https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1128

Ecobank Kenya Ltd v Ngina (Civil Appeal 4 of 2020) [2026] KECA 1128 (KLR) (12 June 2026) (Judgment) Neutral citation: [2026] KECA 1128 (KLR) Republic of Kenya In the Court of Appeal at Nairobi Civil Appeal 4 of 2020 W Karanja, LA Achode & AO Muchelule, JJA June 12, 2026 Between Ecobank Kenya Limited Appellant and Ndombi Georgina Ngina Respondent (Being an appeal from the Judgment of the Employment and Labour Relation Court at Nairobi, (Nduma J), dated 31st July 2018 in ELRC Cause No. 1235 of 2014 Cause 1235 of 2014 ) Judgment 1.This appeal originates from a Memorandum of Claim dated 15th July 2014, filed by Ndombi Georgina Ngina the respondent herein, against Ecobank Kenya Limited the appellant seeking orders as follows:i.House, fuel and transport allowance for the month of May 2014 in the sum of Kshs. 58,753.ii.Two (2) months’ salary in lieu of notice in the sum of Kshs. 611,408.iii.Severance pay calculated at the rate of three (3) months’ salary for each completed year of service, amounting to Kshs. 6,419,784.iv.Damages for wrongful dismissal and for loss of earnings up to retirement, estimated at five (5) years.v.Issuance of a Certificate of Service. 2.According to the respondent, she was employed by the appellant on 11th June 2007, in the position of Customer Service Resolution Officer. She served continuously until 9th May 2014, when her employment was terminated on account of redundancy. She averred that the said termination was unlawful, unfair, and in breach of both statute and the appellant’s internal human resource policies. That she was improperly and unjustifiably singled out for retrenchment, without being afforded a fair opportunity to be heard, or considered for alternative placement within the appellant’s organization. That no meaningful consultation was undertaken and she was denied the chance to apply for, or to transition into other available roles. 3.The respondent claimed that the appellant failed to comply with the mandatory provisions of section 40 of the Employment Act, 2007, as no proper prior notice of redundancy was issued to her, or to the relevant Labour Office. That any purported notification was effected after the fact, thereby rendering the process procedurally defective. In addition the respondent was dissatisfied with the way the termination was executed, stating that she was abruptly summoned, issued with a termination letter without explanation, and immediately escorted out of the appellant’s premises by security personnel. Her access to the workplace systems was terminated forthwith, and she was denied an opportunity to clear or seek clarification. She characterized this as humiliating and demeaning treatment. 4.In a response dated 2nd September, 2014 the appellant was adamant that the termination of the respondent’s employment was lawful, justified, and effected pursuant to genuine redundancy, arising from organizational restructuring. That the appellant was undertaking a phased reorganization of its operations over a period of time, which entailed structural changes within various departments, including the Domestic Bank Department where the respondent was stationed. As part of the process the Customer Service Resolution, (CSR) function in which the respondent served was reconfigured and ultimately absorbed into a broader and more advanced role within the Customer Service Quality (CSQ) Unit. This Unit subsequently evolved into a more strategic Customer Experience Management (CEM) function. 5.The appellant averred that the restructuring resulted in the abolition of the respondent’s position and the new role created under the reorganization required enhanced competencies, broader responsibilities, and a higher level of qualification. The respondent did not possess these qualifications and therefore, was not suitable for redeployment into the new position. The restructuring process and the resultant changes were duly communicated to staff within the affected departments, including the respondent, and the decision to declare her redundant was made in accordance with operational requirements. 6.During the hearing, Gloria Everlyne Byamuggisha (RW1), the appellant’s Head of Human Resources for Kenya and East African Community, testified that the appellant undertook an internal reorganization aimed at improving efficiency and aligning operations with business needs. This restructuring affected several departments, including the one in which the respondent worked and her position as Customer Service Resolution Officer was rendered redundant and abolished. The restructuring process was communicated internally, and the employees including the respondent, were aware, or ought to have been aware of the changes. RW1 asserted that the redundancy was conducted lawfully and in accordance with company policy, and the respondent was paid her terminal dues as required. 