[2023] KEELRC 2865 (KLR)

Njuki v Cooperative Bank of Kenya Limited (Cause 5 of 2020) [2023] KEELRC 2865 (KLR) (10 November 2023) (Judgment)

Neutral citation: [2023] KEELRC 2865 (KLR)

Republic of Kenya

In the Employment and Labour Relations Court at Nyeri

Cause 5 of 2020

ON Makau, J

November 10, 2023

Between

Francis Muchoki Njuki

Claimant

and

Cooperative Bank of Kenya Limited

Respondent

Judgment

1. The claimant brings this suit alleging that his employment was unlawfully and unfairly terminated by the respondent on 25th June 2019. Consequently, the suit seeks the following reliefs: -a.Declaration that the claimant’s termination was unlawful.b.Unpaid dues totaling to Kshs. 1,384,500 made up of:-i.One-month salary in lieu of notice Kshs. 106,500ii.Compensation for unfair termination Kshs. 1,278,000c.Compensation for overtime hours worked.d.Costs of the suit.e.Interest on (b), (c) and (d) above at court rates.

2. The respondent filed defence denying the alleged unfair termination and prayed for the suit to be dismissed with costs. It is the defence case that the termination of the claimant’s employment was done for valid reason and fair procedure was followed.

Factual background 3. The Claimant was employed by the Respondent as a graduate Clerk on 8th July 2013. He was confirmed vide letter dated 8th January 2014 on permanent and pensionable terms with a gross salary of Kshs. 78,216/=. He rose through ranks to a Cash Officer and ATM custodian at a gross salary of Kshs. 106,500/=. He attributed the promotions to the diligent performance of his duties

4. On 25th June 2019, his employment was terminated by the Respondent’s Kutus Branch Manager without notice or payment of salary in lieu of notice. The claimant averred that the termination was unfair because it was without justification and not done in accordance with fair procedure. He claimed that the Respondent did not act in good faith but contrary to justice and equity.

5. However, during the hearing, he admitted that on 4th April 2019, he incurred a shortage of Kshs. 360,000 while discharging his duties of a Teller and he could not account for the same. He further admitted that under Clause 2. 9 X of the respondent’s Staff Manual, incurring cash shortage is punishable by summary dismissal. He also admitted that negligence is another ground for summary dismissal.

6. He admitted that Sales and Service Advisers (SSAs) Manual Clause 3. 10 provides that a teller or cash officer when receiving cash is required to count the money in the presence of the customer and have the customer confirm the amount before entering the same into the system. He admitted that he made the seven entries in the absence of the customer after a request by the Branch Manager, but denied that he signed the deposit slips on behalf the customer. He further confirmed that in all the seven transactions, he was receiving the money from the customer who was a bank agent, and then post the same later.

7. He also claimed that on the 4th April 2019 when the cash shortage was incurred, he was under pressure of work as he was the only one doing the teller work assisted by an intern. He also alleged that it was also during month end and students of Kirinyaga university were reporting back. He denied having stolen the Kshs. 360,000 but confirmed that it was his responsibility to safeguard and ensure security of the money in his possession.

8. As regards the procedure followed, he admitted during the hearing that the bank investigated the cash shortage and he recorded two statements. He further admitted that he exchanged emails with the investigator Mr. Charles Ngumba Njuguna about the same matter. He also admitted that he was served with a show cause letter indicating seven entries in the absence of the customer. Finally, he admitted that he was invited to a disciplinary hearing and was given the right of being accompanied by a fellow employee but he attended alone. However, he observed that the account number and the amount of money indicated in the minutes is different from what he was charged with.

9. The Respondent on the other hand, averred that the Claimant’s employment was terminated as a consequence of the cash shortage of Kshs. 360,000. The claimant incurred on 4th April 2019 and failed to account for the same. An investigation was done which revealed that the claimant had failed to adhere to the respondent’s cash handling policy and the Bank’s operating Manual.

10. Allegedly, the investigation revealed that on the material date the claimant carried out several cash deposits into the Account No. 0119849062000, for Sicily Njoki, without having the cash on him and in the absence of the customer in total contravention of the Bank’s Operating Manual, Vol. III, section 1 and on Teller Services Manual Part 9. 1.7 Local Cash Deposits.

11. further, the Claimant failed to handle and keep the cash received properly and instead placed it in the dustbin under his workstation or in a till in the counting area before retrieving the same later on and repatriating it to the strong room. The Respondent averred that the Claimant’s conduct was in contravention of the Bank’s Operating Manual, Vol III Cash Section 2 Cash and Cash Movement.

