https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1276

Macharia v Standard Chartered Bank Kenya Ltd (Civil Appeal E717 of 2024) [2026] KECA 1276 (KLR) (3 July 2026) (Judgment) Neutral citation: [2026] KECA 1276 (KLR) Republic of Kenya In the Court of Appeal at Nairobi Civil Appeal E717 of 2024 DK Musinga, P Lilan & JO Okello, JJA July 3, 2026 Between Charles John Macharia Appellant and Standard Chartered Bank Kenya Limited Respondent (Being an appeal from the judgment, decree and orders of the Employment & Labour Relations Court in Nairobi (B. Ongaya, J.) dated 15th March, 2024 in ELRC Cause No. E421 of 2020 Cause E421 of 2020 ) Judgment 1.This appeal arises from a Record of Appeal dated 1st August, 2024 where the appellant is dissatisfied with the whole judgment dated 15th March, 2024 and has set out six grounds of appeal in the memorandum of appeal. The grounds of appeal are summarised as follows: that the learned Judge erred in law and fact by finding that the termination of the appellant was procedural; that in concluding that the termination of the claimant was lawful, the learned Judge erred in fact and in law by considering the respondent’s case to the exclusion of the appellant’s; that the learned Judge erred in law and fact by finding that the respondent’s redundancy exercise was genuine; that the learned Judge erred in in law and fact by finding that termination was lawful because the underlying justification by the respondent was presumably genuine; the learned judge erred in law and fact by failing to take into account peculiar terms of relationship between the appellant and the respondent as against the redundancy claim; and the learned Judge erred in law and fact by finding that the appellant had abandoned the other reliefs he had sought. 2.The appellant prays that this appeal be allowed, that the entire judgment, orders and decree issued on 15th March, 2024 be set aside, that the amended memorandum of claim dated 4th May 2023 be allowed as prayed, and costs be awarded to the appellant. 3.From the record, the appellant filed an amended statement of claim dated 4th May, 2023. The appellant, being an employee of the respondent serving in the position of Relationships Manager effective 15th May, 2015, claimed that on diverse dates between 2018 and 2020, he was subjected to harassment and discrimination by the actions of his immediate supervisor, one Mr. Ian Amogola, who was his line Manager with the respondent. The harassment saw him undergo a disciplinary process which led to him being issued with a termination letter dated 19th December, 2019. He subsequently appealed against the termination and was reinstated by a letter dated 17th February, 2020. The reinstatement letter indicated that it was also to serve as a final warning letter. The appellant was reinstated and was later on informed that there was a pending retrenchment necessitated by a restructuring of the respondent. The appellant was then required to apply for a newly created position arising from the restructuring, and was expected to undergo performance-based interview. He objected to this on account of the pendency of the claim which was ongoing before the trial court. 4.In the amended claim, the appellant sought judgment against the respondent, inter alia, that: a declaration that the respondent pays the appellant an annual bonus of Kshs 2,331,000/=; a declaration that the respondent pays the appellant telephone allowance of Kshs 10,000/= for the months of January and February 2020 which was not paid; a declaration for annual increment of the appellant’s salary at 2% effective 1st April, 2019 and an increment of 5% effective 1st April, 2020 as given to other employees of the respondent; compensation for financial turmoil experienced by the appellant during the two months’ period which he did not receive his monthly salary on time as a direct consequence of the decision of the respondent to withhold his salary; a declaration that the Group Disciplinary Procedure is unlawful in so far as it denies employees the right to be represented by an external lawyer at both disciplinary and appeal hearings; exemplary damages and costs and interest of the suit; and that costs of the suit be awarded to the appellant. 5.The trial court in its judgment of 15th March, 2024 dismissed the suit with orders that each party to bear their own costs of the proceedings. 6.Aggrieved by that decision, the appellant lodged the instant appeal before this Court. He filed his notice of appeal dated 27th March, 2024 and filed in court on 16th May, 2024. He also filed his memorandum of appeal dated 1st April, 2024 that raised six grounds disputing the findings of the trial court. 7.The appeal was heard virtually on 3rd March, 2026. Learned counsel, Dr. Duncan Okubasu appeared for the appellant, while learned counsel Mr. Mbeche held brief for Mr. Weru for the respondent. The appellant relied on his written submissions dated 26th January, 2026 and also made oral highlights of the submissions. The respondent made oral submissions and relied on their written submissions dated 2nd March, 2026 which had been filed in Court in the morning of the hearing. 