer might reasonably have dismissed him, the dismissal was fair. It must be remembered that in all these cases there is a band of reasonableness, within which an employer might reasonably take one view: another quite reasonably take a different view. One would quite reasonably dismiss the man. The other quite reasonably keep him on. Both views may be quite reasonable. If it was quite reasonable to dismiss him, then the dismissal must be upheld as fair even though some other employers may not have dismissed him.”
46. Further Ojwang’ J (as he then was) in the case of Kenya Revenue Authority Vs Menginya Salim Murgani, Civil Appeal No. 108 of 2009 as cited in Republic Vs National Police Service Commission Exparte Daniel Chacha JR 36 of 2016 (2016) eKLR- stated:
“There is ample authority that decision making bodies other than courts and bodies whose procedures are laid down by statute are masters of their own procedures. Provided that they achieve the degree of fairness appropriate to their tasks. It is for them to decide how they will proceed”
47. From the foregoing, and considering the fact that the claimant did not deny that he was performing poorly and further that he acknowledged that poor performance was a valid ground for termination of contract, the Court will not overanalyse the merit of the decision and hold that it was reasonable in the circumstances.
48. The next issue is whether it was procedurally fair to terminate the claimant’s service after the Performance Review Meeting. The respondent assured the claimant that he was attending a Performance Review Meeting and not a disciplinary hearing. It therefore mattered not that the claimant acknowledged at the meeting that poor performance could result in termination of employment. The Performance Review Meeting was for the sole purpose of discussing and seeking explanation from the claimant why his performance was not improving despite having been placed on PIP. The claimant offered what he thought was the reason behind his poor performance. He may have offered more explanation or even adduced additional evidence if he was made aware that at the end of the meeting his service could be terminated.
49. The Court acknowledges that the claimant had adequately interacted and was fully aware of the allegations against him at the Performance Review Meeting but it was unprocedural to terminate the claimant’s contract after the meeting and after representing to him that it was not a disciplinary hearing.
50. To this extent, whereas the Court found as above that the respondent had a valid reason for terminating the claimant’s service, the termination was not carried out through a fair procedure contrary to section 45(2)(c) of the Employment Act hence unfair.
51. The claimant sought from the Court a declaration that the respondent’s actions were in breach of his constitutional right as to fair administrative action and non-discrimination in the work place. The Court however is not satisfied that the claimant demonstrated adequately any violation or breach of his rights that could reach the threshold set for allegations of constitutional violations. The authorities on this point are abound and the Court in the interest of time will not delve into this area that is now more or less settled. A termination of employment is one of the expected outcomes of an employment contract. In order for such termination to qualify as a breach of rights and fundamental freedoms under the constitution, one needs to demonstrate that the reason and or the process was so egregious that not reasonable employer could terminate for such reason or embark on such a procedure in the name of termination of service. This claim is therefore not proved and is without merit and is rejected.
52. The claimant has laid a claim for overtime totaling to Kshs.11,909.917.43. This claim was not adequately itemized and no evidence was led to show how the amount was arrived at. The claimant also did not adequately respond to the issue of respondent’s policy on overtime which stated that such claims ought to be made within two months of accrual. No evidence was tabled before me detailing the overtime and for which period. The claim is therefore found without merit and is hereby rejected.
53. The claim for unpaid salary pleaded was not adequately proved. The claimant did not lead evidence laying the basis of the claim. The claimant’s service according to record was terminated on 17th February, 2020 hence the basis for claiming salary for April, 2020 through to September, 2020 did not come out in evidence. The claim is therefore rejected.
54. Concerning the Counterclaim, the claimant did not dispute that he took loans from the respondent. He further did not deny owing the respondent the amount outstanding on the loans account. The claimant’s complaint was over the change of interest rate on the loans from staff to commercial rates. This in the Court’s view is a matter of contract between the parties that the Court cannot rewrite. The loan agreement was clear that upon leaving employment other than by way of retirement, the staff rate of interest ceases to apply and the applicable rate would be market rate.
55. In conclusion, the Court having found that the respondent had valid reason to terminate the claimant’s employment on account of poor performance but in doing so did not follow a fair procedure, the claimant is entitled to compensation for unfair termination in accordance with section 49 of the Employment Act. The claimant had worked for the respondent for approximately ten years rising through the ranks. He was however found to be nonperforming in the 2nd to 4th quarter of 2019 despite being placed on PIP. He had his reasons for dismal performance which the respondent did not agree with hence terminated him. The Court has however found that the procedure followed in terminating the claimant denied him a fair hearing. In the circumstances an award of 9 months’ salary would be reasonable in the circumstances.
56. Judgment is therefore entered against the respondent in favour of the claimant for Kshs. 2,300,850/- being nine months’ salary at the rate of Kshs. 255,650/- per month. This amount shall be subject to taxes and statutory deductions.
57. Judgment against the claimant in favour of the respondent in the sum of Kshs.6,204,283.23 which sum shall continue to attract interest at 13% p.a until payment in full.
58. Either party shall in appropriate case have the right of set off.
59. Each party shall bear their own costs of the suit.
60. It is so ordered.
Dated at Nairobi this ……… day of…………. 2025
Delivered virtually this……… day of ………….2025
Abuodha Nelson Jorum
Presiding Judge-Appeals Division