https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1549

**IN THE COURT OF APPEAL** **AT NAIROBI** **CIVIL APPEAL NO. E204 OF 2021 (CORAM: JOEL NGUGI, MURUNGI & HASSAN, JJ.A.)** **BETWEEN** **NATIONAL BANK OF KENYA LTD APPELLANT** **AND** **BANKING INSURANCE &** **FINANCE UNION KENYA RESPONDENT** *(An appeal from the judgment and decree of the Employment and Labour Relations Court at Nairobi (Wasilwa, J.) delivered on 27th April 2018* ***in*** ***ELRC Cause No. 2028 of 2015*** ***\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\**** **JUDGMENT OF THE COURT** 1. By this appeal National Bank of Kenya ltd [the Appellant] seeks to set aside the judgment and Decree issued by the Hon. H. Wasilwa J on 27th April, 2018 in Nairobi ELRC Cause No. 2028 of 2015 in which the learned judge found that the Appellant had no proper reason to dismiss the Respondent’s member [Lilian Tintira Kaoka] from employment on 4th August,2015, declared the said dismissal unfair and unwarranted and ordered the Appellant to; reinstate her to her duties, pay all her salary since the dismissal date and continue to pay her salary and allowance when due until her retirement age unless otherwise involved in misconduct and pay the costs of the claim to the Respondent. 1. The Appellant challenges that decision on the four grounds of appeal in its memorandum of appeal dated 29th March,2021 contending that the learned judge erred in law and fact in failing to: 1. *appreciate that the transaction performed by the grievant on 27th February,2015 on the subject account ,a loss of Ksh 3,153,000 occurred due to numerous fraudulent transactions around that period;* 2. *consider the documentary and viva voce evidence tendered by the Appellant to the effect that the grievant was not only found guilty of gross misconduct but also accorded a fair hearing and her services terminated following due process stipulated in law;* 3. *consider and appreciate the Appellant’s submissions in relation to the provisions of section 49[4] of the Employment Act 2007; and* 4. *to take into consideration the factors stipulated under that section in determining available remedies for unfair termination.* 2. We heard the appeal on 3rd March, 2026 when Ms. Sandra Kavagi Advocate appeared for the Appellant while Mr. Okello Advocate appeared for the Respondent. In support of the appeal Counsel for the Appellant relied on the Appellant’s written submissions dated 25th February, 2026. She told us that the appeal centers on whether the reason given by the appellant for termination was fair and valid and submitted that had the trial court addressed itself to the facts submitted in evidence it would have found that the facts leading up to the grievant’s summary dismissal revealed gross misconduct on her part justifying summary dismissal in line with both the Employment Act [Section 44[4] [c] and the Collective Bargaining Agreement [clause A5[a][ii] ]between the Appellant and the Respondent. 1. In support of grounds 1, 2, and 3 in the grounds of appeal counsel submitted that the Appellant had observed both substantive and procedural fairness when it summarily dismissed the grievant. In this regard counsel pointed out that it was never denied that the grievant attempted to perform and cancelled a withdrawal transaction of Ksh 1000 on 27th February, 2015 on the subject account and argued that: “but for the grievant’s attempted access and otherwise “testing’’ of the account on that day, the loss subsequently suffered by the bank would not have happened.” According to the Appellant that action by the Grievant resulted in a series of other transactions much later including a transaction in the account [4] months later leading to the loss of Ksh 3,153,000. Counsel added that the grievant did not provide a satisfactory explanation for actions and failed to provide any evidence of the customer trying to withdraw the money on 27th February, 2015 and produce the withdrawal voucher to support the alleged transaction. 1. In the Appellant’s Counsel’s view the grievant’s actions border on wilful neglect in the performance of her duties and breach of security amounting to gross misconduct and therefore justifying lawful grounds for her summary dismissal. Counsel further submitted that the test of proof of the reason for termination is whether the employer genuinely believed the matters complained of to exist at the time it made the decision to terminate. In Support of that proposition Counsel relied on this Court’s decision in ***Kenya Revenue Authority vs. Reuwel*** ***Waithaka Gitahi & 2 Others*** (2019) KECA 300 (KLR) and submitted that the grievant’s actions and inactions on the dormant account occasioned a huge loss to the bank and is a genuine reason which the Appellant believed to exist entitling it to summarily dismiss. 