8.The appellant in his submissions identified six issues from the grounds of appeal including; first, the issue of procedural and substantive invalidity, secondly, failure to consider the appellant’s evidence, third, whether redundancy was genuine or not, fourth, whether the respondent’s action was presumed as genuine and thereby reversing the burden of proof, fifth, peculiar employment relationship, and sixth, whether the finding of abandoned relief was proper. 9.On the first issue of procedural and substantive invalidity, the appellant submitted that the respondent failed to comply with mandatory procedural requirements under sections 40, 41, 43, and 45 of the Employment Act. He avers that the respondent gave different justifications to the employees and the Commissioner for Labour, with employees being informed that there was redundancy, while the Commissioner was advised that the restructuring was necessitated by digitization process of the respondent’s services. 10.He further submits that the notice of redundancy was addressed to the wrong office against the provisions of section 40(1)(b) which require notice of redundancy to be given to the Commissioner of Labour. He further submitted that the principle of Last In First Out (LIFO) was ignored because section 40(1)(c) require that selection criteria include due regard to seniority when implementing redundancy policy. The appellant refers to the following authorities: Mercy Wangari Muchiri vs Total Kenya Limited [2020] eKLR, Allied Workers Union vs Kenya Airways Limited [2016] eKLR and Elizabeth Onyango vs Mobile Planet [2014] eKLR. He concludes his submissions on this point by averring that the redundancy had been pre- determined because the handover directive was issued before the formal Notice of Redundancy, evidencing pre-meditation. 11.On failure to consider the appellant’s evidence, the appellant avers that the learned judge selectively evaluated evidence focusing exclusively on the respondent’s account while disregarding critical evidence of victimization. He further submits that evidence on reputational damage was ignored by the trial court, this having arisen when the respondent sent an email to clients during the pending disciplinary appeal and thereby damaged the appellant’s professional standing. 12.On the third issue of declaration of redundancy not being genuine, the appellant submitted that the redundancy was not genuine because the respondent attributed underperformance to the appellant, while at the same time admitting that the performance management process was flawed. 13.On the issue of presumed justification, the appellant submitted that the learned judge erroneously presumed the respondent’s justification was genuine, reversing the burden of proof, whereas section 43(2) of the Employment Act places the evidential burden on the employer. The learned judge failed to recognize the internal contradictions; he avers. He relies on the case of Barclays Bank vs Mwangi__ [2014] eKLR. 14.During the oral highlights, counsel for the appellant submitted that the main issue before this Court was whether the respondent had undertaken a genuine redundancy exercise, and whether the reasons for redundancy were legitimate and genuine. Counsel submitted that the reasons for redundancy were not clear because different reasons were advanced for the redundancy i.e., one was restructuring, and the other reason was the digitization exercise. He submitted that redundancy occurs only when there is no fault on the part of an employee. In this case, however, redundancy was taking place when the employer/employee relationship was severely strained. That, in his opinion, demonstrated want of genuineness in the redundancy process. 15.On the abandoned reliefs finding, the appellant submitted that the learned judge incorrectly found that reliefs were abandoned, despite comprehensive submissions covering each monetary head of the claim. In this regard, the appellant relies on the case of Kenya Bus Service vs Mboya [2021] eKLR. The appellant has proceeded in his submissions to tabulate the respective quantum covering compensation for unfair termination, special damages claimed and unchallenged, exemplary damages and costs. 16.The appeal is opposed vide submissions dated 2nd March, 2026.The respondent opened their submissions by stating that the appeal is devoid of merit and does not meet the threshold for appellate interference. The respondent has identified four issues which it has addressed in its submissions. The issues are:a.whether the redundancy was genuine;b.whether the respondent complied with section 40 of the Employment Act;c.whether the appellant proved victimization or bad faith; andd.whether the judgment should be disturbed. 17.On the first issue, the respondent submitted that the termination of the appellant’s employment arose from a genuine organizational restructuring within the respondent’s commercial banking function, which affected the category of employees to which the appellant belonged, namely, relationship managers.He further submitted that the restructuring had its operational impact in that the number of available positions was reduced, and that there were insufficient roles for all existing relationship managers. The appellant’s role had therefore become superfluous, and therefore the learned trial judge correctly found that there was a valid and genuine operational reason for the redundancy. 