Court stops KCB from paying management bonus

Top bank managers are paid bonuses if their units meet pre-set performance targets. FILE PHOTO | NMG
Top bank managers are paid bonuses if their units meet pre-set performance targets. FILE PHOTO | NMG 

Kenya’s largest bank by assets, KCB #ticker:KCB, has been stopped from paying annual bonuses to its management in the wake of an appraisal dispute with unionisable workers.

The latest court action is the culmination of a dispute that began last August when the Banking, Insurance and Finance Union (Bifu) obtained orders stopping termination of any unionisable employees’ services based on quarterly performance reviews.

The workers argued that the appraisals were unfair and discriminatory and could therefore not form the basis for such drastic action.

Union officials went back to court this week upon learning that management — who are not members of the union — were due to be paid 2017 bonuses at the end of this month to the exclusion of unionisable employees, a move the union sees as discriminatory.

Bifu reckons that failure to assess the performance of unionisable employees in the last quarter of last year means seniors in management could not purport to have appraised themselves and qualified for bonuses, since their performance depends on that of the staff working under their supervision.

Top bank managers are paid bonuses running into millions of shillings if their units meet pre-set performance targets. KCB reported flat net profit of Sh19.7 billion for the year ended 2017.

The High Court has now granted the orders staying payment of the bonuses and set the matter for hearing on April 9.

“Interim exparte orders are hereby issued restraining the respondent from paying the 2017 staff bonuses to the management staff and entities of the group in line with the group staff performance bonus policy and the group remuneration policy on or before March 23 or any time thereafter until the hearing and determination of this application,” the Employment and Labour Relations Court said in the March 20 ruling.

KCB has said in a replying affidavit that it has been using the current appraisal scorecard as a tool to measure performance since 2004, and introduced a staff performance bonus policy in 2013 without any challenge from employees.

KCB has also argued that the unionised employees have refused to use the present scorecard for appraisal, making it impossible to measure their performance since this is the only tool available.

“The performance management framework being used expressly stipulated that (the) scorecard is the tool used to measure performance and it also enabled the bank to reward performance in a differentiated manner,” said KCB Kenya head of employee relations Laban Sogomo in the affidavit dated February 2.

KCB managing director Joshua Oigara said in a March 12 memo to staff that the lender’s board has approved the 2017 performance ratings, salary reviews and bonuses for eligible staff in line with the bank’s remuneration and bonus policies to be implemented by the end of the month.

Mr Oigara added that the bank would retain bonus pot for unionised staff pending determination of the court case.

Bifu national organising secretary Tom O’Odero however argues that without appraisals, it would be hard for the bank to justify how it arrived at the bonus pot for unionised staff.