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ELRCPartially AllowedNot stated in judgment· [2024] KEELRC 1748 (KLR)

Naliaka v Diamond Trust Bank Limited (Employment and Labour Relations Cause E059 of 2021) [2024] KEELRC 1748 (KLR)

Employment and Labour Relations Court
11 July 2024
HWHellen Wasilwa
1,284 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan employer that skips the fair-hearing steps in the Employment Act risked over Kshs 1.5 million in damages after failing to defend its case in court.

What this practically means

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Executive summary

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The claimant sued alleging unfair and unlawful termination of employment on 15th November 2018, seeking three months' notice pay of Kshs 419,664, severance pay for 3½ years of Kshs 2,937,648, compensation under section 49 of the Employment Act of Kshs 1,678,656, and costs. The Respondent entered appearance and filed a response and counterclaim, contending that termination followed due procedure, that the contract provided only one month's notice which was paid with pension benefits, and that the claimant was never declared redundant and so was not entitled to severance. It counterclaimed for an outstanding staff loan of Kshs 1,427,464.17 said to have accrued after terminal dues were offset against the loan and commercial rates applied. The Respondent, though served, failed to attend hearings on 25th April and 30th May 2024, and the matter proceeded exparte, leaving the claimant's case largely uncontroverted. The court held that the claimant was entitled to due process under section 41 of the Employment Act and, with no evidence to the contrary, that the termination was unfair and unjustified under section 45(2). The court awarded one month's salary in lieu of notice (Kshs 139,888) per the employment contract and compensation equivalent to ten months' salary (Kshs 1,398,880), totalling Kshs 1,538,786 less statutory deductions, with costs and interest to the claimant. Severance pay was not awarded. Notably, the counterclaim for the loan arrears is not addressed in the final orders. Judgment was delivered virtually on 11th July 2024 by Hon. Lady Justice Hellen Wasilwa.

Key legal issues

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01

Fairness of termination under sections 41 and 45 of the Employment Act

Holding

The termination was unfair and unjustified as the Respondent, having not appeared, adduced no evidence of valid reason or fair procedure

Reasoning

Section 41 requires an employer, before terminating for misconduct, to explain the reasons to the employee and hear representations. Section 45(2) places the burden on the employer to prove a valid reason, a fair reason, and adherence to fair procedure. The matter proceeded exparte after service, leaving the claim uncontroverted. With no evidence of compliance, the court found the termination unfair and awarded notice pay and maximum-range compensation of 10 months' salary.

p. 3
02

Notice pay

Holding

The claimant was awarded one month's salary in lieu of notice, per the employment contract, rather than the three months claimed

Reasoning

The claimant sought three months' salary in lieu of notice, but the Respondent's pleadings indicated the contract provided only one month's notice, and the court awarded notice strictly per the contract at the monthly salary of Kshs 139,888.

p. 4

Legal principles established

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  • An employer bears the burden of proving a valid reason and fair procedure for termination; absent evidence to the contrary, the employee was entitled to due process

Court orders

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  1. 1.Award of 1 month's salary in lieu of notice of Kshs 139,888
  2. 2.Compensation equivalent to 10 months' salary for unfair termination of Kshs 1,398,880
  3. 3.Total award of Kshs 1,538,786 less statutory deductions
  4. 4.Respondent to pay costs of the suit plus interest at court rates from the date of judgment
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (sections 35, 41, 44, 45 and 49 invoked)

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, "Naliaka v Diamond Trust Bank Limited (Employment and Labour Relations Cause E059 of 2021) [2024] KEELRC 1748 (KLR)", Case Analysis (2024). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/1748/eng@2024-07-11

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