18.On the second issue, that is, whether the respondent complied with section 40 of the Employment Act, it is the respondent’s case that it complied with the requirements of the section. The appellant received prior notice of the intended redundancy, the Ministry of Labour was duly notified, and the appellant was informed of and participated in the selection process, and that the redundancy was effected only after completion of the statutory process. In the circumstances, the respondent avers, the evidence on record establishes procedural compliance with section 40 of the Employment Act, and the learned trial Judge was correct in so finding. 19.On the third issue, that is, whether the appellant proved victimization or bad faith, it is the respondent’s submission that the appellant did not discharge the burden of proving that the redundancy was actuated by victimization, malice, discrimination or bad faith. The respondent submits that the appellant’s case before the trial court was founded on matters relating to his employment history, including placement on performance improvement plans, alleged workplace disagreements, the issuance of warning letters, and the appellant’s working relationship with his supervisor. The respondent further submitted that the appellant did not place before the court any evidence establishing a causal nexus between the alleged workplace issues and the decision to declare his role redundant. There was no evidence adduced that the restructuring was initiated because of the appellant, that the selection process was manipulated to target the appellant, that he was treated differently from other employees within the same category, or that the redundancy exercise was used as a disguise for disciplinary or performance related termination. The respondent closed its submission on this point by averring that the appellant failed to prove victimization, discrimination, or bad faith, and the learned trial judge was therefore correct in rejecting the allegation of victimization. 20.On the final issue, that is, whether the judgment should be disturbed, the respondent submitted that there was no basis upon which this Court ought to interfere with the judgment of the trial court. It submitted that the trial Judge considered the pleadings, the oral and documentary evidence, and the submissions of the parties and arrived at findings that were fully supported by the evidence and consistent with the applicable legal principles. The judgment is therefore sound in fact and in law. 21.This is a first appeal, therefore, this Court’s mandate as a first appellate court is settled as being re-hearing or retrial of the case, based on the material on record. This duty is well provided for in rule 31(1)(a) of the Court of Appeal Rules (2022), which requires this Court to re-examine both issues of law and fact. However, while this Court has the power to arrive at its own independent decision, we must exercise caution and be slow to overturn a trial court’s findings of fact because we did not have the advantage of seeing or hearing the witnesses. In Gitobu Imanyara & 2 Others vs Attorney General [2016] eKLR, the Court observed thus:“…being a first appeal, it is trite law, that this Court is not bound necessarily to accept the findings of fact by the court below and that an appeal to this Court from a trial by the High Court is by way of retrial and the principles upon which this Court acts in such an appeal are well settled. Briefly put, they are that this court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowances in this respect.” 22.This Court restated this position in Kimathi vs Ericsson Kenya Limited [2023] KECA 106 (KLR) where it held thus:“This being a first appeal, we are cognizant of the fact that our primary role is to re-evaluate the evidence before the trial court and draw our own conclusions bearing in mind that we, unlike the trial court, did not have the benefit of hearing the witnesses testify…. Our duty is to reconsider the evidence, evaluate it and draw our own conclusions…In this regard we will only depart from the findings by the trial court if they are not based on the evidence on record, or where the learned judge is shown to have acted on wrong principles of law.” 23.Bearing in mind rule 31(1)(a) of the Court of Appeal Rules (2022) and the plethora of authorities in this area, we will only overturn a trial court’s finding if it is shown to be clearly wrong, or if the judge failed to take into account material circumstances, or made a finding that no reasonable tribunal, properly directing itself on the evidence could have made 24.We have carefully considered the record, the grounds of appeal, the parties’ submissions and the law. We discern the following four issues for determination:a.whether the redundancy undertaken by the respondent was genuine;b.whether the process of termination of the appellant’s employment was procedurally and lawful;c.whether the trial court ignored material evidence relating to victimization of the appellant; andd.whether the learned judge erred by finding that the appellant had abandoned reliefs that he had pleaded and fully argued. 