Muiruri v Family Bank Limited [2024] KEELRC 2354 (KLR)

Muiruri v Family Bank Limited (Employment and Labour Relations Cause E841 of 2021) [2024] KEELRC 2354 (KLR) (30 September 2024) (Judgment)

Neutral citation: [2024] KEELRC 2354 (KLR)

Republic of Kenya

In the Employment and Labour Relations Court at Nairobi

Employment and Labour Relations Cause E841 of 2021

BOM Manani, J

September 30, 2024

Between

Cyrus Mugo Muiruri

Claimant

and

Family Bank Limited

Respondent

Judgment

Background 1. The Claimant instituted these proceedings to challenge the Respondent’s decision to terminate his contract of service. The evidence on record shows that the parties entered into an employment contract on 1st July 2008 when the Respondent hired the Claimant’s services as a Sales and Marketing Officer.

2. The Claimant was later elevated to the position of Operations Manager. He held this position until 15th October 2018 when his services were terminated.

3. The decision to terminate the Claimant’s contract of service was triggered by a theft incident at the Respondent’s Ruiru branch on the night of 14th July 2018. Following this incident, it appears that the Respondent’s Automated Teller Machines (ATMs) were interfered with.

4. The Claimant contends that on 15th July 2018, he received information from the security guard at the branch that the bank’s ATMs were not functional. He states that he reported the incident to the Respondent’s Head Office and branch management.

5. The Claimant contends that he was advised by Mr. Brian Nzioki from the Respondent’s Head Office to restart the ATMs in order to resolve the technical challenges which they may have experienced. He contends that following these directions, he called the branch Operations Manager and asked her to meet him at the branch in order to restart the machines.

6. The Claimant avers that he arrived at the branch in the company of his family just before the branch Operation Manager arrived. He indicates that his children indicated that they wanted to relieve themselves. Consequently, he decided to access the bank premises before the Operations Manager arrived to enable the children access the conveniences.

7. The Claimant contends that he accessed the banking hall in the company of the security guard and his children. He says that when he entered the premises, he noticed that they were dusty and the trap door had been broken.

8. It is the Claimant’s case that on noticing the foregoing, he immediately stepped out of the banking hall and alerted the Respondent’s security manager about the incident. He contends that at the time, he had only accessed the banking hall but had not gone to the back office.

9. On the other hand, the Respondent contends that the Claimant breached its branch entry procedures when he accessed the banking hall on 15th July 2018 in the absence of a watch. The Respondent believes that the laxity exhibited by the Claimant in this respect was a demonstration of a deeper problem at the branch regarding failure to observe its policies, a factor which may account for the occurrence on the night of 14th July 2018 during which its premises were broken into.

10. The Respondent avers that after the two incidents of 14th July 2018 and 15th July 2018, it issued the Claimant a notice to show cause why disciplinary action should not be taken against him for failure to adhere to its policies. It contends that the Claimant’s response to the show cause was not satisfactory. As a result, it subjected him to a disciplinary hearing where-after his contract of service was terminated.

Issues for Determination 11. The parties filed a list of agreed issues. They identified the following as the issues that require determination:-a.Whether the Claimant’s termination was lawful and justified.b.Whether the Respondent accorded the Claimant due process and or fair opportunity to be heard.c.Whether the Claimant is entitled to the prayers sought in the claim.d.Who bears the costs of the suit?

12. Issues numbers a) and b) are intertwined. In order to determine whether the decision to terminate the Claimant’s contract was justified and lawful, the court has to consider whether the Respondent upheld fair procedure in releasing him from employment. Similarly, issues numbers c) and d) are interrelated since costs form part of the reliefs that are sought in an action.

13. In effect, I arrive at the conclusion that the dispute raises two issues for determination. These are:-a.Whether termination of the Claimant’s contract of service was lawful and justified.b.Whether the Claimant is entitled to the prayers sought in the claim.