1. It was further contended that the Appellant had demonstrated before the trial court that the grievant participated in the subsequent loss, albeit indirectly which severed the employer employee relationship which had hitherto been based on mutual trust. Counsel pointed to the evidence of the Appellant’s witness at page 115 of the record of appeal which attributed the alleged loss of trust to the grievant’s alleged negligent conduct. Counsel cited the decision of this Court in ***Co-operative Bank*** ***of Kenya ltd Vs Banking Insurance & Finance Union*** (K) 2017 KECA 136(KLR). 1. Turning to procedural fairness the Appellant submitted there is no contest that it afforded the Grievant adequate opportunity to be heard by way of a disciplinary hearing and submitted that the Appellant had met the threshold in Section 41 of the Employment Act. 2. On whether the order for reinstatement was made in error as contended in ground 4 in the memorandum of appeal the Appellant submitted that the learned judge failed to consider and erroneously disregarded evidence that the grievant had activated a dormant account and set in motion a fraudulent process that led to a huge loss for the bank. For that reason the Appellant contended that she contributed to her dismissal from service and as such was not entitled to any of the remedies sought on her behalf by the Respondent in the statement of claim filed before the ELRC. Counsel finally submitted that the relationship between the Appellant and the Grievant had broken down so irretrievably that the learned judge fell into error when she ordered the grievant’s reinstatement to her duties with the Respondent. Without taking into account the provisions of Section 49[4] of the Employment Act. Counsel cited this Court’s decision in ***Postal Corporation of Kenya vs.*** ***Andrew K.Tanui*** (2019) eKLR. 1. In opposition to the appeal, Mr. Okello advocate for the Respondent Union, relied on the Respondent’s written submissions dated 6th February, 2026 which he highlighted orally. He submitted that the learned trial court judge did not make any error of law, fact or principle to warrant our interference with the impugned judgment and decree. That the Respondent had proved that the grievant was dismissed unfairly and the charge of gross misconduct labelled against her was unwarranted and was not proved by the Appellant at the trial. There was documentary evidence by the Appellant of the disciplinary hearing at page 93 of the record which showed that the Appellant’s disciplinary panel exonerated the grievant and recommended that no action be taken against her. 1. The Respondent maintained that the judge took relevant factors into consideration including that the Conciliator recommended that the grievant be reinstated to her duties, the grievant had worked for close to eight years without any disciplinary cases being brought against her, the grievant was a young lady whose professional career was in the brink of being ruined by the unjustified summary dismissal and there was no evidence of loss of trust as the Appellant’s own disciplinary committee had found that the action of cancellation of the withdrawal transaction complained of was within her line of duty. The said disciplinary panel also found that she did not activate a dormant account and the said account was already active on 27th February, 2015. 2. Counsel further submitted that the Grievant is currently an employee of the Appellant after her reinstatement by the trial court and she has not had any disciplinary issues subsequent to her reinstatement. Counsel added that the reason of gross misconduct given by the Appellant was not a valid reason and was not proved and the termination was not based on any reason at all considering the evidence of the Appellant’s witness [RW1] that Appellant’s tellers could not transact on a dormant account as they had no reactivation password credentials. The Respondent’s counsel cited Section [45] [2] for the triple standard test to be discharged by the employer before a termination can be considered fair namely: 3. ***The reason for the termination must be valid;*** 4. ***The reason for the termination must be fair; and*** 5. ***The procedure followed in terminating the employment of the grievant must be fair.