25.We start by considering the first two issues because they are intertwined. This appeal raises broad issues of termination of contract of service on account of redundancy and the procedure to be followed in the implementation. Termination of a contract of service on account of redundancy is governed by section 40 of the Employment Act. Section 40(1) lays down the procedure to be followed when terminating a contract of service on account of redundancy. The section provides—“An employer shall not terminate a contract of service on account of redundancy unless the employer complies with the following conditions—(a)…..b.where an employee is not a member of a trade union, the employer notifies the employee personally in writing and the labour officer;c.the employer has, in the selection of employees to be declared redundant had due regard to seniority in time and to skill, ability and reliability of each employee of the particular class of employees affected by the redundancy; 26.Section 2 of the Act defines a labour officer thus —“labour officer” means a person appointed as the Commissioner of Labour, a senior Deputy Commissioner of Labour, a Deputy Commissioner of Labour, an Assistant Commissioner of Labour, a Chief Industrial Relations Officer, a Deputy Chief Industrial Relations Officer, a Senior Labour Officer, and Industrial Relations Officer or a Labour Officer;” 27.The section further defines redundancy to mean —“...the loss of employment, occupation, job or career by involuntary means through no fault of an employee, involving termination of employment at the initiative of the employer, where the services of an employee are superfluous and the practices commonly known as abolition of office, job or occupation and loss of employment;” 28.Section 40 as read together with section 2 lay down the procedure for termination on grounds of redundancy. Section 40(1)(b) specifically requires that a notice be given to the employee and to the Commissioner of Labour. In the instant case, it is not disputed that a notice of redundancy was given to the appellant and to the labour officer. The only contention is that the statutory notice was issued to the “labour officer in charge of the area” and not the “Commissioner of Labour.” Section 2 of the employment Act however defines “Commissioner of Labour” to include a Labour Officer. The appellant in his submissions aver that the notice purportedly issued did not conform to the law because it was issued to the “labour officer” and that this rendered the termination unlawful. We find that the notice sent to the “labour officer” instead of the “Commissioner of Labour” is not a fatal omission so as to nullify the notice. 29.From the record of appeal, the redundancy was occasioned by restructuring of the respondent’s business affecting the Commercial Banking Unit and Institutional Banking Unit. This is a fact that was communicated to all employees, including the appellant. It is observed that the appellant raised queries with the management and was informed vide an email dated 7th September, 2020 that the restructuring was an organizational exercise unrelated to any individual concerns previously raised with the appellant. It was on the basis of this clarification that the appellant participated in the process by applying for the new roles that had been created. 30.Did the trial court consider this evidence? On page 11 of the judgment, the court observed—“The respondent has by his own submissions at paragraph 47 confirmed that the respondent was undertaking a retrenchment exercise for which the respondent instituted a Vantage Insurance Policy against retrenchment. By that assertion and the alternatives offered through the interviews at which the claimant was not successful, there is no doubt that the respondent was engaged in genuine redundancy…. The court finds that as at termination there existed genuine redundancy situation as envisaged in section 43 of the Employment Act as constituting a genuine reason for termination.” 31.We see no reason to interfere with the findings of the trial court on this aspect. The appellant was not selected for redundancy, rather there was a genuine business need by the respondent to restructure the business. In Kenya Airways vs Aviation Allied Workers Union Kenya & 3 Others [2014] KECA 403 (KLR), this Court observed thus —“redundancy is a legitimate ground for terminating a contract of employment provided there is a valid and fair reason based on operational requirements of the employer and termination is in accordance with fair procedure. As section 43(2) provides, the test of what is a fair reason is subjective. The phrase “based on operational requirements of the employer “must be construed in the context of the statutory definition of redundancy. What the phrase means…is that while there may be underlying cases leading to a true redundancy situation, such as reorganization, the employer must nevertheless show that the termination is attributable to the redundancy – that is that the services of the employee has been rendered superfluous or that redundancy has resulted in abolition of office, job or loss of employment.” 