Kombo v SBM Bank (Kenya) Limited (Employment and Labour Relations Cause E739 of 2022) [2025] KEELRC 1483 (KLR)
The bottom line
#Kenya's Employment Court ruled a bank's redundancy unlawful because it skipped one month's notice and consultation, awarding the employee over Kshs 1.5 million in compensation.
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 Respondent complied with the law (section 40 of the Employment Act) before declaring the Claimant redundant
- 2.Whether this Court has jurisdiction to determine the Respondent's Counterclaim
- 3.Whether the Claimant deserves the orders sought
Key legal issues
#Whether the redundancy complied with section 40 of the Employment Act
The redundancy was unfair and unjustified because the Respondent failed to give one month's notice and did not consult the Claimant.
The court examined section 40(1) of the Employment Act, which requires not less than one month's notice of intended redundancy to the employee personally and the labour officer, due regard to seniority, skill, ability and reliability in selection, payment in lieu of notice and severance. The letter of 6/12/21 was the notice and the 14/12/21 letter terminated employment effective 7/12/21, meaning no one month's notice was given. No consultation occurred, denying the Claimant an opportunity to negotiate a soft landing. Relying on Aviation & Allied Workers Union v Kenya Airways and Mugford v Midland Bank, the court found the process breached section 40.
Remedies for the unfair redundancy
Compensation of ten months' gross salary plus one month's salary in lieu of notice was awarded.
Having found the redundancy unfair, the court held the Claimant entitled to compensation. Taking into account the inhumane manner of the declaration - effected without any notice and leaving the Claimant in limbo - the court considered ten months' salary apt, calculated at the gross salary of Kshs. 137,696, totaling Kshs. 1,376,960, and further awarded one month's salary in lieu of notice of Kshs. 137,696, for a total award of Kshs. 1,514,656.
The Respondent's counterclaim for the outstanding staff personal loan
The outstanding loan of Kshs. 1,884,520, which the Claimant admitted owing, was set off against the awards, with the balance of Kshs. 369,864 awarded to the Respondent.
The Respondent counterclaimed for the outstanding staff personal loan. The Claimant admitted owing the loan. The court found the Claimant unable to pay the outstanding sum of Kshs. 1,884,520 and set the amount off against the total award to the Claimant of Kshs. 1,514,656, arriving at a net balance of Kshs. 369,864 in favour of the Respondent on the counterclaim. The court did not expressly address the jurisdictional objection or the Credit Life Insurance issue separately.
Legal principles established
#- An employer who fails to issue one month's notice and does not consult the employee before redundancy breaches section 40 of the Employment Act and the redundancy is unfair.
- Consultation with the affected employee is a prerequisite of a fair redundancy; without it the selection process cannot be known to be fair.
Court orders
#- 1.Declaration implicit in finding that the Claimant's redundancy was unfair and unjustified
- 2.Compensation of 10 months' salary (10 x 137,696 = Kshs. 1,376,960) for unfair termination
- 3.One month's salary in lieu of notice (Kshs. 137,696)
- 4.Set-off of amounts due to the Respondent on the outstanding staff loan of Kshs. 1,884,520 against the awards, leaving Kshs. 369,864 awarded to the Respondent on its counterclaim
- 5.Each party to bear its own costs
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
- Jurisdiction invoked
- Employment and labour relations jurisdiction under the Employment Act (court not explicitly stated in judgment)
Relief refused
#Reinstatement of the Claimant's employment
The court awarded compensation in lieu rather than reinstatement
Orders to freeze the loan and bar the Respondent from effecting default clauses (conversion to market rate, CRB listing, penalties)
Not granted; the court instead set off the outstanding loan against the awards and awarded a balance to the Respondent on the counterclaim
Costs
Each party will bear its own costs.
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.
In view of the above position, it is my finding that the Claimant's redundancy was unfair and unjustified and therefore the Claimant is entitled to compensation which I grant him.
Based on the inhumane manner of declaring him redundant without any notice whatsoever, and leaving him in limbo, I find compensation of 10 months salary is apt which I grant = 10x137,696 = 1,376,960/=.
The total due to the Claimant is therefore 1,514,656/= less 1,994,520/= due to the Respondent which is KShs.369,864/= awarded to Respondent as counterclaim.
Each party will bear its own costs.
The Respondent failed to issue the Claimant with 1 month notice as envisaged under section 40 of Employment Act. The opportunity to negotiate with the Claimant in order to give him a soft landing space was also denied.
Issues in the judgment
#Arithmetic discrepancy in the set-off: the counterclaim in the pleadings was Kshs. 1,852,587.95, the court found the admitted outstanding loan to be Kshs. 1,884,520, but the final computation uses Kshs. 1,994,520, which does not match either figure.
The judgment records the counterclaim figure inconsistently with the pleaded figure.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Kombo v SBM Bank (Kenya) Limited (Employment and Labour Relations Cause E739 of 2022) [2025] KEELRC 1483 (KLR)", Case Analysis (2025). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/1483/eng@2025-05-21
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.