12. The Respondent based the foregoing averments on the CCTV footage of the material date and contended that the said lapses contributed to the loss of the said Kshs.360,000. It is the respondent’s case that the claimant is liable for the said loss, for breaching its Business Code of Conduct and Ethics.

13. The Respondent averred that before the termination, the matter was thoroughly investigated by security Department and a report made to the HR department. The Claimant was then taken through the disciplinary process starting with a show cause letter dated 23rd May 2019, to which he responded vide the letter dated 27th May 2019. Thereafter, he was invited for a hearing on 3rd June 2019 vide a letter dated 29th May 2019 which informed him of his right to be accompanied by a member of staff or a central staff union official. After the said hearing the Claimant was found culpable and he was summarily dismissed vide the letter of 25th June 2019.

14. In view of the above matters, its the respondent’s case that the Claimant’s claim is baseless as the termination was for a valid reason and a fair procedure was followed. It maintained that the nature of its business calls for utmost trust, integrity and honesty of the employees and therefore the Claimant’s failure to account for the said money led to loss of trust in him. It also contended that the summary dismissal was in accordance with Clause A5 of the CBA and hence no notice was required.

15. The Respondent averred that if the Claimant in any event worked overtime, his claim was untenable as he was required to lodge a claim for overtime not later than 2 months from the time worked as per the Respondent’s overtime policy. The Respondent therefore denied all the allegations and put the Claimant to strict proof.

16. The respondent admitted that the minutes of the disciplinary hearing had an error of the bank account and the amount involved in the said 7 transactions. It clarified that the ones in investigator’s statements were the correct figures and they were backed by the Claimant’s statements in which he admitted the transactions. The Claimant also admitted to have been carrying money using dustbin.

Claimant’s submissions 17. The Claimant framed the following issues for determination by this Court were:a.Whether the Respondent’s evidence on record is admissible.b.Whether the Claimant was wrongfully, unlawfully and unfairly dismissed.c.Whether the Claimant is entitled to the prayers sought.

18. It was then submitted for the claimant that most of the evidence relied upon by the Respondent is inadmissible because it is electronic evidence which is not accompanied by a certificate of electronic evidence as required by Section 106B of the Evidence Act. The said evidence includes photographs related to recordings of CCTV. They relied on the case of Samwel Kazungu Kambi v Nelly Ilongo the Returning Officer, Kilifi County & 2 others [2017] eKLR where the Court emphasized the importance of the Certificate of electronic evidence.

19. The Claimant also submitted that the Respondent’s witnesses neither produced documents to show that they were employees of the Respondent nor did they produce any authority to act on behalf of the Respondent. It was further argued that RW1(Charles Ngumba Njuguna) did not adduce any evidence to prove that he is a qualified Fraud Analyst.

20. It was further submitted that the evidence of excerpts of banker’s books adduced by the RW1 did not meet the legal threshold under section 177 read with section 176 of the Evidence Act. Consequently, the Court was urged to dismiss the CCTV footage print out, the witness statements and the excerpts of the Respondent’s banker’s books. The Claimant relied on the case of Peter Ngethe Ngari t/a PNN Funeral Services v Standard Group Limited PLC & another [2020] eKLR.

21. As regards the issue of unfair dismissal, it was submitted that as at the time of the dismissal, the claimant was a cash officer and the ATM custodian but the Respondent allocated him duties of cash officer, ATM custodian, strong room custodian and teller in bad faith. Besides, the said workload was occasioned by the release of one teller to attend training. Consequently, it was submitted that the increased work load could have contributed to the loss of the Kshs. 360,000/=.

22. As regards the procedure followed, it was submitted that the claimant was not able to adequately prepare for his hearing since he was not furnished with the material which the Respondent intended to rely upon during the disciplinary hearing. He submitted that he was only furnished with an extract of the Kutus Branch Treasury book page recorded on 4th April 2019 and which indicated that there were denominations of 1000, 500, 200, 100, 50 and mutilated notes. He argued that the minutes did not capture that there were mutilated notes amounting to over Kshs. 100,000/=.

23. The Claimant submitted that at the hearing the charges were as per the show cause letter and thus he was only to answer the charge of keeping money in a dustbin which was also finally dropped leaving no other charge against him.