*** 6. The Respondent’s counsel cited the following case law: ***Postal*** ***Corporation of Kenya vs. Andrew K. Tanui*** (2019) eKLR; ***Jane Samba Mukala vs. Ol Tukai Lodge Ltd. Industrial*** Cause No. 823 of 2010; ***Janet Nyandiko vs. Kenya*** ***Commercial Bank limited*** (2017) eKLR; ***Loice Otieno vs. KCB*** and ***Pius Machafu Isindu vs. Lavington Security Ltd.*** (2017) eKLR; in support of the proposition that the employer must demonstrate that the dismissal was both substantively and procedurally fair to effectively justify summary dismissal. In the instant case counsel argued the employer did not do so, because though the Appellant observed procedural fairness and the grievant was found to be innocent of any wrongdoing the Appellant nevertheless proceeded to terminate her employment despite the favourable finding by its own disciplinary and therefore failed the substantive fairness test. 1. On whether the remedy of reinstatement was justified counsel submitted that the golden rule is that reinstatement is applicable in exceptional circumstances and in making the order the trial judge correctly considered the prerequisites in Section 49[4] as read with Section 12[3] and relevant case law, after establishing from the evidence tendered by both parties that the employer employee relationship had not broken down and the grievant was a young lady whose career was on a nosedive due to the Appellant’s unfair accusations and consequent termination of employment which is in line with the dicta in ***Kenya Power & Lightning Company Ltd. vs. Aggrey*** ***Lukorito Wasike*** (2017) eKLR; and ***Kenya Airways Limited*** ***vs. Aviation & Allied Workers Union Kenya & 3 Others*** (2014) eKLR. 1. On costs counsel submitted that the Respondent successfully proved that the termination of the grievant’s employment was unfair and unlawful and the trial court was justified to award costs. Counsel cited the decision in ***Rai & 3 Others vs. Rai*** ***and 4 others*** (2014) KESC31 (KLR) in support of the proposition that costs follow the event and the submission that the trial court did not err when it awarded costs of the suit to the successful party. In conclusion the Respondent urged us to dismiss the appeal with costs. 1. We have carefully considered the grounds of appeal, the record of appeal, the parties’ rival submissions and the cited statutory provisions and case law. The broad question for determination is whether or not the learned judge erred in fact and law when she allowed the Respondent’s claim on behalf of Lilian Tintina Kaoka and ordered her reinstatement back to her duties with the Appellant without loss of salary and benefits from the date of dismissal until her retirement unless otherwise earlier terminated for misconduct. 1. This being a first appeal, our duty as enunciated in ***Selle vs.***  ***Associated Motor Boat Company Ltd***. [1968] EA and restated in subsequent decisions of this Court is to retry the case by reconsidering the evidence, re-analyzing and re-evaluating it and drawing our own conclusions of the facts and the law keeping in mind that unlike the trial court we never heard nor saw the witnesses and giving due allowance for that fact. An appellant appearing before us is entitled to a fresh and exhaustive evaluation of the evidence. [See ***Gitobu Imanyara*** ***& 2 Others vs. Attorney General [2016] eKLR***. It is to that exercise that we now turn. 1. From the Record we gather that Lilian Tintira Kaoka is an employee of the Appellant National Bank of Kenya Ltd a registered banking institution and a member of the Banking Insurance & Finance Union [Kenya] a registered Trade Union [the Respondent] with recognition and collective bargaining agreements with the Appellant. She was first engaged as a graduate clerk on 1st April, 2008 and posted to the Appellant’s Harambee Avenue Branch as a Cashier and Customer Service officer. By letter dated 14th August 2013 she was transferred to the Appellant’s Sameer Park branch as a teller effective 2nd September, 2013. She reported there and continued with her duties which involved payments and receipts of cash, check payments and deposits, KRA returns, MoneyGram transactions, Western Union transactions, Mpesa, chief teller and ATM control and banking. 1. In May 2015 Lilian was called by the Appellant’s security team and asked to record a statement regarding attempted withdrawal of Ksh.1000 from account number 01243033673200, belonging to Kenyatta Kimori on 27th February, 2015 in the context of investigations of fraudulent withdrawal transactions leading to the loss of Ksh 3,153,000 in the period between 31st January, 2015 and 17th March, 2015. According to the investigator Denis Yegon the first six transactions were performed at the Appellant’s Ongata Rongai Branch by two tellers Kevin Munge and Joseph Okoth Angir, after which there was the Ksh 1000 cancelled withdrawal transaction by Lilian at Sameer Park branch followed by three successful transactions performed by teller Ezra Birundu Nyanamba at Bomet Branch. 