The Court of Appeal has overturned the ruling by the Employment and Labour Relations Court that had awarded close to Sh1 billion in compensation to former National Bank of Kenya employees for wrongful termination.
The former employees had moved to court in early 2014, seeking damages for unfair retirement and discrimination under the Voluntary Early Retirement (VER) scheme offered by the bank.
They said the bank accepted their VER on terms that were not only discriminatory, but in breach of the bank’s Human Resource (HR) Manual, Collective Bargaining Agreement (CBA), and the Constitution and the Employment Act 2007.
In her judgment delivered on February 22, 2017, Justice Monica Mbaru of the Employment and Labour Relations Court stated that the former employees were discriminated against and unfairly treated when they were sent on voluntary retirement in 2014.
“To engage an employee on inferior or unfavourable terms and conditions of employment is a practice that cannot find justification in law and in fair labour practices. Such should be frowned upon and not receive the sanction of the court,” she said.
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Through its lawyers Mr Chacha Odera of Oraro and Co. Advocates, the bank appealed the ruling stating that the offer made to the claimants was not discriminatory. The bank also faulted the ruling for not appreciating that VER agreement was separate and distinct from the HR manual and CBA.
“They have failed to illustrate or establish factual and legal comparable terms against which the offer is discriminatory,” NBK said in its response. “The respondents were bound by the terms of the VER scheme and it was not open to the learned Judge to rewrite the contract as she did,” the bank said in response to the trial court ruling.”
In their ruling, appellate judges Alnashir Visram, W. Karanja and M.K. Koome stated that the respondents accepted the terms offered in the circular according to their respective applications as well as acceptance letters issued by the bank, adding that it was open for the respondents to reject the aforesaid terms and not take advantage of the VER scheme.
“In our view, there was no evidence of undue influence or coercion which diminished the respondents’ capacity to voluntarily accept the terms in question.”
“Moreover, it is clear that the parties vide the circular, applications and acceptance letters varied the terms of retirement as stipulated in the HR manual and CBA. We find that the appeal has merit and hereby allowed with costs to the appellant. We hereby set aside the judgment of the trial court dated 22ndFebruary 2017 and substitute the same with an order dismissing the respondents’ suit with cost to appellant,” Judgment reads in part.
In 2014, National Bank of Kenya launched a voluntary early retirement scheme for employees aged 50 years and above as part of its restructuring process geared towards achieving its growth target as spelt out in its strategic plan 2013-2017.
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