24. The Claimant also submitted that the summary dismissal letter did not indicate the second charge as reason for dismissal and it was for that reason that he concluded that the termination was biased and predetermined. The Claimant submitted that the Respondent was not sure of the purported POS machine that was used as the show cause letter and the disciplinary minutes indicated the POS as 000110 whereas the dismissal letter indicated POS 00001100. Consequently, the Claimant argued that there was bad faith, unfairness, malice, biasness and that the dismissal was based on improper investigation.

25. It was submitted that following his dismissal, he appealed the decision vide letter dated 13th July 2019 citing new evidence and the unfairness of the procedure followed. It was submitted that the appeal was on the ground that there were discrepancies in the information captured in the minutes which he had been coerced to sign by the Branch Manager. However, the appeal was dismissed just two days vide letter of 19th July 2019 without being given a chance to be heard. Section 45 of the Employment Act in support of his submissions.

26. It was argued that the Claimant had earned promotions for his exemplary performance and he was never issued with a warning letter. The cash shortage incurred was attributed to the overload from the Respondent. The case of Nation Media Group Limited vs Onesmus Kilonzo [2017] eKLR and section 49 of the Employment Act were cited to urge for the reliefs sought. The claim for overtime pay was based on the provisions of clauses AB20 (i) of the CBA which provides that the standard working week for clerical staff shall be 41 hours. Further, reliance was placed on clause AB21 (i) of the CBA which provides for payment of overtime for time worked in excess.

Respondent’s submission 27. The respondent framed the following issue for determination by this Court were:i.Whether the termination of the Claimant’s employment was procedural, lawful and for a valid reason.ii.Whether the Claimant is entitled to the relief sought.iii.Who bears the costs?

28. On the issue of termination, it was submitted that the summarily dismissal was procedural, lawful and for a valid reason as required under sections 43 & 45 of the Employment Act, 2007. For emphasis, reliance was placed on the case of Nugi Kahiga v Access Kenya Group Ltd [2022] eKLR.

29. It was submitted that the Claimant admitted during cross examination that he made several deposits into the said Sicily Njoki’s account on the 4th April 2019 in the absence of the customer. He also admitted the same infraction in his statement recorded 23rd April 2019 during investigations. He further admitted that he received cash from customers and the other teller and placed in dustbin. He also admitted that he incurred a cash shortage of Kshs. 360,000/= which was in his possession and failed to account for it. The said infraction was contrary to the Respondents Operating Manual Vol III Sec 1.

30. It was submitted that the Claimant’s conduct was in contravention of the Respondent’s Operating Manual Vol. III Section 2 which requires that when Sales and Service Advisors (SSA) receive money, they should confirm the amount as the customer watches, notify the customer how much it is in order to ensure that they are in consensus. It was further submitted that the Claimant acted in contravention of the Respondents Operating Manual Vol III Sec. 2, when he used dustbins to carry money which was risky as the same could have been forgotten therein leading to a shortage.

31. As regards the procedure before termination, it was submitted that the Respondent followed due procedure by serving the Claimant with the show cause letter, to which he responded. Thereafter, he was taken through disciplinary hearing as per the minutes produced as exhibits. He was informed of his right to be accompanied by a fellow employee or union official but he chose to attend alone. It was submitted that the claimant also admitted the said infractions during the disciplinary hearing. Consequently, the court was urged to find that the termination was procedural, lawful and justified by a valid reason.

32. For emphasis, reliance was placed on the case of Postal Corporation of Kenya v K. Tanui [2019] eKLR where the Court of Appeal outlined the elements of fair procedure as information, hearing and consideration. It was submitted that the instant case has met the three conditions in that the claimant was informed through the show cause letter, he was invited for disciplinary hearing, and his representations were considered before the termination as indicated in the minutes of the hearing.

33. As regards the reliefs sought, it was submitted that the dismissal of Claimant was for a valid reason and through a fair procedure. Consequently, he is not entitled to the reliefs sought. Reliance was placed on the case of George Kariuki Ngugi and 2 Others v Brolaz East Africa Limited [2014] eKLR and Thomas Sila Nzivo vs Bamburi Cement Limited [2014] eKLR.

34. It was submitted that the claim for overtime pay lacked merits since the Claimant did not produce any evidence to prove the same. It was also submitted that the Claimant did not comply with the procedure for claiming overtime by filling a claim form. Sections 107 to 109 of the Evidence Act and the case of Daniel Otieno Ogonjo & 2 Others v Pendulum Entertainment Limited t/a Treehouse Club [2021] eKLR were cited to urge that the claim for overtime was not proved.