7.Nduma J (as he then was), considered the evidence before him and in a judgment dated 31st July 2018, delivered by Onyango J on his behalf on 10th August 2018, he found in favour of the respondent. The learned Judge held that whereas the respondent was terminated for a valid reason, the appellant did not adhere to the mandatory procedural requirement under section 40 of the Employment Act. Accordingly, he awarded the respondent as follows:i.Five (5) months in compensation for the un-procedural declaration of redundancy ……… ….Kshs. 1, 528,820ii.Two months’ notice pay …………….…Kshs. 611,408iii.Unpaid allowances at time of termination..Kshs 58,753Total award - Kshs. 2,198,981iv.Provision of certificate of service within 30 days of the judgment.v.Interest at court rates from date of filing suit in respect of (ii) & (iii) above and from date of judgment in respect of (i) above till payment in fullvi.The respondent to pay costs of the suit 8.The appellant indicated its discontentment with the judgment by filing this appeal. It advanced five grounds of appeal in the memorandum of appeal dated 6th January 2020 as follows:1.The Judge misdirected himself in law in finding that the respondent was not accorded personal audience with regard to the selection criteria that declared her redundant.2.The Judge erred in fact and in law in finding that the appellant did not, before declaring the respondent redundant, explain to her why she was selected for the redundancy and why she could not be redeployed to the new created positions.3.The learned Judge erred in fact and in law in failing to appreciate the emails circulated by the appellant to all its staff members and the meetings held to communicate the restructuring and redundancy as comprising notice to the respondent.4.The Judge erred in fact and law in finding that the respondent was entitled to three months termination notice.5.The Judge erred in fact in failing to find that the respondent was an employee of Ecobank Kenya Limited entitled to a one month termination notice period, and finding that the respondent was entitled to three months termination notice period provided for employees of the Ecobank Group. 9.The appellant filed submissions dated 29th July 2020 through the firm of M/S Njoroge Regeru and Company Advocates, while the respondent filed submissions dated 8th October 2020 through the firm of M/S Nchogu, Omwanza & Nyasimi Advocates. 10.The appellant urged that the redundancy arose from a bona fide and lawful restructuring of its operations, which led to the abolition of the respondent’s position. It contended that the Customer Service Resolution role was replaced by a more advanced Customer Experience Management position, with broader responsibilities and higher qualification thresholds. That the respondent was aware of the restructuring, and she applied for the new role. She was however, unsuccessful thereby justifying the decision to declare her redundant. 11.On the question of procedure, the appellant maintained that it substantially complied with section 40 of the Employment Act. That the respondent was adequately informed of the restructuring through internal communications and meetings, and that in selecting her for redundancy, due consideration was given to the statutory criteria of seniority, skill, ability, and reliability. It was posited that although the notice to the Labour Office may have been issued late, such lapse was not fatal to the process and did not render the redundancy unlawful. 12.With respect to remedies, the appellant urged that the respondent was adequately compensated in accordance with the law, having received severance pay more than the statutory minimum, together with additional ex gratia benefits, including extension of medical cover and favourable loan terms. It was contended that the award of five months’ salary as compensation was, therefore, unwarranted and excessive. In support of its position on the appropriate level of compensation, the appellant relied on Charles Nyangi Nyamohanga v Action Aid International [2015] eKLR, Hellen Nyanganyi v Mattresses Limited & another [2017] eKLR, and Margaret Mumbi Mwago v Intrahealth International [2017] eKLR, where the court awarded between two and three months in damages for failure to notify the Labour Office. 13.In addition, the appellant contended that the Judge erred in awarding two months’ salary in lieu of notice based on a three- month notice period, while the applicable employment contract expressly provided for one month’s notice period. That there was no legal basis for departing from the contractual term, or invoking the inapplicable Group Human Resource Policies. 