32.This Court cited with approval the New Zealand case of Aoraki Corporations Limited vs Collin Keith Mcgavin; Civil Appeal No. 2 of 1997 [1998] 2 NZLR 278 where the Court of Appeal of New Zealand stated thus —“…it is convenient in other termination cases, and essential in redundancy cases, to consider whether the dismissal was substantively justified. Thus, if dismissal is said to be for a cause it may be substantively unjustified in the sense of a cause not being shown or being subject to significant procedural irregularity as to cast doubt upon outcome….Redundancy is a special situation. The employees have done no wrong. It is simply that in the circumstances the employer faces, their jobs have disappeared and they are considered surplus to the needs of the business. Where it is decided as a matter of commercial judgment that there are too many employees in the particular area or overall, it is for the employer as a matter of commercial judgment to decide on the strategy to be adopted in the restructuring exercise and what position or positions should be dispensed with in the implementation of that strategy and whether an employee whose job has disappeared should be offered another position elsewhere in the business.It cannot be mandatory for the employer to consult with all potentially affected employees in making any redundancy decision. To impose an absolute requirement of that kind would be inconsistent with the employer’s prima facie right to organize and run its business as it sees fit. And consultation would often be impracticable, particularly where circumstances are seen to require mass redundancies. However, in some circumstances an absence of consultation where consultation would reasonably be expected may cast doubt on the genuineness of the alleged redundancy or its timing. So, too, may a failure to consider any redeployment possibilities.” 33.This passage is apt. In the present case, the respondent gave reasons for restructuring being that the respondent was amalgamating two business units, the Global Banking unit and the Commercial Banking unit. The effect of such merger was that some positions were going to be scrapped. For instance, the position of relationship managers had 13 staff, but in the restructuring/merger, the same was reduced to four, and all the employees were given opportunity to apply and compete for the available positions. From our understanding, the restructuring was implemented through various means such as amalgamation of two business units, abolition of some roles and reconfiguration of others. Indeed, in the role of relationship managers, nine employees were declared redundant and only four were retained. We thus find that as long as the respondent genuinely believed that there was a redundancy situation, any termination was justified as this was purely a business decision. Accordingly, we are satisfied that there was a valid, justified and genuine reason- based redundancy. 34.As regards procedural fairness on the redundancy, the appellant submitted that there was no compliance with requirements of sections 40, 41, 43 and 45. The appellant avers that the respondent did not comply with section 40(1)(c) which requires that due regard should be given to seniority by applying the principle of Last In First Out (LIFO). It is our finding that the respondent complied with the relevant provisions of the law. By giving notice to the staff on the pending retrenchment and redundancy and providing opportunity for all parties to participate in the new recruitment process, the same was as fair as it could be. The respondent gave notice on the criteria to be used which was basically through interviews. The criteria provided for under section 40(1)(c) is seniority in time, skill, ability and reliability. The criteria applied of interviewing the applicants cannot be said to have departed significantly from the statutory criteria. 35.The appellant alleged that his termination was based on discrimination and harassment by his line supervisor. This however was not proved and the fact that the respondent explained to the appellant about the restructuring, and gave him an opportunity to participate in the interviews, debunks the claim of discrimination and harassment. We therefore find that the respondent applied fair procedure in the termination of the services of the appellant. 36.Was the termination lawful and procedural? The appellant has submitted that his termination was unlawful and unprocedural contrary to sections 40, 41, 43 and 45 of the Employment Act. Section 40 deals with termination on account of redundancy. This we have dispensed with and found that the same was procedural. Section 41 deals with notification and hearing on termination on account of misconduct. Section 41(1) provides -“Subject to section 42(1), an employer shall,before terminating the employment of an employee, on the grounds of misconduct, poor performance or physical incapacity explain to the employee, in a language the employee understands, the reason for which the employer is considering termination and the employee shall be entitled to have another employee or a shop floor union representative of his choice present during this explanation.” 