1. She recorded a statement with the security team and stated that on the material day [27/2/2015] a customer walked into the bank‘s Sameer Park branch, went to her cubicle and presented to her a cash withdrawal voucher intending to withdraw ksh 1000[one thousand], but on entering the customer’s account number into the system and checking the customer’s signature she found that the signature on the withdrawal voucher was not a perfect match of the specimen signature in the bank’s system. She then requested the customer to countersign the withdrawal voucher for verification but even after doing so the signature still differed, whereupon she cancelled the transaction and requested the customer to see the branch customer service officer for further assistance as she continued attending to other customers and the said customer did not return back to her. 2. Following the recording of that statement the Appellant accused Lilian of performing and reversing a withdrawal Ksh 1000 in a dormant account and invited her to a disciplinary hearing on 17th June, 2015. She attended the disciplinary hearing and on 28th June, 2015, the disciplinary panel exonerated her and recommended that no action be taken against her. 1.  It is noteworthy that the disciplinary panel made that recommendation upon finding that the account was not dormant but active on 27th February, 2015 when she performed the cancelled transaction and that she was not responsible for re-activating the subject account. Notwithstanding that finding and recommendation the Appellant dismissed her from employment for gross misconduct by letter dated 6th August 2015. She then reported to the Respondent Union who took up and registered a dispute on her behalf with the Ministry of Labour and Social Security Services by letter dated August 24th, 2015 in accordance with Section 62 of the Labour Relations Act. 2. On 18th September, 2015, Mr. J. Ndiho of the Headquarters Labour Office was appointed to act as Conciliator. He contacted the parties on 23rd September, 2015 and invited them for a conciliatory meeting. Following conciliatory meetings held on 23rd October, 2015 and 28th October, 2015 and hearing the Appellant and the Respondent the Conciliator found that Lilian acted within the line of her duties when she cancelled the transaction on 27th February, 2015, that she did not activate a dormant account and she was not involved in the loss of Ksh 3,153,000 which was paid out in different transactions. Consequently he recommended that Lilian be reinstated back to her normal duties without any loss of salary and benefits in a report dated 29th October, 2015. 1. The Appellant declined to reinstate Lilian to her position as recommended by the Conciliator thus precipitating the filing by the Respondent Union of the statement of claim dated 12th November, 2015 urging the Employment and Labour Relations Court to: find and declare that the termination of her employment was unfair, unlawful and invalid; order reinstatement of the grievant back to her former position in the bank without loss of employment benefits, seniority in service or status; order payment of all the salaries and allowances lost as a result of the unfair and unlawful termination of employment; order 12 months compensation and any other relief as the court will deem expedient and justifiable to grant. 2. In response the Appellant filed a Memorandum of Response dated 16th May, 2016 denying the claim and prayed that the claim be dismissed with costs contending that the claimant had failed to demonstrate that the dismissal was wrongful and unfair and the claim as instituted was an abuse of the court process. 3. The ELRC [H.Wasilwa J] heard the case on 16th January 2018 when Lilian Tintira Kaoka orally testified and produced documentary evidence in support of the claim while Ms. Mutua testified and tendered documentary evidence in opposition to the claim. The learned judge considered the evidence both oral and documentary and the parties’ rival submissions. She identified three issues for determination at par. 14 in the judgment namely: 1. ***Whether there were valid reasons to warrant dismissal of the grievant;*** 2. ***Whether the grievant was accorded due process before dismissal;*** 3. ***What remedies can be given in the circumstances.