Consolidated Bank Suffers Fresh Court Blow as Appeal Fails Over Unfair Dismissal of Senior Officer

Consolidated Bank has suffered a major legal setback after losing its appeal over the dismissal of a senior employee.

The Court of Appeal upheld an earlier ruling that the bank unfairly terminated Eustace Muchigiri Njuguna’s employment.

Judges found the bank failed to prove the allegations against him clearly. They also ruled the lender ignored its own disciplinary procedures before firing him.

The decision was delivered by Justices M’Inoti, Chacha Mwita and Byram Ongaya.

The judges dismissed the bank’s appeal in its entirety. They partly allowed Njuguna’s cross-appeal on notice pay.

Njuguna joined Consolidated Bank in 2009 and steadily climbed through the ranks.

He eventually became a Business Development Officer handling credit-related responsibilities.

Flawed Process

His employment ended abruptly on June 20, 2014.

The bank accused him of facilitating irregular transfers involving Masafi Fruits & Vegetables Limited accounts.

It claimed those transactions exposed the lender to significant financial losses through unauthorised overdrafts.

However, the appellate judges viewed the dispute through a different legal lens.

They said the central question was not whether employers may discipline staff. Instead, the issue was whether dismissal followed a fair and lawful process.

Their answer was unequivocal.

“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,” the judges ruled.

The court reached that conclusion after reviewing the disciplinary proceedings in detail.

Those records exposed significant weaknesses in the bank’s case against Njuguna.

The judges noted both parties disagreed about the allegations during the disciplinary hearing.

Yet the panel never resolved those disagreements before recommending dismissal.

That omission proved decisive.

Human Resource Manual

Under Kenya’s Employment Act, employers must prove the reasons for terminating employment.

Those reasons must genuinely exist when dismissal occurs.

The judges concluded the bank failed to meet that legal burden.

The court also identified another serious procedural flaw.

The bank’s Human Resource Manual required dismissal letters for officers to bear the Chief Executive Officer’s signature.

Instead, the dismissal letter was signed by the Head of Human Resources.

Evidence further showed the chief executive had recommended resignation instead of summary dismissal.

“The procedure adopted to dismiss the respondent breached clause 10.4 of the Manual,” the judges observed. They concluded the dismissal was procedurally unfair.

The ruling strengthens an important principle in Kenyan employment law.

Employers must establish valid reasons before dismissing workers. They must also follow their own disciplinary procedures faithfully.

Internal Policies

Internal policies cannot simply be ignored when employment disputes arise.

The judges nevertheless declined to increase Njuguna’s compensation.

He had asked the court to award the statutory maximum of twelve months’ salary.

The judges upheld the Employment Court’s award of six months’ salary instead.

They noted Njuguna served the bank for about five years.

They also found the employment relationship had irretrievably broken down.

Given banking’s trust-sensitive nature, reinstatement was no longer practical.

However, Njuguna succeeded on one important issue.

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His employment contract guaranteed three months’ notice before termination.

The Employment Court had awarded only one month’s salary instead.

The Court of Appeal corrected that error.

It increased the award to three months’ salary, amounting to KSh349,511.

Ultimately, the judgement carries lessons beyond this single employment dispute.

It reminds employers that fairness extends beyond proving employee misconduct.

A lawful dismissal demands both credible evidence and scrupulous adherence to established disciplinary procedures.

When either requirement collapses, the dismissal itself may also collapse.

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