37.We note that this section does not apply in the circumstances because the termination under consideration and for which the appellant has majored on, is termination based on redundancy. The initial termination for which the appellant was dismissed was overtaken by events when the appellant appealed the decision of the disciplinary committee and was later on reinstated. Section 41 therefore does not apply in the instant case. Section 43 deals with proof for termination. Again, the termination under consideration is termination on account of redundancy. The reasons for the respondent terminating the appellant’s contract of service on account of redundancy were given. We have dealt with the issue substantively and will not belabour the point further. Section 45 on the other hand deals with unfair termination and is not applicable here. Again, we observe that from the record of appeal and the appellant’s submissions, the issue for consideration is termination on grounds of redundancy, not unfair termination per se. 38.Finally, is the question on whether the learned Judge failed to consider the appellant’s evidence and erred by finding that the appellant had abandoned reliefs that he had pleaded and fully argued. On the consideration of the appellant’s evidence, we are persuaded that the judge did consider the evidence placed before him to arrive at the determination. As to the reliefs, it is true that the appellant had pleaded the reliefs sought. On Page 10 of the judgment, the learned judge held that —“There being no unfair termination, the claim must fail. The claimant made no submissions to justify the reliefs enumerated in the amended statement of the claim and they are deemed abandoned for want of justification.” 39.Having perused the records of appeal, we find that the trial judge misdirected himself on the facts before him and thereby arrived at a conclusion that the reliefs had been abandoned. The judge ought to have considered the pleadings and the evidence placed before him and make a determination on the issue. Therefore, this being a first appeal, this Court is mandated to re-evaluate the evidence in order to make its own independent determination. 40.On the issue of reliefs, the appellant in his submissions prays for damages which he avers are claimed and unchallenged. The reliefs sought include general damages for unlawful dismissal, special damages including bonus pay of Kshs 2,331,000/=, insurance loss of Kshs 5,598,331.29 which he submits that he could not apply for because of unfair dismissal, telephone allowance of Kshs 10,000/= expectation damages of Kshs 700,000/= for golf club membership, annual increments withheld at the rate of 2% in 2019 and 5% in 2020; exemplary damages of Kshs 2,000,000/= on account of harassment, discrimination and sub judice interviews concerning the appellant’s performance, and costs of Kshs 5000/= on grounds that the respondent remains in contempt of a previous throwaway costs orders. In his witness statement in the trial court dated 13th June, 2023, the appellant pleaded the same reliefs and adduced evidence on the same. Whereas the reliefs are pleaded and witness statement captures the prayers, the appellant has not proved that he was entitled to these reliefs. Thus, on the prayer for special damages, the appellant just pleaded and stated his relief without any supportive documents to justify his claims. For instance, on golf club membership, the appellant in his witness statement, states that he is entitled to membership of a golf club in Nairobi which goes at the rate of approximately Kshs 700,000/= per year, which rates he has downloaded from the internet. There is no evidence whatsoever to indicate that he had applied for, or was a member of any club. On the issue of general damages for unfair dismissal, this claim also fails because the court has already determined that there was no unfair dismissal. 41.In view of the conclusions arrived at on each of the issues addressed, we find no reason to interfere with the trial court’s findings. The trial court considered the totality of the material before it and arrived at the correct conclusion by dismissing the claim. 42.Thus, having considered the record of appeal, the impugned judgment, the parties’ submissions, the highlights by counsel, the authorities cited and the law, we are persuaded that this appeal lacks merit. 43.Consequently, the appeal is dismissed. Each party shall bear its own costs of the appeal. DATED AND DELIVERED AT NAIROBI THIS 3RD DAY OF JULY, 2026.D. K. MUSINGA, PRESIDENT......................................JUDGE OF APPEALPAUL LILAN......................................JUDGE OF APPEALDR. J.O. OKELLO......................................JUDGE OF APPEALI certify that this is a true copy of the original.SignedDEPUTY REGISTRAR.