Issues for determination and analysis 35. I have considered the pleadings, the evidence and the rival submissions. It is not in dispute that the Claimant was an employee of the Respondent until 25th June 2019 when he was summarily dismissed for gross misconduct. The issues that fall for determination are:a.Whether the Claimant’s dismissal was grounded on a valid and fair reason.b.Whether a fair procedure was followed before the dismissal.c.Whether the Claimant is entitled to the reliefs sought.

Whether the dismissal was grounded on valid and fair reason. 36. Section 43 of the Employment Act provides:“(1)In any claim arising out of termination of a contract, the employer shall be required to prove the reason or reasons for the termination, and where the employer fails to do so, the termination shall be deemed to have been unfair within the meaning of section 45. (2)The reason or reasons for termination of a contract are the matters that the employer at the time of termination of the contract genuinely believed to exist, and which caused the employer to terminate the services of the employee.”

37. Further, section 45 of the 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 employee’s conduct, capacity or compatibility; or(ii)based on the operational requirements of the employer; and(c)that the employment was terminated in accordance with fair procedure.”

38. The Claimant alleged that his dismissal was not justified by a valid reason. The respondent contended that the claimant incurred cash shortage of Kshs. 360,000 on 4th April 2019 and failed to account for the same. The claimant was further faulted for breach of the Bank’s operation policy and procedures that contributed to the loss of the said funds from the bank. The claimant admitted the offence during the investigation, disciplinary hearing and before this court. He admitted that on the material day he severally received cash from customer Sicily Njoki and her proxy and kept it aside without confirming the amount and deposited it later in her A/C No. 01198489062000 in the absence of the customer. He also confirmed that he kept money in a dustbin under his workstation and also left more cash in the counting room. He further allowed his senior to help him count the money.

39. In the case of Kenya Revenue Authority v Reuwel Waithaka Gitahi & 2 others [2019] eKLR the Court of Appeal held as follows:“The standard of proof is on a balance of probability, not beyond reasonable doubt, and all the employer is required to prove are the reasons that it “genuinely believed to exist,” causing it to terminate the employee’s services. That is a partly subjective test.’’

40. I have perused the Claimant’s contract of service and confirmed that clause 2 (f) required the Claimant to:“take all proper precautions to prevent loss, destruction, embezzlement, damage or waste of any securities deeds writing papers, books, money or other property of the Bank or of its customer.”

41. I have also perused the Respondent’s Staff Manual Appendix 14 Part 2. 9 (x) which provides for dismissal:-“if an employee fails to account for monies received or held on behalf of the Bank and/or incurs cash shortages.”

42. Clause xii which provides for dismissal: “if an employee either willfully or by negligence allows or facilitates loss, destruction or damage of any Bank’s property/cash.”

43. The Claimant contended that the copies of the banker’s books produced by RW1 to prove the alleged offence are inadmissible since they do not meet the requirements set out under section 176 and 177 of the Evidence Act. The said provision states that:“176. Mode of proof of entries in bankers’ books.Subject to the provisions of this Chapter of this Act, a copy of any entry in a banker’s book shall in all legal proceedings be received as prima facie evidence of such entry, and of the matters, transaction and accounts therein recorded.

177. Proof and verification of copy.(1)A copy of an entry in a banker’s book shall not be received in evidence under section 176 of this Act unless it be first proved that—(a)the book was, at the time of making the entry, one of the ordinary books of the bank; and(b)the book is in the custody and control of the bank; and(c)the entry was made in the usual and ordinary course of banking business; and(d)the copy has been examined with the original entry, and is correct.(2)Such proof may be given by an officer of the bank, or, in the case of the proof required under paragraph (d) of subsection (1), by the person who has performed the examination, and may be given either orally or by an affidavit sworn before a commissioner for oaths or a person authorized to take affidavits. Emphasis added.”

44. The banker’s record herein was produced by an agent of the Respondent in open Court. The same was also in the custody and control of the Respondent having been one of the ordinary books of the Respondent at the time of the making of the produced entry. Further, the same was examined by the producing officer of the Respondent as illustrated in Court. Consequently, I am satisfied that documents met the requirements of the said sections of the Act and they are admissible.

