Florence Achieng Asetto v Faulu Microfinance Bank Kenya Limited [2021] KEELRC 1401 (KLR)
The bottom line
#Kenya's Employment Court allowed Faulu Microfinance Bank to amend its defence and counterclaim over a former employee's staff loan, confirming such loans are employment benefits.
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 court should grant the respondent leave to amend its Response to the amended Memorandum of Claim and to file a Counterclaim after closure of pleadings
Key legal issues
#Correct procedural basis for amending pleadings in the ELRC
Applications to amend pleadings in the ELRC are governed by Rule 14 of the ELRC (Procedure) Rules, 2016, not the Civil Procedure Act and Rules relied on by the respondent.
The respondent had anchored its application on sections 1A, 1B and 3A of the Civil Procedure Act and Orders 17 and 18 of the Civil Procedure Rules. The court held that amendments before this court are governed by the ELRC (Procedure) Rules, 2016, specifically Rule 14(6), which permits amendment after close of pleadings only with leave of the court. The application, though mis-anchored, was treated as seeking such leave.
Whether leave to amend and file a counterclaim should be granted after closure of pleadings
Leave was granted because hearing had not commenced and the claimant would suffer no prejudice, being able to reply to the amended response.
Pleadings closed on 17th December, 2018 when hearing directions issued, so the amendment required leave. Applying the principle that amendments should be freely allowed before hearing where no injustice results, and noting that hearing had not commenced and a fair chance to reply existed, the court found the application reasonable, within Rule 14, and non-prejudicial to the claimant.
Whether the loan dispute is severable from the employment relationship
A staff loan granted on favourable staff rates is an employment benefit that cannot be detached from the employment relationship.
The court held that where a loan is granted to an employee on terms and rates favourable to the workforce, it is a benefit subject to the employment, unlike a commercial loan. The loan due arose out of a work benefit and cannot change merely because there is a loan agreement. Section 19(1)(g) and (h) of the Employment Act, 2007 permits deductions for repayment of loans advanced by the employer.
Legal principles established
#- Amendments to pleadings sought before the hearing should be freely allowed if they can be made without injustice to the other side, and there is no injustice if the other party can be compensated by costs.
- Employment benefits enjoyed by an employee, including a staff loan granted on favourable rates, cannot be extricated from the employment relationship and urged separately.
Court orders
#- 1.The respondent shall file and serve the Amended Response within 14 days
- 2.Upon service the claimant shall reply thereto within 14 days
- 3.Pleadings close in 30 days
- 4.Costs shall be in the cause
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
- Jurisdiction invoked
- Employment and Labour Relations Court (Procedure) Rules, 2016, Rule 14
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.
The general rule on this subject is that amendments to pleadings sought before the hearing should be freely allowed if they can be made without injustice to the other side, and there is no injustice if the other party can be compensated by costs.
A party is allowed to make such amendments as may be necessary for determining the real question in controversy or to avoid a multiplicity of suits, provided there has been no undue delay, that no new or inconsistent cause of action is introduced, that no vested interest or accrued legal right is affected and that the amendment can be allowed without injustice to the other side.
Where an employee enjoys a loan in the course of employment and the same is granted on terms and conditions applicable to employees and on rates which are favourable to the entire workforce by the employer, such is a benefit subject to the employment.
In this case, hearing has not commenced, the leave sought to amend pleadings is found reasonable and within the provisions of Rule 14 and this shall not prejudice the claimant as there is a fair chance to reply to the Amended Response as shall be found necessary.
a. The respondent shall file and serve the Amended Response within 14 days; b. Upon service the claimant shall reply thereto within 14 days; c. Pleadings close in 30 days; and d. costs shall be in the cause.
Issues in the judgment
#The application is described as undated, so the application date cannot be confirmed; the judgment also alternately refers to an application dated 16th August, 2017 and one filed on 17th August, 2017.
The case number of the main suit is not stated anywhere in the judgment.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Florence Achieng Asetto v Faulu Microfinance Bank Kenya Limited [2021] KEELRC 1401 (KLR)", Case Analysis (2021). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2021/1401/eng@2021-02-11
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.