https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/1579

Mbuuko v Jubilee Life Insurance Ltd (Cause E059 of 2022) [2026] KEELRC 1579 (KLR) (25 May 2026) (Judgment) Neutral citation: [2026] KEELRC 1579 (KLR) Republic of Kenya In the Employment and Labour Relations Court at Nairobi Cause E059 of 2022 ON Makau, J May 25, 2026 Between Donald Kivungi Mbuuko Claimant and Jubilee Life Insurance Limited Respondent Judgment Introduction 1.By a Memorandum of Claim dated 27th January 2022, the Claimant sued the Respondent for unfair termination of his employment and violation of his rights. Therefore he prayed for the following reliefs:-a.A declaration that the termination of the Claimant from employment was un procedural, unfair and unlawful; hence illegal.b.A declaration that the Claimant’s rights to fair administrative action, fair hearing and fair labour practices were breached by the Respondent.c.General damages.d.Special damages as computed below:i.Kshs. 2,784,000 being 12 months compensation for unfair and unlawful termination.ii.Kshs. 1,670,400 being unpaid bonus for the years 2016, 2017 and 2020.iii.Kshs. 47,328,000 being the Claimant’s projected income until his age of retirement.iv.A Certificate of Service.e.Costs of the claim.f.Any other relief that the Honourable Court may deem fit and just in the circumstances. 2.The Respondent filed a Statement of Defence dated 28th March 2022 denying the alleged unfair termination and violation of rights, and prayed for the suit to be dismissed with costs. Facts of the case. 3.The Claimant was employed by the Respondent as Claims and Benefits Manager under a contract dated 29th October 2014 and he was confirmed to the position vide a letter dated 27th May 2015. By a letter dated 1st October 2018 his post and job description was reviewed from Claims and Benefits Manager to Assistant Manager– Claims and Benefits. All the terms and conditions of service remained the save that he was to report to the Claims and Benefits Manager. No reasons were cited for the said demotion. 4.By a letter dated 24th March 2021, the Claimant was suspended from duty with full pay for 30 days. No specific allegations were cited for the suspension but alleged information of concern which necessitated further investigations. The suspension was extended periodically until his services were terminated on 2nd November 2021 for gross misconduct and or negligence that led to loss of Kshs. 751,158.25 to the Respondent made up of Kshs. 229,999.50 in respect of Policy number IL 20XXXXXXXX86 and Kshs. 571,158.75 in respect of Policy number 210384. 5.Before the termination, the Respondent carried out Forensic Investigations and thereafter served the Claimant with a show cause letter dated 9th July 2021. The Claimant responded to the show cause letter vide letter dated 16th July 2021 and thereafter he was invited to a disciplinary hearing on 12th August 2021 vide a letter dated 3rd August 2021. No decision was communicated until 23rd October 2021 when the Claimant wrote to the Respondent requesting for the decision on his case. The decision was finally communicated vide the letter dated 2nd November 2021. 6.The Claimant averred that the procedure followed was unfair and in breach of the Respondent’s Human Resource Policy Manual which requires the process to be concluded within a reasonable time and especially the decision. He further averred that his right to fair administrative action, right to fair hearing and right to fair labour practices under the constitution were violated since he was denied fair hearing and rules of national justice were violated. He also averred that the reason for the termination was invalid since the investigation report never implicated him. Finally, he averred that he was discriminated against since other employees in the approval chain who were adversely mentioned in the Investigation Report were never subjected to any disciplinary process. 7.However the Respondent averred that the reason for the termination was cited in the termination letter as gross misconduct in the nature of willful neglect to perform his duty or performing his duties carelessly and improperly contrary to Section 44 (4) ( c) of the Employment Act. It further averred that the procedure followed was fair and in line with the company Human Resource Policy Procedure Manual. The Claimant was suspended, he was served with show cause letter and he responded, and finally he was accorded a disciplinary hearing where he defended himself before the decision to dismiss was communicated vide letter dated 2nd November 2021. Evidence 8.The Claimant testified on 27th March 2023 when he adopted a written statement dated 27th January 2023 as his testimony and produced 31 documents in his list dated 27th January 2022 as exhibits. 