Analysis 14. In order to determine whether a decision to terminate an employee’s contract of service is fair and lawful, the court is required to examine two things: the reason for the decision; and the procedure followed in making the decision. These two requirements are imbued in sections 40, 41, 43, 44, 45, 46 and 47 of the Employment Act. However, the facts and circumstances of each case will determine which of the aforesaid provisions of statute will apply to it. In the instant case, sections 41, 43, 45 and 47 of the Act are relevant.

15. Section 41 of the Employment Act entitles an employer to terminate the services of an employee if he (the employer) has a substantive justification to support his decision. Some of the reasons why the employer may sever an employment relation under this provision are: poor performance by an employee; misconduct by an employee; and physical incapacity of an employee. Misconduct of an employee is often considered in the context of section 44 of the Act.

16. Apart from meeting the requirement of substantive justification, the employer is required to ensure fair procedure in processing the release of an employee from employment. In this respect, section 41 of the Employment Act obligates him (the employer) to: notify the employee of the infraction which he is accused of; and allow the employee an opportunity to rebut the accusations against him often through an administrative hearing.

17. By virtue of section 43 of the Employment Act, the employer bears the burden of demonstrating that he had a valid reason to terminate an employee’s contract of service. Under section 45 of the Act, if the employer is unable to demonstrate the validity of the reason to terminate a contract of service and to further demonstrate that he upheld due process in making his decision to terminate the contract, the decision to terminate the contract will be deemed unfair.

18. Although sections 43 and 45 of the Employment Act, place the burden of justifying the decision to terminate a contract of service on the employer, section 47 of the Act has often been interpreted as placing the initial burden to demonstrate the unlawfulness of the decision to terminate the contract on the employee. As such, the employee must provide prima facie evidence which points to the unlawfulness of the employer’s decision before the employer is asked to justify the termination.

19. With respect to the burden of proof, the Employment Act only obligates the employer to justify the decision to terminate a contract of service on a balance of probabilities. Indeed, all that section 43 of the Act requires of the employer is for him to demonstrate that he had genuine grounds to entertain a reasonable belief that the employee had committed the infraction in question at the time he made the decision to terminate his (the employee’s) contract (Kenya Revenue Authority v Reuwel Waithaka Gitahi & 2 others [2019] eKLR).

20. In the instant case, the Respondent accuses the Claimant of having breached its branch entry procedure on 15th July 2018 when the latter gained entry into the Respondent’s Ruiru branch. The Respondent contends that its regulations required the Claimant to enter the banking hall in the presence of a watch and a security guard However, the Claimant accessed the premises without a watch.

21. The Respondent relies on two of its policies to anchor its case. These are the Operations Policies and Procedures Manual (OPPM) and the Physical Security Policy (PSP) appearing at pages 23 to 93 and 94 to 113 of the Respondent’s trial bundle dated 25th October 2023.

22. Clause 8. 6.4 of the PSP provides for the procedure of entry into the Respondent’s premises. It requires key holders to the premises to open them in the presence of a security guard. The policy provides that at the time of executing the entry procedure, other employees of the Respondent who may be present must maintain a safe distance from the premises.

23. The key holder who is also described as the searcher is required to enter the banking hall together with the security guard and undertake a search of the premises to confirm that all is well. It is only after this is done that the searcher will signal the rest of the members of staff to enter the premises for the day’s business.

24. During the trial of the case, the Claimant contested the applicability of the PSP to his case. He contended that the policy came into force in late 2021 following its approval by the Respondent’s Board on 30th November 2021. As such, it cannot be applied retrospectively to affect his case. I agree.

25. In addition to the PSP, the Respondent also has the OPPM. Like the PSP, this instrument also provides for entry procedure to the Respondent’s premises.

26. Clause 6. 5 of the OPPM sets out the steps to be followed whilst accessing the Respondent’s premises at any time. It provides as follows:-a.Before the searcher (the person executing the entry procedure) opens the banking hall, he must ensure that there is another member of staff referred to as the watch together with a security guard.b.Once the searcher confirms the presence of the watch and the security guard, he should proceed to open the premises under their watch. However, the two, together with any other employee who may be present, must maintain a safe distance from the premises.c.After opening the premises, the searcher should enter the banking hall whilst leaving the security guard and watch behind. Whilst inside the premises, the searcher should inspect them in a bid to confirm that they are incident free. It is only after doing this that he may signal other members of staff to enter the premises.

