Court of Appeal upholds ruling against Consolidated Bank over unfair dismissal

The Court of Appeal has upheld a ruling that Consolidated Bank of Kenya unfairly dismissed a senior employee, finding that the lender failed to follow its own disciplinary procedures and did not establish valid grounds for terminating his employment.

In a judgment delivered on July 10, the appellate court dismissed the bank’s appeal and partly allowed a cross-appeal filed by former Business Development Officer Eustace Muchigiri Njuguna.

The court increased Njuguna’s notice pay from one month’s salary to three months’ salary while upholding an award equivalent to six months’ salary as compensation for unfair termination.

The dispute arose from Njuguna’s summary dismissal in June 2014 over allegations that he had facilitated irregular transfers involving customer accounts.

However, the three-judge bench found that the disciplinary process did not clearly establish the allegations against the employee and that the bank failed to comply with its Human Resource Manual during the dismissal process.

The judges noted that the bank’s Human Resource Manual required the Chief Executive Officer to sign dismissal letters, but the termination letter was instead signed by the Head of Human Resources.

“We find that the trial Court did not err in law or fact in holding that the dismissal was unfair because the reasons for dismissal were not shown to exist as at the time of the disciplinary hearing. The Chief Executive Officer did not sign the dismissal letter as was required in the Manual,” the judges ruled.

The court declined Njuguna’s request for reinstatement, noting that the statutory period within which such an order could be granted had already expired.

It also dismissed his claim for payment of salary covering the remainder of his employment contract.

The Court of Appeal ordered Consolidated Bank to pay the costs of both the appeal and the earlier court proceedings.

Following the ruling, Njuguna’s revised notice pay was increased to Sh349,511, in addition to the compensation equivalent to six months’ salary awarded for unfair termination.