9.On cross examination, he stated that he holds a Masters degree in Strategic Management and a Bachelors degree in Science and Applied Statistics. He further stated that his salary was Kshs. 232,000 and that it remained the same after change of his role to Assistant Manager Claims and Benefits. 10.He admitted that he was required to give leadership to his team but denied ever having been accused of violating the Human Resource Manual. He admitted that Page 19 of the Human Resource Manual set out the conduct that could lead to termination of employment including performance and discipline related incidents. He admitted that the reason cited for his dismissal was ethical conduct. He further admitted that during disciplinary hearing he confirmed that he had seen the discrepancies in the signatures. He further admitted that there was no due diligence but contended that he had no capability to confirm authenticity of claim documents especially Death Certificates. 11.He admitted that the Claimant was suspended on 24th March 2021 and thereafter the suspension was extended 4 times. He also admitted that he was given a chance to explain himself in writing and also physically before a disciplinary committee. The Head of Investigations Mr. Jack Njuguna also attended the hearing but the committee never asked him any question. He confirmed that the termination letter gave the right to appeal but he never appealed nor did he do clearance as directed. He admitted that Bonus was discretional but denied knowledge whether an employee under Performance Improvement Plan would get bonus. 12.In re-examination he contended that his role was to confirm the person issued with burial permit but he could not confirm authenticity of the documents. He contended that the person in charge of authenticating documents was customer service officer and if there was any issue refer to the fraud and Investigations report. 13.He contended that he was receiving documents in photocopies and the fraud and investigation team never questioned the authenticity of the documents leading to the termination. He contended that he did not appeal because the procedure followed was unfair since the process took over seven months and the Disciplinary Committee was not properly constituted. 14.The Respondent called its Human Resource officer, one Wallace Nzaui as its first witness. He adopted a written statement dated 13th December 2022 as his testimony and produced 16 documents as exhibits. He then stated that the reason for changing Claimant’s role was due to his deteriorating performance. He further stated that Respondent’s Policy on Bonuses is that they are discretionary based on performance. 15.He further stated that the Claimant’s Disciplinary Committee was composed of the Chief Executive Officer (Jubilee Health) CFO (Jubilee Life Insurance), Investigating Officer and Human Resource representative. He contended that the Investigations officer appeared as a witness. 16.On cross examination, he stated that he attended Claimant’s disciplinary hearing. He contended that Claimant’s supervisor was Charles Tanki. He confirmed that there was no performance review Report for the Claimant for 2018 and 2020 but there was one for 2019 where he scored 59.25 below the pass mark of 70%. 17.He contended that he was aware of the surrender of policy for Caroline Waithera Kantai of 2020 but not of any for 2019. He confirmed that there was no indication that the policies were paid into the same bank account. He contended that the Claimant had stated during the disciplinary hearing that a previous policy had been paid using the same bank details. 18.He confirmed that Catherine Ng’ang’a is the FO and a bank approver. She was part of the Disciplinary Committee and was not accused or questioned like the Claimant. He explained that first port of call for a customer claiming a mature policy is customer service and then the documents proceed to the Claims approval team. He confirmed that the documents herein went to the two levels before the claims approval team. 19.He confirmed that claim documents were going through Moses Obenzo, a former employee and he never raised any issue with the claim documents herein. He could not recall the people who were subjected to disciplinary hearing and found culpable. 20.In re-examination he contended that the Claimant was not singled out since a number of other employees were found culpable upon investigation which took four (4) months. The investigation was done by security and forensic team led by Jack Njuguna who also sat as part of Disciplinary Committee. 21.He reiterated that performance review was done in 2019 but not in 2016 and 2017. He contended that the Claimant’s job description required due diligence as the team leader in, verification of documents and approval within claims team. He contended that Caroline had provided only one account at Stanchart. 22.He contended that Moses Obenzo worked with the Claimant, but checking validity of documents fell with the Claimant. Finally, he reiterated that the Claimant was not singled out since action was taken against other employees who were mentioned in the investigations report. 