14.In rebuttal, the respondent urged that the appellant failed to comply with the mandatory requirements of section 40 of the Employment Act. It contended that no proper notice of the intended redundancy was issued to the respondent personally, or to the Labour Office at least one month prior to the termination. The respondent argued that the emails relied upon by the appellant merely communicated a general restructuring and did not constitute a valid redundancy notice, as they neither specified the reasons and extent, nor the employees to be affected. That the purported notification to the Labour Office was made after the termination had already taken effect, thereby rendering the process fatally defective. 15.In support of this position, reliance was placed on the case of Thomas De La Rue (K) Ltd v David Opondo Omutelema [2013] eKLR, where this Court underscored the necessity of strict compliance with the notice requirements under section 40.The respondent also invoked the holding in Kenya Airways Limited v Aviation & Allied Workers Union Kenya & 3 others [2014] eKLR, for the proposition that the provisions of section 40 are mandatory and must be adhered to in effecting a lawful redundancy. Further support was drawn from the English decision in Williams v Compair Maxam Ltd, as cited with approval in Kenya Airways Limited (supra), for the principle that redundancy procedures, including notice and consultation, are intended to enable affected employees to prepare and mitigate the consequences of job loss. 16.The respondent further submitted that the appellant failed to engage her in any meaningful consultation prior to the termination, contrary to both statutory requirements and international labour standards. In this regard, she cited Article 13 of Recommendation No. 166 of the ILO Convention No.158 – Termination of Employment Convention, 1982 as domesticated by Article 2 of the Constitution of Kenya, which emphasize the duty of employers to provide information and engage in consultations with employees prior to termination on account of redundancy. She argued that such consultation would have afforded an opportunity to clarify the apparent confusion regarding the position allegedly abolished and to explore alternatives. 17.The respondent asserted that the award of five months’ salary as compensation was a proper exercise of judicial discretion under section 49 of the Employment Act, considering the circumstances of the case, including the manner of termination and the respondent’s length of service. Regarding the principles governing appellate interference with discretion, she referred to Mrao Ltd v First American Bank of Kenya Ltd & 2 others [2003] eKLR, to state that an appellate court ought not to interfere unless it is shown that the trial court misdirected itself, or arrived at a plainly wrong decision. 18.In addition, the respondent referred to this Court’s decision in Kenfreight (E.A.) Limited v Benson K. Nguti [2016] eKLR, as affirmed on appeal by the Supreme Court (Kenfreight (E.A.) Limited v Benson K. Nguti [2019] eKLR) to demonstrate that awards of compensation, even up to the statutory maximum, fall within the discretion of the trial court and ought not to be lightly interfered with. She fortified this argument by stating that in Kenya Airways Limited (supra), compensation of six (6) months’ salary was upheld for failure to adhere to redundancy procedures. 19.Regarding payment in lieu of notice, the respondent submitted that she was entitled to three months’ notice in accordance with the applicable contractual terms and the Eco-bank Group Human Resource Policies. It was argued that the appellant’s reliance on a document providing for one month’s notice is misplaced, as that document did not constitute the governing employment contract. The respondent invoked the principle in National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & another [2001] eKLR, to assert that courts cannot rewrite contracts, and that the trial court correctly enforced the applicable contractual provision providing for three months’ notice. 20.During the plenary hearing on 18th November 2025 via the virtual platform, Ms.Mathangi learned counsel appeared for the appellant while Mr. Momanyi learned counsel was present for the respondent. They both relied on their filed submission and opted not to highlight them. 21.This is a first appeal and we are obligated to re-evaluate and re- analyze the evidence on record to draw our own independent conclusions. In so doing we bear in mind that we neither saw nor heard the witnesses, and give allowance therefore. This mandate was articulated in the decision of this Court in Gitobu Imanyara & 2 others v Attorney General [2016] eKLR as follows:“[A]n 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.From a reading of the record of appeal and the rival submissions of the parties we are of the view that this dispute can be settled by the determination of two issues. One is whether the termination of the respondent’s employment on account of redundancy was lawful and procedurally fair, and the other is whether the remedies awarded by the trial court were justified and ought to be upheld. 