The Employment and Labour Relations Court has upheld a decision by Family Bank to dismiss a branch manager for breaching internal banking procedures, including authorising transactions based on a phone call from a customer.
The court rejected Mark Kiplagat’s claims of unfair termination, finding that the bank had valid reasons and followed due process.
Mr Kiplagat had sought reinstatement or Sh32.9 million in compensation after his October 2023 dismissal for non-compliance with operational manuals, which exposed the bank to risk.
However, the court noted that he did not deny approving transactions via phone calls but argued that clients later signed the documents. It was observed that the bank’s policies strictly require physical presence and signatures in advance.
“By authorising transactions before signature by the client, the claimant not only flouted the provisions of the operation manuals, but also exposed the respondent to risk. His position as branch manager in charge of ensuring compliance with bank processes and procedures aggravated the situation,” said the court.
It dismissed his defence that other staff — operations managers, supervisors and tellers — also approved the transactions, ruling that he bore ultimate responsibility.
Mr Kiplagat alleged discrimination, testifying that while he was dismissed, other staff involved received warnings. The court rejected the claim, emphasising his managerial duty to enforce procedures.
He admitted that the customers involved in the contested transactions were known to him and the bank, and that their accounts were legitimate. However, the court stressed that banking procedural safeguards could not be bypassed.
In the court’s view, the claimant bore ultimate responsibility for ensuring strict compliance with the bank’s operational manuals and internal controls.
“Even where customers were known, and consent was eventually reduced into writing, the claimant was required to ensure that all procedural safeguards were complied with before authorising the transactions,” the court said.
He also indicated that the customer subsequently appended her signature to all the relevant debit receipts.
In his suit, Mr Kiplagat accused the bank of unfair dismissal, claiming he was denied valid reasons, notice and a hearing. He demanded notice pay, leave dues, gratuity, severance and compensation, or reinstatement with back pay.
He joined Family Bank in 2005, rising to branch manager over 18 years, and stated that he had no prior warnings. He also alleged unpaid overtime, denied leave and workplace discrimination.
Family Bank countered that investigations in September 2023 revealed serious violations, including unauthorised transactions that breached cash management rules.
It described his tenure as “marred by numerous instances of gross misconduct,” including breaches of its operations manual that exposed the lender to financial and reputational risk.
The bank said he received a show-cause letter on September 4, attended a disciplinary hearing on October 6, and was terminated on October 26 after due process. He was paid one month’s salary in lieu of notice and accrued leave, with severance and gratuity deemed inapplicable.
In its judgment, the court cited Sections 43 and 45 of the Employment Act, which require employers to prove valid reasons and follow fair procedure. It found that the bank met both criteria, noting Mr Kiplagat’s admissions and the bank’s evidence.
While the disciplinary hearing minutes were absent, the court said this did not invalidate the process. It also clarified that Section 41 does not guarantee external witnesses at hearings.
The court found that the bank had a “valid and fair reason to subject the claimant to disciplinary action and ultimately to terminate his employment.”
It added that the “Know Your Customer” initiative does not dispense with or override the mandatory operational procedures of the bank.
“The respondent has demonstrated both a valid and fair reason for termination and substantial compliance with the procedural requirements of the law. The claimant has therefore failed to prove that his termination was unfair or unlawful within the meaning of section 45 of the Employment Act,” said the court, dismissing the claim in its entirety.