23.The second witness for the Respondent was its Head of Forensic Security Services Mr. Jack Njuguna. He adopted his written statement dated 13th December 2022 and three (3) investigations reports as his evidence. The three investigation reports related to fraudulent payment of death claim, fraudulent surrender of life policy, and fraudulent payment of pension benefit. 24.He contended that the Claimant was the subject of investigation because the main responsibility was identification of valid claims through careful analysis of supporting documents. The company had provided him with the necessary record systems to validate authenticity of claims but he acted negligently. That had he acted diligently, he would have noted that the claims were fake. 25.On cross examination, he contended that the Claimant had signed his job description. He confirmed that the investigation report recommended for disciplinary action against the Claimant for negligent performance in approving the surrender policy number 210384 and for payment of fraudulent death claim. 26.He contended that the death claim was fake because there were issues with the Burial Permit. He admitted that claim documents are first submitted to the customer desk and after confirmation that they are complete, they are scanned and handed over to the first approver for verification after which they are forwarded to the second approver (Claimant) who then forward to the payment section. 27.He confirmed that Kantai had two policies and the Claimant approved surrender on 9th April 2020 after the maturity in 2019. After the approval he passed the claim to Charles Tanki who was more senior. He confirmed that the Claimant never used the same approval details by Charles. He further confirmed that the two payments for the maturity and surrender were made to the same account in cooperative bank. 28.He contended that the Claimant was not supposed to blindly follow what his senior Charles did. He admitted that there were other senior bank approvers like Catherine Ng’ang’a were supposed to verify the documents. He confirmed that Catherine Ng’ang’a sat in the Disciplinary Committee for the Claimant. He confirmed that Charles Tanki is still working in the company. 29.In re-examination he maintained that the Claimant’s principal role was to review claims to ensure that they were valid but the three claims he approved were found to be fraudulent. He contended that death claim approved by the Claimant was in respect of a person who was still alive. He contended that the Claimant approved the fraudulent claims. Finally he contended that Catherine Ng’ang’a, the Chief Officer, had no role in claims approval of the fraudulent claims herein and clarified that payment is done by finance after validation of claims. 30.After the close of the hearing only the Respondent filed written submissions. Having considered the pleadings, evidence and submissions, the issues commending themselves for determination are:- 31.a)Whether there was unfair and unlawful termination.b)Whether the reliefs sought are merited. Unfair termination 32.Section 45 (1) and (2) of the Employment Act provides that:-“(1).No employer shall terminate the employment of an employee unfairly.“(2)A termination of employment by an employer is unfair if the employer fails to prove-a.That the reason for the termination is valid;b.That the reason for the termination is a fair reason-i.Related to the employees conduct, capacity or compatibility; orii.Based on the operational requirements of the employer; andc.That the employment was terminated in accordance with fair procedure.” 33.The above provisions clearly puts a burden of proof on the employer to prove a valid of the reason for terminating employment of an employee, and also to show that fair process was followed. In the instant case the Claimant contends that the reason for termination was not valid and fair procedure was not followed. However, the Respondent is of a different view. Reason for termination 34.The termination letter dated 2nd November 2021 cited the reason for termination as follows:-“…gross misconduct and willfully negligent in your handling of the below life insurance policies which occasioned the company a total loss of Kshs. 751,158.25:a.Policy No. IL 20XXXXXXXX86: You approved a fraudulent last expense payment despite noticing anomalies in the burial permit. Loss of Kshs. 229,999.50.b.Policy No. 210384: You approved a fraudulent surrender claim despite noticing an anomaly in the signature presented, a change of bank account and a change in mobile contacts. Loss – Kshs. 571,158.75.c.During the disciplinary hearing, you did not appreciate the magnitude of the matter and showed no concern that your actions had an adverse impact on the company.In view of the above and in accordance with section 44 (c) of the Employment Act 2007, the company has decided to terminate your employment.” 