23.It is not in dispute that the respondent was employed by the appellant on 11th June 2007, in the position of Customer Service Resolution Officer, and that on 9th May 2014, her employment was terminated on account of redundancy. Section 2 of the Employment Act defines redundancy as:“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.” (emphasis added) 24.The central question in this dispute is whether the said redundancy met the procedural safeguards prescribed under section 40 (1) of the Employment Act which provides that:1.An employer shall not terminate a contract of service on account of redundancy unless the employer complies with the following conditions—a.where the employee is a member of a trade union, the employer notifies the union to which the employee is a member and the labour officer in charge of the area where the employee is employed of the reasons for, and the extent of, the intended redundancy not less than a month prior to the date of the intended date of termination on account of redundancy;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 the skill, ability and reliability of each employee of the particular class of employees affected by the redundancy;d.where there is in existence a collective agreement between an employer and a trade union setting out terminal benefits payable upon redundancy; the employer has not placed the employee at a disadvantage for being or not being a member of the trade union;e.the employer has where leave is due to an employee who is declared redundant, paid off the leave in cash;f.the employer has paid an employee declared redundant not less than one month's notice or one month's wages in lieu of notice; andg.the employer has paid to an employee declared redundant severance pay at the rate of not less than fifteen days pay for each completed year of service.” 25.According to Black’s Law Dictionary (6th Edition), redundancy in employment is defined as the involuntary loss of a job, career or occupation, initiated by the employer due to the employee’s services becoming superfluous, often through no fault of the employee. It represents a permanent, non-voluntary termination. Therefore, the key elements of redundancy are that the termination is attributable to no fault of the employee and is initiated by the employer due to the employee’s services becoming superfluous. 26.In the case before us the appellant argues that the redundancy was as a result of lawful restructuring, which led to the abolition of the respondent’s position, and the respondent was adequately informed of the redundancy through emails. The appellant concedes that notice to the labour officer was not issued within the statutory period but asserts that such lapse was not fatal to the process and did not render the redundancy unlawful. Thus, according to the appellant, it complied with section 40 of the Employment Act. 27.On the other hand, the respondent contends that no proper notice of the intended redundancy was issued to her personally, or to the labour officer, at least one month prior to the termination. She maintains that section 40 of the Employment Act is couched in mandatory terms, and the appellant failed to comply with it. 28.In concluding that the redundancy met the substantial requirement but failed to meet the procedural requirement, the superior court rendered itself thus:“17.The respondent however did not strictly follow section 40 of Employment Act, in effecting the redundancy. The respondent admitted that there was no notice specifically addressed to the claimant and to the Labour office notifying the claimant personally and the labour office that the position held by the claimant was about to be declared redundant. Section 40 speaks in mandatory terms as follows:-……18.It is apparent that the respondent did not comply with section 40 (1) (b) in declaring the claimant redundant.19.Even though, the respondent has carefully explained why it did not re-deploy the claimant, it is also apparent that it did not accord the claimant personal audience with regard to the selection criteria applied and did not before declaring the claimant redundant explain to her why she was selected for the redundancy and why she could not be re-deployed to the new created positions. It is evident that Gloria was hostile to the claimant when she sought explanation on the matter and she ordered her to immediately vacate the company premises. She was treated rudely, and escorted out of the compound like a criminal. The claimant was not allowed to clear from her office and her communication account was disabled immediately upon being given the letter of termination.20.This is not the letter and spirit of section 40(1) (c) of the Act. Clearly the respondent also violated this provision in the manner it dealt with the claimant.21.Accordingly, the court finds that even though the respondent had a valid reason to declare the claimant redundant, it did not meet the mandatory procedural requirements provided under section 40 as read with section 41 and 45 of the Employment Act, 2007. The court so finds." 