Consolidated Bank of Kenya Limited v Makathimo (Civil Appeal 114 of 2021) [2025] KECA 356 (KLR)
The bottom line
#Kenya's Court of Appeal overturned a Kshs.2 million unfair dismissal award, confirming that an employer only needs to prove misconduct on a balance of probability.
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 appellant's rights under Article 50(2)(k) of the Constitution were violated when the trial court proceeded with the hearing without allowing the filing of witness statements and documents under Order 11 of the Civil Procedure Rules
- 2.Whether the termination of the respondent's employment was substantively and procedurally fair and justified
- 3.Whether the judgment of the ELRC awarding compensation should be upheld
Key legal issues
#Whether the appellant's Article 50 fair hearing rights were violated in the trial court
No violation; the appellant was given adequate opportunities to file witness statements and documents and failed to use them, and the ruling refusing further indulgence was not appealed.
The court enumerated four reasons: the Civil Procedure Rules required documents and witness statements to accompany the Response to Claim; case management gave the appellant adequate opportunity; various applications afforded further opportunities; and the trial judge's ruling explaining his refusal to allow further filing was never appealed. Issues not appealed cannot be raised in a later appeal.
Whether the termination of the respondent's employment was substantively justified
Yes. The respondent abdicated her duty as second vault custodian contrary to standard operating procedures, leading to loss of Kshs.641,500; she lent money at interest contrary to her terms of employment; and she unprocedurally withdrew Kshs.20,000 from a customer's account - all amounting to misconduct under the Employment Act.
The respondent admitted in her own letter that she handed her vault key to her colleague so cash was counted without dual presence, contrary to procedure, resulting in the loss. Documentary evidence established a written agreement lending Kshs.300,000 at interest of Kshs.102,000 and a debit of Kshs.20,000 from a customer's account credited to her account the same day. The trial judge's finding that she was not guilty of the reasons advanced was wrong.
Whether the termination was procedurally fair
Yes. The respondent was given show cause notices, two disciplinary hearings on 9th June 2017 and 18th July 2017, notice of her right to be accompanied by a colleague, and was heard as required by section 41 of the Employment Act.
The court found the disciplinary process complied with section 41 of the Employment Act: explanations were invited through show cause letters, hearings were scheduled with notice, the respondent was informed she could be accompanied by a colleague of her choice, and her representations were heard and considered before dismissal. No provision of law was breached in the process.
Standard of proof in employment misconduct
The employer must prove grounds on a balance of probability, not beyond reasonable doubt, and need only prove reasons it genuinely believed to exist - a partly subjective test.
Adopting the passage from Kenya Revenue Authority v Waithaka and Bamburi Cement Ltd v Kilonzi, the court endorsed the contextual test from McKinley v B.C.Tel: whether the alleged misconduct, assessed in context, gave rise to a breakdown in the employment relationship. A court should not expect a near-forensic examination or criminal standard from an employer acting subject to statutory procedural fairness.
Legal principles established
#- An employer need only prove grounds for termination on a balance of probability, not beyond reasonable doubt, and need only prove reasons it genuinely believed to exist.
- Where an employee admits abdicating assigned duties in breach of standard operating procedures, causing loss, that constitutes misconduct justifying termination under the Employment Act.
- A ruling of the trial court on case management that is not appealed cannot be re-visited in a subsequent appeal.
Court orders
#- 1.The judgment of the ELRC delivered on 6th February 2019 is set aside in its entirety
- 2.Judgment is substituted with an order that the respondent's suit before the ELRC is dismissed with costs
- 3.The appellant is awarded three-quarters (¾) of the costs of the appeal
- 4.The ground of appeal alleging violation of Article 50 rights is dismissed
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- Employment and Labour Relations Court at Meru
- Not stated in judgment
- Jurisdiction invoked
- First appeal to the Court of Appeal against the judgment of the ELRC (statutory appeal; specific provision not cited in judgment)
Relief refused
#Respondent's claim for unfair dismissal compensation (12 months' salary Kshs.1,842,432) and unpaid half salary during suspension (Kshs.230,904)
The termination was substantively justified: the respondent abdicated her duties as second vault custodian leading to loss of Kshs.641,500, lent money at interest contrary to her employment terms, and unprocedurally withdrew Kshs.20,000 from a customer's account; the trial judge's contrary finding cannot be sustained.
Appellant's ground of appeal alleging violation of its Article 50 constitutional rights
The appellant failed to attach witness statements and documents to its Response to Claim, was given adequate opportunities at case management and upon application, and a ruling declining further opportunity was never appealed, so the issue cannot be re-visited.
Costs
The suit before ELRC dismissed with costs to the appellant; and as one ground of appeal failed, the appellant awarded ¾ costs of the appeal.
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.
We allow the appeal by setting aside the whole of the said judgment and substitute the same with an order that the suit before ELRC is hereby dismissed with costs. As one ground of appeal failed we award ¾ costs of the appeal to the appellant.
The standard of proof is on a balance of probability, not beyond reasonable doubt, and all the employer is required to prove are the reasons that it “genuinely believed to exist,” causing it to terminate the employee’s services.
There were suficient reasons for terminating the respondent’s employment and we think, again with respect, that the Judge reached the wrong conclusions in the said judgment which cannot be sustained and is hereby set aside.
That ruling was not appealed at all and the issue cannot be re-visited in this appeal.
The Rules of natural justice require that the court must not necessarily drive any litigant from the seat of justice without a hearing, however weak his or her case may be.
Issues in the judgment
#Internal date discrepancy: the respondent's letter explaining the vault matters is described as dated 10th May 2017 in one place and 10th March 2017 in another.
Internal discrepancy on the date of the customer's alleged unauthorised debit: the show cause letter refers to 1st March 2016 while the complaint before the trial court refers to 1st March 2017.
The quotation from the trial judge's judgment appears to conflate the parties' names (referring to the employee as 'Claimant' dismissed by 'the respondent'), and the judgment text jumps from paragraph 34 to paragraph 36 with the case citation for Waithaka embedded mid-sentence, indicating possible transcription defects.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Consolidated Bank of Kenya Limited v Makathimo (Civil Appeal 114 of 2021) [2025] KECA 356 (KLR)", Case Analysis (2025). Civil Appeal (Nyeri) - number not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2025/356/eng@2025-02-28
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.