*** 4. Upon evaluation of the evidence the learned judge found that there was no reason for the appellant to dismiss the grievant and though the grievant was accorded due process, the disciplinary panel did not find her culpable and it was not apparent why the Appellant still dismissed her. Consequently the learned judge declared the dismissal unfair and unwarranted at para. 22 in the judgment appealed from. 1. As regards the reliefs sought the learned judge stated as follows: ***“23. On the third issue, the grievant seeks reinstatement by this court. The Respondents on their part are opposed to reinstatement citing a relationship that has broken down.*** 1. ***From the evidence on record, I do not perceive a relationship that has broken down. The Respondents own disciplinary committee absolved the grievant of any wrongdoing.*** 2. ***The grievant is a young lady whose career path seems to be on a nose dive by virtue of the action of the Respondent unfairly accusing her and then dismissing her. The only remedy that can compensate the grievant is reinstatement or reengagement which I now order. I also order that the grievant be paid all her salary since dismissal to date and the Respondent to continue to pay her salary and allowance when due until her retirement age unless involved in misconduct.*** 3. ***Costs to the Claimant.’’*** 4. It is those findings that the Appellant urges us to set aside in this appeal but we are unable to do so. For upon our own in- depth review, reevaluation and reconsideration of the evidence on record; we are not in the least persuaded that the trial court erred in fact or in law as contended in the four grounds of appeal canvassed before us. The Appellant’s theory that the grievant performed cancellation of the withdrawal transaction for purposes of “testing’’ if the account could be accessed and somehow created the path way through which the fraudulent transactions in the account were conducted leading to a loss of Ksh 3,158,000 is not backed by the evidence tendered by the parties at the trial at all. To start with there is the evidence of the investigator that the account was first accessed on 31st January, 2015 and by 27th February, 2015 when the grievant performed the transaction involving the cancellation of the withdrawal of Ksh 1000 some six odd withdrawal transactions had been performed by two tellers at the Appellant’s Rongai Branch. Clearly the account was not dormant when the grievant accessed it on 27th February, 2015 allegedly for testing. Besides there was also clear evidence from RW1 that the Grievant could not have accessed a dormant account as she did not have the password credentials to access it. Furthermore the Appellant’s own disciplinary panel found that the withdrawal cancellation transaction performed by the grievant on 27th February, 2015 was within the scope of her duty as a teller. Indeed, it was the proper thing to do once she established that the customer’s signature on the withdrawal voucher did not match the specimen signature provided by the customer in the Appellant’s system. Her action saved the Appellant money. 1. It is thus not clear to us why the Appellant has over the years insisted that it had valid reasons to terminate the grievant’s employment or that their relationship had irretrievably broken because of the 27th February, 2015 transaction which did not cause the Appellant any loss at all and which the Appellant’s own disciplinary panel found was within the scope of her duty. We do not see how such lawful performance of duty by the grievant could possibly lead to a loss of the mutual trust between the Appellant and the grievant as was contended before us. 2. In the end, we agree with the trial court that the Appellant did not have any reason to dismiss the grievant and that the remedy of reinstatement was the most efficacious remedy given the lack of a valid reason for dismissal, the grievant’s clean record both before the unwarranted termination and after reinstatement, the recommendation by the Appellant’s disciplinary panel that no action be taken against her and the Conciliator’s recommendation that she be reinstated in November 2015. 1. In the upshot, we find no merits in this appeal and hereby dismiss it with costs to the Respondent. Orders accordingly. **Dated and delivered at Nairobi this 31st day of July, 2026.** **JOEL NGUGI** **..................................** **JUDGE OF APPEAL MURUNGI B. KAIRARIA** **..................................** **JUDGE OF APPEAL AHMED ISSACK** **................................. JUDGE OF APPEAL** *I certify that this is a True copy of the original* *Signed* ***DEPUTY REGISTRAR***