29.It is firmly settled by this Court that compliance with section 40 of the Employment Act is mandatory. In Kenya Airways Ltd v Aviation & Allied Workers Union Kenya & 3 others [2014] KECA 404 (KLR) Maraga J (as he was then), held that:“Though contractual, employment relations have some sort of statutory underpinnings. Part VI of the Employment Act 2007 in a nutshell outlaws unreasonable or unjustified termination of employment. Though it requires an employee to proof (sic) that the termination of his employment was unlawful, in my view, it places a heavier burden of proof upon the employer to justify any termination of employment. Section 40(1) of the Employment Act, which provides for the implementation of the redundancy decision, provides in mandatory terms that “[a]n employer shall not terminate a contract of service on account of redundancy unless … [he] complies with the … conditions” therein stipulated. As this is the central provision in the second issue of fair play in redundancy that we need to determine in this appeal, I need to set it out verbatim." 30.The appellant argues that the respondent was adequately informed of the redundancy. We have sight of the email sent on Friday, 6th September 2013, from Kassi Ehouman to ALLEKE. The subject of the email is “DOMESTIC BANK REORGANISATION.” The email contains the names of the staff redeployed from the Sales Hub and Lean to other Departments or branches. The respondent was maintained in her position. The letter further advised the staff that the company will advertise vacant roles to give their staff an opportunity to apply for and be considered for these positions. This email does not speak to redundancy, and it is not addressed to the respondent. 31.We, therefore, find that no personalized notice of redundancy was issued to the respondent as required by section 40(1) (b) of the Employment Act, and that the communication relied upon by the appellant consisted of general internal emails on restructuring. 32.We also note that the appellant sent a letter dated 24th May 2014 to the County Labour Office at Nairobi informing them that the position of the respondent has ceased to exist, hence, she has been rendered redundant, and her last working day was on 26th May 2014. This letter was received on 11th June 2014 after the respondent was terminated. 33.This Court addressed the kinds of redundancy notices required in Africa Nazarene University v David Mutevu & 103 others [2017] KECA 381 (KLR) and stated as follows:“This Court, differently constituted, in the matter of Thomas De La Rue (K) Ltd vs David Opondo Omutelema [2013] eKLR had occasion to consider the construction of subsections (a) and (b) to the effect that both required different kinds of notices. It stated as follows:"It is quite clear to us that sections 40 (a) and 40 (b) provide for two different kinds of redundancy notifications depending on whether the employee is or is not a member of a trade union. Where the employee is a member of a union, the notification is to the union and the local labour officer at least one month before the effective redundancy date. Where the employee is not a member of the union, the notification must be in writing and to the employee and the local labour officer. Section 40 (b) does not stipulate the notice period as is the case in 40 (a), but in our view, a purposive reading and interpretation of the statute would mean the same notice period is required in both situations. We do not see any rational reason why the employee who is not a member of a union should be entitled to a shorter notice."We agree with that construction as well as the observation that subsection (b) says nothing about the length of the notice or the contents. In our view, however, the only difference in both sub-sections is whether an employee is a member of a trade union or not. A proper construction of both subsections would show that the phrase:"...the reasons for, and the extent of, the intended redundancy not less than a month prior to the date of the intended date of termination on account of redundancy…"is common to both kinds of employees. So that, whether an employee belongs to a trade union or not, the reasons and period of notice should be spelt out.” 34.It is common ground that the notice to the Labour Officer was issued post facto. The redundancy had already taken effect. This runs afoul of the statutory requirement that such notice be given at least one month prior to termination. 35.In the circumstances, we agree with the superior court’s decision that the redundancy was substantively justified, and the respondent’s position was validly abolished. The respondent lacked the educational background or competence to occupy the new office. However, the appellant failed to comply with the mandatory procedural requirements which rendered the termination unfair. 