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Court of AppealDismissedELRC Cause No. 40 of 2018 (appeal therefrom)

Njeru v Equity Bank of Kenya Limited (Civil Appeal 85 of 2019) [2025] KECA 1592 (KLR)

Court of Appeal of Kenya
3 October 2025
3,257 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~13 min to read original · ~4 min brief

The bottom line

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The Court of Appeal dismissed a former bank employee's appeal, confirming his pension membership barred service pay and that courts rarely increase unfair dismissal awards without showing clear error.

What this practically means

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Executive summary

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The appellant, a former clerical employee of the respondent bank, was injured in October 2015 when a third-party vehicle crashed into his desk at work. After prolonged absences and a failed attendance at a scheduled medical examination, the respondent retired him on medical grounds by letter dated 24th February 2017, based on the recommendations of both the respondent's doctor and the appellant's own doctor. The ELRC at Meru (Nzioka wa Makau, J.) found the termination procedurally unfair under section 41(1) of the Employment Act for want of a hearing, and awarded one month's salary in lieu of notice (Kshs. 51,865), compensation for unfair dismissal capped at four months' salary (Kshs. 207,460), costs and interest, while dismissing claims for service pay, three months' notice pay and general damages for distress. The appellant appealed, contending the award was inordinately low, that he was discriminated against on account of disability, and that the trial court erred in addressing his loan facility absent a counter-claim. The Court of Appeal (Jamila Mohammed, L. Kimaru and A.O. Muchelule, JJ.A) framed five issues and dismissed the appeal in its entirety with costs to the respondent. It held the appointment letter provided only one month's notice; that membership of the NSSF and the respondent's Group Pension Scheme, with pension paid, excluded service pay under section 35(6) of the Employment Act; that the retirement on medical grounds was substantively justified though procedurally flawed, that discrimination was not proved, and that no misdirection justified interfering with quantum; that general damages for distress were unwarranted given third-party liability and compensation already received from Britam General Insurance and work injury benefits; and that the trial court made no orders on the loan and rightly observed that conversion of the staff loan was contractual.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the appellant was entitled to three months' pay in lieu of notice
  2. 2.Whether the appellant was entitled to service pay
  3. 3.Whether the award of compensation for unfair dismissal granted by the trial court was inordinately low
  4. 4.Whether the appellant was entitled to an award of general damages for distress and agony
  5. 5.Whether the learned Judge erred in making a finding with respect to the appellant's loan facility

Key legal issues

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01

Notice pay on termination

Holding

The appellant was entitled only to the one month's notice provided in his appointment letter, not three months' notice.

Reasoning

The appointment letter of 1st August 2011 stipulated one month's notice on termination. It was not contested that no notice was issued, and the trial court awarded one month's salary in lieu of notice. The claim for three months' notice had no contractual or statutory foundation.

p. 4
02

Service pay

Holding

The claim for service pay was properly dismissed because the appellant was a member of the NSSF and the respondent's Group Pension Scheme and received his pension.

Reasoning

Section 35(6) of the Employment Act excludes entitlement to service pay under section 35(5) where the employee is a member of a registered pension scheme or the NSSF. Pay slips and the appellant's own testimony showed membership of both schemes and payment of pension contributions on retirement.

p. 5
03

Quantum of compensation for unfair dismissal

Holding

The award of four months' salary for unfair termination was not inordinately low and the appellate court would not interfere with the trial court's discretion.

Reasoning

Under section 49 of the Employment Act the court may award up to twelve months' wages, but the exercise is discretionary. Retirement on medical grounds was justified, though the procedure was flawed; discrimination was not proved since even the appellant's own doctor recommended retirement on medical grounds. No misdirection was shown.

p. 6
04

General damages for distress and agony

Holding

General damages for distress and agony were not available because the respondent was not liable for the accident and the appellant had already received compensation from other sources.

Reasoning

The accident was caused by a third-party vehicle; the appellant sued that third party and received Kshs. 276,311 under the personal accident cover and Kshs. 1,839,821 as work injury benefits, and his medical bills were partly offset. There were no special circumstances warranting further compensation.

p. 6
05

Finding on the loan facility without a counter-claim

Holding

The learned Judge committed no error in observing that the loan contract provided for conversion of a staff loan to an ordinary loan on termination, since no orders for payment of the loan were made.

Reasoning

The trial Judge's remark on the loan facility was made in assessing whether the respondent treated the appellant unfairly; the contract expressly provided for conversion of staff loans upon termination of employment. As no payment orders were made, there was no basis for complaint.

p. 6

Legal principles established

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  • On a first appeal, the appellate court must reconsider the evidence, evaluate it itself and draw its own conclusions, while making due allowance for not having seen or heard the witnesses.
  • An appellate court will not interfere with a trial judge's exercise of discretion on damages unless satisfied of misdirection or clear error occasioning injustice.
  • An employee is not entitled to service pay under section 35(5) of the Employment Act where he is a member of a registered pension scheme or the National Social Security Fund.

Court orders

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  1. 1.The appeal is dismissed
  2. 2.Costs of the appeal to the respondent

The bench

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One judgment of the whole court — no separate or dissenting opinions.

majority
majority
majority
On appeal from
Employment and Labour Relations Court at Meru
ELRC Cause No. 40 of 2018
Jurisdiction invoked
First appeal to the Court of Appeal under the Court of Appeal's appellate jurisdiction (first appeal by way of retrial)

Relief refused

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Three months' pay in lieu of notice

Appointment letter stipulated one month's notice

p. 4

Service pay for six years

Appellant was a member of NSSF and the respondent's Group Pension Scheme and was paid his pension

p. 5

Enhanced compensation for unfair dismissal (beyond four months' salary)

No misdirection by the trial Judge shown; discrimination claim unfounded

General damages for distress and agony

Respondent not liable for the third-party accident; appellant already compensated by insurance and work injury benefits

p. 6

Setting aside the trial court's observation on the loan facility

The learned Judge made no orders on payment of the loan and was right that conversion of staff loan to ordinary loan was contractual

p. 6

Costs

Appeal dismissed with costs to the respondent.

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

The upshot of the foregoing is that we find that the appeal lacks merit and is hereby dismissed, with costs to the respondent.
p. 6Disposition
An appeal to this Court from a trial by the High Court is by way of retrial and the principles upon which this Court acts in such an appeal are well settled.
p. 4First appeal - retrial standard
the appellant has not furnished sufficient reasons to prove misdirection on the part of the trial Judge to justify the interference with the damages awarded by this Court.
Interference with discretionary award of damages
Section 41 of the Employment Act acknowledges physical incapacity as a valid ground for termination of employment.
p. 5Termination on medical grounds
we find no special circumstances herein that would warrant additional compensation in the manner claimed for by the appellant.
p. 6General damages for distress

Issues in the judgment

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minor

Judgment header refers to a first appeal from a trial by the High Court, but the decision appealed from is of the Employment and Labour Relations Court; the Gitobu Imanyara quotation references a High Court trial.

minor

Typographical error in the key holding sentence: 'It our considered view...' (missing 'is').

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Njeru v Equity Bank of Kenya Limited (Civil Appeal 85 of 2019) [2025] KECA 1592 (KLR)", Case Analysis (2025). ELRC Cause No. 40 of 2018 (appeal therefrom). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2025/1592/eng@2025-10-03

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.