The Employment and Labour Relations Court has affirmed the legality of SBM Bank Kenya’s mass redundancy exercise, ruling that the lender followed proper procedures when terminating 97 employees following its acquisitions of Chase Bank Kenya and Fidelity Commercial Bank.
The Eldoret court dismissed a lawsuit filed by a former SBM Bank operations manager who had challenged her termination through redundancy.
Court documents reveal that SBM inherited approximately 800 employees from the two defunct banks—Fidelity Bank in 2017 and Chase Bank in 2018—creating significant duplication of roles among staff.
To streamline operations, the bank first implemented a Voluntary Early Separation Scheme in October 2021, notifying the Labour ministry that compulsory redundancies would follow if the workforce rationalisation targets were not met.
When only 80 employees opted for voluntary separation, SBM proceeded with layoffs, engaging an external consultant to evaluate staff based on skills and performance metrics. Employees who scored below 75 percent in the evaluation were declared redundant.
The former senior operations manager, who earned Sh137,696 monthly and scored 74 percent in the evaluation, had sued, arguing that her termination violated Section 40 of the Employment Act. She cited insufficient notice, claiming the redundancy notice issued on December 6, 2021, took effect the next day, far short of the mandatory one-month notice period.
She further alleged that the bank failed to notify the Labour Office beforehand and did not pro-vide transparent selection criteria for affected staff.
However, the court ruled that the bank followed due process, noting that the redundancy was part of a broader restructuring necessitated by the mergers. The court found that the manager received adequate notice, with her termination letter dated December 14, 2021, setting her last working day as January 15, 2022—complying with the one-month requirement.
She was also paid Sh861,669 in terminal dues and underwent outplacement training. The court dismissed her claims for unpaid house allowance and compensation, noting her salary was consolidated and inclusive of allowances.
Crucially, the judge emphasised that while the Employment Act mandates notice, it does not explicitly require individual consultations in large-scale redundancies, especially where no union representation is involved.
“The redundancy was procedurally fair and in conformity with the law,” the judgment concluded.
The ruling also upheld SBM Bank’s counterclaim, ordering the former manager to repay Sh2.3 million plus interest on an outstanding staff loan. Court records showed the claimant acknowledged the debt, but had failed to service it after her employment termination.
