The Employment and Labour Relations Court has upheld dismissal of a former assistant manager at Diamond Trust Bank, ruling that the lender acted lawfully in firing her for breaching banking procedures involving an unsigned and crossed cheque.
The court found that the termination of Ms RN was both procedurally and fair under the Employment Act.
She was dismissed in November 2018 after approving and releasing Sh1 million to an unverified third party acting as an agent for a bank customer.
The cheque was unsigned and crossed. The court said this exposed the bank to serious legal and regulatory risks.
“The claimant admitted that she paid out an unsigned cheque to a third party. It was a crossed cheque,” the judge noted, adding that there was no written authority or prior introduction of the agent to the bank at the time of payment.
She had been hired as a bank teller in 2015 before rising to assistant manager.
The case had a lengthy procedural history. Initially, Ms RN won Sh1.54 million in compensation for unfair termination in July 2024 after the bank failed to appear in court.
However, the judgment was set aside in February 2025 when the bank successfully applied to reopen the case.
During the full hearing, Ms RN conceded under cross-examination that she had received a show-cause letter, attended a disciplinary hearing, appealed the decision, and still processed the unsigned cheque.
She argued that the customer was well-known to the bank and later confirmed authorising his agent. However, the court rejected this defence, ruling that retrospective ratification could not excuse the initial misconduct.
“The ratification of the transaction by the customer Kimani did not absolve the claimant from her act of gross misconduct,” the court ruled.
On the termination procedure, the court found no fault with the bank’s disciplinary process.
“The court has not found any defects that would result in a finding that procedure was not in conformance with the minimum statutory standards of fairness,” the judge said, citing Sections 41 and 45 of the Employment Act.
It also dismissed Ms RN’s claim of not receiving appeal feedback, noting she failed to prove the bank used an incorrect address or that she followed up before filing suit.
The court emphasized the gravity of Ms RN’s actions, stating that paying a crossed and unsigned cheque was a criminal offence. He noted that had the customer denied issuing it, the bank could have faced legal repercussions.
“It is a criminal offence to pay out a crossed cheque. The cheque was unsigned. If the customer denied issuing it, the bank would have been held liable for breach of banking law and regulations,” said the court.
Despite her initial role as a bank teller, the court held that as an assistant manager, she bore a higher duty of care and breached fiduciary obligations to the bank and its customers.
“She had a duty to protect the Respondent and its customers. She ignored the Respondent’s and her own fiduciary duty to the Respondent’s customers,” said the judge.
Additionally, the court ruled in favour of the bank’s counterclaim for an outstanding Sh1.4 million staff loan, which Ms RN admitted owing but stopped repaying after her dismissal.
However, it declined to award commercial interest, warning that indefinite interest would amount to "loan sharking" and violate consumer protection principles in an employment context.