27. The above excerpt from the OPPM shows that the Respondent’s entry procedures require that before its officers access its banking hall, they should ensure that there are two other persons within the vicinity of the premises: a watch and a security guard. According to the OPPM, the watch has to be an employee of the Respondent.

28. The OPPM requires that once the key holder has confirmed the presence of the aforesaid two individuals, he should open the premises and gain access to them in order to inspect their state. He is required to inspect the inside of the premises alone as the security guard and watch stand outside. Once the searcher confirms that all is well inside the banking hall, he is required to signal other members of staff to enter the premises.

29. In their submissions, the Claimant’s advocates contend that the Respondent’s OPPM does not provide for the entry procedure during weekends and non-working hours. They refer to clause 3 in the OPPM to suggest that there is no requirement for the presence of a watch when accessing the bank outside normal work hours.

30. I have looked at this provision in the OPPM. It sets out the procedure for accessing the Respondent’s premises on non-working days in response to specific incidents such as false alarms which may have been triggered by motion sensors and natural phenomena such as wind. The provision also addresses occupancy of the Respondent’s premises outside normal work hours for purposes of completing special assignments or undertaking repairs/renovations in the premises.

31. In my view, clause 3 of the OPPM should not be read in isolation. It should be read together with clause 6. 5 thereof which sets out a detailed entry procedure to the Respondent’s branches at all times.

32. As confirmed in the preamble to clause 6. 5 of the OPPM, the entry procedure set out in the clause ‘’covers the security and the activity of opening the branch/bank’s premises at any time’’. Emphasis added by underlining. As such, I do not agree with the Claimant’s contention that the Respondent’s policies are silent on how to facilitate entry to its premises if there has been a suspected break in or when there is need to attend to the ATMs.

33. The evidence on record shows that the Claimant failed to observe the procedure in clause 6. 5 of the OPPM when he accessed the branch on 15th July 2018. The record shows that once he (the Claimant) was notified about the faulty ATMs, he reported the matter to the Head Office. In response, the Head Office asked him to restart the machine.

34. The record shows that the Claimant asked the branch Operations Manager to meet him at the branch so that the two could re-start the machine. The evidence further shows that when the Claimant arrived at the premises, the Operations Manager was yet to arrive. Despite this, the Claimant proceeded to enter the banking hall in the company of the security guard.

35. In effect, the Claimant accessed the Respondent’s premises in the absence of the Operations Manager who would have acted as his a watch. Clearly, this entry disregarded the entry procedure that is prescribed under clause 6. 5 of the OPPM.

36. The record of the disciplinary proceedings shows that the Claimant conceded that he did not observe the above entry procedure whilst accessing the Respondent’s premises on the material date. This is what he is quoted as saying before the Disciplinary Panel:-Bank: What is the procedure of entering the branch? Did you do that?Cyrus: Two custodians. No we were not two…..’’Bank: When accessing what did you want to do?Cyrus: I wanted to check if the area was ok and also to take the kids to help themselves.Bank: Had you ever accessed the branch before on Sundays/holidays?Cyrus: Yes, with a custodian.

37. The foregoing confirms that the Claimant was aware of the entry procedure in the Respondent’s OPPM. It confirms that he was aware that entry into the Respondent’s premises required the presence of a watch at all times. It also confirms that the Claimant had adhered to this procedure on previous occasions whilst accessing the Respondent’s premises during non-working days including Sundays and public holidays.

38. Despite this awareness, the Claimant elected to access the premises on the material date in the absence of a watch. That he breached this procedure is evident from the minutes of the Disciplinary Panel which he admits to have signed to authenticate them. The minutes demonstrate that the Claimant conceded this anomaly.

39. I sympathize with the fact that the Respondent elected to punish the Claimant despite his explanation on why he had to enter its premises in the absence of another workmate. As the Claimant indicates, his children needed to answer a call of nature and there were no other suitable facilities within their reach.