36.Having found that the appellant’s termination was unfair, we turn to the question whether the remedies awarded by the trial court were justified. The remedies available for unfair termination. Under Section 49 (1) of the Act it stipulates that:“(1)Where in the opinion of a labour officer summary dismissal or termination of a contract of an employee is unjustified, the labour officer may recommend to the employer to pay to the employee any or all of the following:a.the wages which the employee would have earned had the employee been given the period of notice to which he was entitled under this Act or his contract of service;b.where dismissal terminates the contract before the completion of any service upon which the employee's wages became due, the proportion of the wage due for the period of time for which the employee has worked; and any other loss consequent upon the dismissal and arising between the date of dismissal and the date of expiry of the period of notice referred to in paragraph (a) which the employee would have been entitled to by virtue of the contract; orc.the equivalent of a number of months wages or salary not exceeding twelve months based on the gross monthly wage or salary of the employee at the time of dismissal." 37.The superior court awarded the respondent five months’ salary in compensation for the failure to adhere to the procedural requirements under section 40 of the Employment Act. The appellant contends that the award is unwarranted and excessive as they had paid severance pay more than the statutory minimum together with additional ex gratia benefits, including extension of medical cover and favourable loan terms. They proposed an award of two months’ salary, while the respondent contends that the court exercised its discretion judiciously by awarding five months’ salary considering the circumstances of the termination. 38.The award of remedies under section 49 of the Employment Act lies within the discretion of the trial court. The principles governing appellate interference with the superior court’s discretion are well settled. In Mrao Ltd v First American Bank of Kenya Ltd & 2 others [2003] eKLR, this Court held that an appellate court will only interfere where the trial court misdirected itself, took into account irrelevant considerations, failed to consider relevant ones, or arrived at a plainly wrong decision. The appellant has not convinced us of the existence of any of the aforementioned elements to warrant our interference with the award of five months’ salary. 39.Regarding payment in lieu of notice, the appellant contends that the applicable employment contract expressly provides for a one-month notice period, and there was no legal basis for departing from that contractual term, or for invoking inapplicable Group Human Resource Policies. The respondent on her part argues that she was entitled to three months’ notice in accordance with the applicable contractual terms and the Ecobank Group Human Resource Policies. It is argued that the appellant’s reliance on a document providing for one month’s notice is misplaced, as that document does not constitute the governing employment contract. 40.The appellant relies on a document dated 13th December 2008 addressed to the respondent, from the Chief Executive Officer Ecobank Kenya Limited as the binding contract. The title of the letter is “New Grading And Salary Increment.” The content of the letter includes a termination clause which states that: “Either party may terminate this contract without giving any reasons thereof, by giving one month’s notice, or on payment of one month’s salary in lieu of notice.” The respondent acknowledged receipt of the letter and accepted the contents by signing it. 41.The respondent relies on the Ecobank Group Human Resources Policies and a letter dated 30th May 2007, addressed to the respondent from the appellant’s Chief Executive Officer and titled; “Offer For Employment for The Post Of Head Of Training With Eabs Bank Limited”. They both provide for issuance of three months’ notice, or payment of three months’ salary in lieu of the notice. 42.In our considered view, by the respondent appending her signature on the document dated 13th December 2008, it superseded the document dated 30th May 2007. She therefore, accepted to be bound by the contents of the latter document. Accordingly, we find that the learned Judge erred in awarding the respondent two months’ salary in lieu of notice instead of the one month provided by the contract the parties signed. 43.For the foregoing reasons, this appeal partially succeeds only to the extent that the award of two months’ salary in lieu of notice is reduced to one month’s salary in lieu of notice. Each party to bear its own costs.It is so ordered. DATED AND DELIVERED AT NAIROBI THIS 12TH DAY OF JUNE, 2026.W. KARANJA......................................JUDGE OF APPEALL. ACHODE......................................JUDGE OF APPEALA. O. MUCHELULE......................................JUDGE OF APPEALI certify that this is a true copy of the originalSignedDEPUTY REGISTRAR