35.The Claimant admitted that his role included verification of validity of claim documents and approving of claims for payments. He approved payment for the fraudulent claims herein totaling to Kshs. 751,158.25. During the disciplinary hearing he admitted that he noticed anomalies in the signature in the claim form and the burial permit but still approved the claims for payment. He contended that other persons in the approval chain had also okayed the claims. 36.Paragraph 7 of his contract of employment provided for conduct justifying summary dismissal including:-“( c) Willfully neglecting to perform any work which it was your duty to perform or if you carelessly and improperly perform any work which from its nature should have been performed carefully and properly.” 37.The above paragraph is on all fours with section 44 (4) (c) of the Employment Act. Having carefully considered the extracts of the investigation report, the minutes of the disciplinary hearing and the contract of employment, I have no doubt that the Claimant acted negligently in approving the said fraudulent claims. He was not solely to blame as the claims were processed through a hierarchy of document’s verification and approvals. Procedure followed 38.Section 41 of the Employment Act provides that:-““(1) 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.(2)Notwithstanding any other provision of this Part, an employer shall, before terminating the employment of an employee or summarily dismissing an employee under section 44(3) or (4) hear and consider any representations which the employee may on the grounds of misconduct or poor performance, and the person, if any, chosen by the employee within subsection (1), make.” 39.In this case the Claimant was notified of his offences vide two show cause letters and he responded. He was also invited to a hearing before a committee and informed that he could be accompanied by a witness. He attended the hearing without any witness and he was heard on 12th August 2021. He signed the typed proceedings of the said hearing but a decision was rendered until he wrote a letter requesting for the same. The decision was finally communicated on 2nd November 2021 through a dismissal letter. 40.Having considered the evidence before the court, I find that the procedure followed was fashioned along section 41, of the Act. However the Claimant had issues with the composition of the Disciplinary Committee, and the delay in communicating its decision. 41.As regards composition of the committee, Clause 7.1.21 provided that a first instance Disciplinary Committee shall include:-“Line Manager of the staff..Any 2 CEOs excluding the CEO whose staff is under disciplinary-The CEO will be the chair of the Committee.. The investigating Manager in cases that require investigation.. HR Business Partner.. Note taker.” 42.As regards delay in communicating decision, Clause 7.1.12 of the Human Resource Manual Provides that:-“The outcome of the hearing will be communicated to the employee within a reasonable time after the hearing – typically five working days, unless agreed otherwise.” 43.I have perused the minutes for the hearing held on 12th August 2021, to verify whether it was properly constituted. The committee had five members:-“a)Dr. Patrick Gitonga – CEO Jubilee Health Insurance Limited as the chair.b)Catherine Ng’ang’a – CFO Jubilee Life Insurance Limited.c)Jack Njuguna – Head of Forensic Services Jubilee Life Insurance Limited.d)Sammy Kigo – HR Business Partner Jubilee Life Insurance Limitede)Wallace Nzaui – HR Assistant Jubilee Life Insurance Limited.” 44.There is no doubt that the Committee did not have two CEOs and the Claimant’s Line Manager as required by Clause 7.1.12 of the Human Resource Manual. Again the Committee did not comply with Clause 7. 1. 12 about rendering its decision within reasonable time. In fact it was not until the Claimant wrote a protest to the Human Resource Manager that the decision was conveyed not immediately but after a few weeks. 45.Article 47 (1) of the Constitution provides that ‘ every person has the right to administrative action that is expeditious, efficient, lawful, reasonable and procedurally fair’. Besides Article 41 of the Constitution provides that every person has the right to fair labour practices which includes reasonable working conditions. Further the rules of natural justice require that administrative decision ought to be by a properly constituted tribunal, and after according hearing to the subject. 46.In this case, I have already made a finding of fact that the procedural followed was fashioned along the provision of Section 41 of the Employment Act, however that alone does not validate the process so long as the disciplinary committee was improperly constituted. The matters were made even worse by the delay of the decision for months after the hearing. 