40. It is true that one may consider (as indeed the court does) that the Claimant’s action in the circumstances was not unreasonable. Yet, this does not negate the fact that he acted contrary to the Respondent’s security regulations as set out in its OPPM.

41. Had the court been in the Respondent’s shoes, it probably would have arrived at a different conclusion on the matter. However, this does not entitle it to substitute the Respondent’s decision with its own if the Respondent’s decision falls in the band of reactions that another reasonable employer, confronted with the same set of facts, would probably have made.

42. To upset the employer’s decision in the circumstances would be tantamount to usurping his prerogative to manage the workplace. This, the law does not permit.

43. This position has been affirmed in a series of judicial pronouncements. For instance, in Kenya Revenue Authority v Reuwel Waithaka Gitahi & 2 others [2019] eKLR the Court of Appeal, quoting the Halsbury’s Laws of England, expressed itself on the matter as follows:-“...In adjudicating on the reasonableness of the employer's conduct, an employment tribunal must not simply substitute its own views for those of the employer and decide whether it would have dismissed on those facts; it must make a wider inquiry to determine whether a reasonable employer could have decided to dismiss on those facts. The basis of this approach (the range of reasonable responses test) is that in many cases there is a band of reasonable responses to the employee's conduct within which one employer might reasonably take one view and another quite reasonably take another; the function of a tribunal as an industrial jury is to determine whether in the particular circumstances of each case the decision to dismiss the employee fell within the band of reasonable responses which a reasonable employer might have adopted. If the dismissal falls within the band, the dismissal is fair; but if the dismissal falls outside the band, it is unfair.”

44. The Respondent terminated the Claimant’s contract of service because the latter breached its branch entry/occupancy protocols. The Claimant’s action may have been informed by necessity. However, this does not render it any less of a breach.

45. Whilst one employer may have excused this conduct, another may, quite reasonably, have opted to terminate the Claimant’s contract in like manner as the Respondent. Having regard to the circumstances of the case and the applicable regulations, either of the reactions would be legitimate and the court is not entitled to interfere with it (the reaction). This is because they (the reactions) both meet the ‘’reasonable response’’ test. Consequently, I arrive at the conclusion that the Respondent has demonstrated that it had legitimate grounds to terminate the Claimant’s employment.

46. The Claimant’s counsel has contended that his client’s alleged breach of the Respondent’s entry protocol on 15th July 2018 cannot be said to have contributed to the theft incident that occurred on the night of 14th July 2018. Yet, it appears that the Respondent sought to link the two incidents in a bid to indirectly blame the Claimant for the theft and hence terminate his services.

47. I do not understand the Respondent as attempting to do what counsel suggests. The Respondent’s decision to terminate the Claimant’s services was anchored on his failure to adhere to its bank occupancy procedure as set out in its OPPM. This is a workplace infraction which can legitimately attract a sanction.

48. As regards the procedure that was followed in arriving at the decision, there is evidence that the Claimant was: served with a notice to show cause setting out the charges against him; invited to a disciplinary hearing in the company of a co-employee where he was heard; notified of the decision to terminate his employment for having breached the Respondent’s branch entry procedure; permitted to challenge the decision on appeal; and notified of the Respondent’s decision rejecting his appeal. As such, there is ample evidence to demonstrate that the Respondent observed fair procedure in arriving at its decision.

Determination 49. Having regard to the foregoing, I am satisfied that the Respondent’s decision to terminate the Claimant’s contract of service was justified and therefore lawful.

50. Consequently, I arrive at the conclusion that the Claimant is not entitled to the reliefs that he seeks through this action.

51. As such the case is dismissed with costs to the Respondent.

DATED, SIGNED AND DELIVERED ON THE 30TH DAY OF SEPTEMBER, 2024B. O. M. MANANIJUDGEIn the presence of:…………….……. for the Claimant………………for the RespondentORDERIn light of the directions issued on 12th July 2022 by her Ladyship, the Chief Justice with respect to online court proceedings, this decision has been delivered to the parties online with their consent, the parties having waived compliance with Rule 28 (3) of the ELRC Procedure Rules which requires that all judgments and rulings shall be dated, signed and delivered in the open court.B. O. M MANANI