45. In view of the evidence adduced by the respondent and the admission by the claimant, I am satisfied that the claimant committed the infractions for which he was dismissed from service. Section 44 of the Employment Act provides for summary dismissal, in the following circumstances: -“(3)Subject to the provisions of this Act, an employer may dismiss an employee summarily when the employee has by his conduct indicated that he has fundamentally breached his obligations arising under the contract of service.(4)Any of the following matters may amount to gross misconduct so as to justify the summary dismissal of an employee for lawful cause, but the enumeration of such matters or the decision of an employer to dismiss an employee summarily under subsection (3) shall not preclude an employer or an employee from respectively alleging or disputing whether the facts giving rise to the same, or whether any other matters not mentioned in this section, constitute justifiable or lawful grounds for the dismissal if—(c)an employee willfully neglects to perform any work which it was his duty to perform, or if he carelessly and improperly performs any work which from its nature it was his duty, under his contract, to have performed carefully and properly;(e)an employee knowingly fails, or refuses, to obey a lawful and proper command which it was within the scope of his duty to obey, issued by his employer or a person placed in authority over him by his employer;”

46. In the dismissal letter, the Respondent informed the Claimant that his contravention of the Bank’s Operating Manual, Staff Manual & Business Code of Conduct and Ethics leading to the loss of the Kshs. 360,000/= made the Bank lose trust in him. Courts have recognized lack of trust or incompatibility as a valid ground for termination of employment. In the Kenya Revenue Authority case, supra, the ourt held as that: -“… When trust has irretrievably broken down, due to acts and omissions of the respondents, it would be foolhardy to force the employer and the employee to stick together. We are in no doubt that the respondents contributed to the acts leading to their termination as envisaged under Section 49(4) (b) (c) and (k) which leads us to the determination that the termination, though flawed due to procedural lapses, was lawful and justified. In the circumstances of this case and in consideration of public interest, the remedy that commends itself to us is that the services of the respondents shall stand terminated.”

47. Having considered the evidence adduced by the respondent and the admission by the claimant, I am satisfied that the employer herein has discharged its burden of proof of a valid reason for dismissing the claimant from service.

Procedure followed 48. Section 45 of the Employment Act, precludes an employer from arbitrarily terminating an employee’s employment and as such a fair procedure must be followed. Section 41 of the Employment Act provides as follows:“(1)(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.”

49. In this case, the claimant was served with a show cause letter dated 23rd May 2019 indicating the allegations and he responded vide his letter dated 27th May 2019. Subsequently, the Claimant was invited for a hearing vide letter dated 28th May 2019 where he was notified that he was entitled to be accompanied by a member of staff or a central staff union official. From the minutes contained in page 39 of Respondent’s bundle, he appeared at the hearing without any companion and he made his representations. The representations were considered before the dismissal in compliance with section 41 above.

50. Based on the foregoing, it is clear that the respondent followed a fair procedure before dismissing the claimant from service. The claimant was afforded a fair opportunity to defend himself both orally and in writing before the dismissal.

Whether the Claimant is entitled to the reliefs sought? 51. Based on my finding above, that the termination was grounded on valid reason, and that fair procedure was followed, the claimant is not entitled to declaration that the termination was unfair and unlawful. For the same reason, I find that he is not entitled to compensation for unfair termination and salary in lieu of notice under section 49 of the Employment Act.

52. On the issue on overtime, the Respondent’s Staff Policy Manual Appendix 18 – Policy on Overtime provides as follows:“The Human Resource Department will pay overtime on condition that: -a.Hours worked are optimally utilizedb.The work is supervised by Officers of Supervisory grade and above.c.Officers at 2. above sign to confirm 1 above on the attendance register on the same day that the work is performed.d.Overtime claims (attendance and pre-approval) are presented not later than two months upon the overtime being worked.e.Heads of departments and Branch Managers expressly confirm while forwarding the attendance registers to HRD, that conditions 1 to 4 above have been complied with.”

53. The Claimant did not give particulars of the claim for overtime and did not produce any document to prove that he indeed worked overtime. The claim is also not well grounded on the above policy. Consequently, the claim for compensation for overtime fails.

Conclusion 54. I have found that the summary dismissal of the claimant was fair and lawful since it was grounded on a valid reason and fair procedure was followed. I have also found that the claimant is not entitled to the reliefs sought. Therefore, I dismiss the suit with costs to the Respondent.

DATED, SIGNED AND DELIVERED AT NYERI THIS 10TH DAY OF NOVEMBER, 2023ONESMUS N MAKAUJUDGEOrderThis judgment has been delivered to the parties via Teams video conferencing with their consent, having waived compliance with Rule 28 (3) of the ELRC Procedure Rules which requires that all judgments and rulings shall be dated, signed and delivered in the open court.ONESMUS N MAKAUJUDGE