47.The delay extended the Claimant’s suspension for over 7 months. During the said period the Claimant was receiving half salary and not allowed to look for alternative employment. He was also subjected to psychological stress and anxiety as he worried about the possible outcome the hearing. Consequently, I hold that the extended suspension, delayed decision beyond the period provided under the Human Resource Policy and Procedure Manual and the improper composition of the Disciplinary Committee amounted to unfair procedure and the termination of the Claimant’s employment was rendered unfair within the meaning of Section 45 of the Employment ct. 48.The Respondent offered to pay one month salary in lieu of notice but that could not cure the procedural defect in the termination. Where an employer breaches the tenets of procedural fairness during termination of employment, the violation cannot be cured by payment of salary in lieu of notice. I gather support from KenflightE. A Limited v. Benson K. Nguti(2016) eKLR where the Court of Appeal held:-“It is considered unfair to terminate contract of service if the employer fails to demonstrate that the reason for the termination is valid and fair, that reason related to the employee’s conduct, capacity and compatibility or is based on the operational requirements of the employer. The employer must also prove that the termination was in accordance with fair procedure…Apart from issuing proper Notice according to the contract (or payment in lieu of Notice as provided), an employer is duty-bound to explain to an employee in the presence of another employee or union official, in a language the employee understands, the reason or reasons for which the employer is considering termination of the contract. In addition, an employee is entitled to be heard and his representations, if any, considered by an employer before the decision to terminate his contract of service.” Reliefs 49.In view of the foregoing matter, the Claimant is entitled to declaration that this employment was unfairly and unlawfully terminated by the Respondent. He is further entitled to declaration that his rights to fair administrative action, fair hearing and fair labour practices were breached by the Respondent. 50.The Claimant sought General damages but he did not specify for what offence. Therefore I decline that prayer. Instead, I award him reliefs under Section 49 (1) of the Employment Act, being compensation for unfair termination. He worked for 7 years but then contributed to his dismissal through misconduct. Consequently, I award him 4 months gross salary as compensation for the unfair termination. His gross monthly salary Kshs. 232,000 and therefore the compensation shall be Kshs. 928,000. 51.The Claimant prayed for bonus for the year 2016, 2017 and 2020 totaling to Kshs. 1,670,400. No particulars were pleaded and no evidence was adduced to substantiate the said claim. Besides, the Claimant admitted that the Bonus was at the discretion of the employer based on performance. There is proof that no performance appraisal was done in respect of the years claimed Consequently, I find that the claim for bonus is not well founded and I decline it. 52.The Claimant further prayed for Kshs. 47,328,000 being the projected income until his retirement age. No particulars were pleaded and no evidence was adduced to support the claim for future earnings. There is a legion of court decision to the effect that a claim for future earnings in employment disputes is untenable unless specifically provided for in the contract of employment. The contract of employment herein is silent on payment of future earning in case of separation before retirement age. Consequently, I decline the claim for future earnings. 53.The claim for Certificate of Service is however well founded and the Respondents is directed to issue one in line with Section 51 of the Employment Act. He is also awarded costs since the suit has succeeded partially. Conclusion 54.I have found that the termination of Claimants employment was unfair due to procedural defect. I have further found that the Claimant is entitled to compensation for unfair termination under Section 49 of the Employment Act. Consequently, I enter Judgment for him as follows:-a.Declaration that the Claimant’s termination of employment was unfair and unlawful.b.Declaration that his rights to fair labour practices, fair hearing and fair administrative action were violated by the Respondent.c.Award of Kshs. 928,000 compensation for unfair termination.d.Certificate of Service.e.Costs and interest at court rate from date of the Judgment.f.Compensation is subject to statutory deductions. DATED SIGNED AND DELIVERED VIRTUALLY IN OPEN COURT AT NAIROBI THIS 25TH DAY OF MAY 2026.ONESMUS MAKAUJUDGEAppearanceKinyanjui for the ClaimantOkello for the Respondent