COURT FINDS THAT EMPLOYER'S PERFORMANCE MANAGEMENT PROCESS VIOLATED LABOUR LAWS
James WaNjeri - Employment Law
In Namai vs National Bank of Kenya Limited, Constitutional Petition E039 of 2023, the Employee stated that he had worked for his employer in the Banking industry for 27 years, earning various promotions and accolades. In 2013 he applied for the position of Branch Operations Manager and while serving on probation as promoted, he was deployed to Kitengela Branch and it was ranked amongst the Bank’s best 5 Branches due to his performance. His challenges appear to have started in 2020, when the COVID Pandemic was declared in Kenya.
He received a show-cause notice dated 22.03.2021, which he replied to on 24.03.2021 and the employer found his explanation satisfactory. In December, the Employer advertised the position of Branch Manager, which he was already occupying. On 17.01.2022 his employment was terminated.
At the Employment Court, he argued that his termination was unlawful and without reason since he was not subjected to 2021 performance cycle review and moderation process as per the employer’s policy and guidelines.
He sued for unfair termination, violation of his fundamental rights and freedoms and alleged that the employer had discriminated against him.
On its part, the employer stated that it had instituted a performance policy entailing one half-yearly review in the Month of July and a final review at the end of the financial year. In 2020 the employee was rated 2.15 after a formal review. After completion of 2020 performance review the employer informed him that he had a moderated score of 2.16 being Partially Meets Targets. The letter stated that he had a right to appeal by close of 22.03.2020. He did not appeal. In 2021 he was rated 2.1 after a formal review. In April of that year, the employer issued a memorandum to all staff informing them that staff who did not meet targets “shall be on a PIP program that supports staff who did not meet expected performance standards to improve performance levels.” The memorandum provided that staff with a score of below 3.00 would be placed on PIP for 6-months.
On 15.04.2021 the employer wrote to him about his unsatisfactory performance for year 2021. He was given a first warning letter for unsatisfactory performance and advised to strive to improve within the next 6 months of PIP program. During the Performance Improvement Plan (PIP) he met his supervisor on three occasions in April, June and August 2021. As at 26.08.2021 his performance had not improved and he was rated at 2.13- Partially Meets Targets, after a formal review and being below expected performance. He was issued with a final warning letter for unsatisfactory performance. He was advised failure to meet targets by Quarter 3 2021 could lead to further disciplinary action against him, including termination of his employment.
Upon completion of the PIP process with no improvement, the petitioner was invited to a capability hearing on 15.12.2021, having failed to turn around his performance. His employment was terminated by a letter dated 17.01.2022 for unsatisfactory performance. The termination was effective 17.01.2022. The letter stated that after the final warning dated 26.08.2021 the petitioner had been invited to the capability hearing on 15.12.2021 to discuss why he could not improve performance despite the PIP support. The petitioner appealed by his letter of appeal dated 23.01.2022.
He stated that the capability hearing was full of threats and intimidation pointing to a predetermined outcome; he had 27 years of dedicated service; the time to turn around performance had been short upon return to Kitengela Branch; there had been staff issues causing fraud; there had been no business due to poor client relationship; revenue not aligned to the branch, the Covid situation; lack of support mechanism and the supervisor lacked time to support him due to Covid scenario or managing his branch as fellow branch manager; and lack of customers when a major customer terminated all employees.
He enumerated performance initiatives he had undertaken. He offered options of redeployment in other roles he had excelled over the previous 20 years of service, extension of tenure as branch manager at Kitengela Branch with a clear support line as he had suggested, or mutual separation agreement with the respondent considering a separation package appreciating his long good service.
He was invited to appeal hearing on 07.02.2022 per letter of invitation dated 31.01.2022 and he attended. By letter dated 16.02.2022 the respondent informed the petitioner that no merit had been found to vary the decision. When considering the case, the court took note that the employee had not denied the scores for his performance but instead he had explained his scores rated as “unsatisfactory performance” as follows:
a) He agreed he signed a PIP and he signed the review every month and he raised matters not addressed. He had not been called for coaching or mentoring session to support his performance.
b) In July 2013 he was deployed to Wilson Airport Branch. Shortly he was called and deployed to Kitengela Branch reporting in May 2014. In May 2015 he was called and deployed to Rongai Branch. At that time, he left Kitengela as one of the best 5 Branches. He had worked to achieve that performance.
c) He was transferred to Kitengela in March 2020. COVID 19 Pandemic was declared after that transfer. It became difficult for him to handle the business with that uncertain new environment. The Branch he had left in top 5 was now performing poorly upon his redeployment. The customers he had brought in had left.
d) He was unable to meet customers due to COVID 19 situation.
e) The branch had no collector clerk as he repeatedly reported at every review and he needed one due to a bad historical book. The support had never been given as requested.
f) The audit for 2017 highlighted reasons why Kitengela Branch was performing poorly and he was a victim of those reported circumstances. For the last 8-years the branch had not broken even and on his redeployment, it was already on a downward trajectory.
g) The targets he signed were adopted from those of the former branch managers and there were no target review meetings.
Justice Byram Ongaya while rendering judgment took issue with the employer’s failure to take the Employee’s concerns into account. “The Court has perused all exhibits on record including the petitioner’s appeal and its being disallowed. He raised the same issues he had informed the capacity hearing meeting. The issues were not taken into consideration. Essentially he was raising well-grounded grievances or complaints as envisaged in section 46 of the Employment Act, 2007 and instead of the respondent amicably addressing them, the scores of unsatisfactory performances were taken as if they existed in vacuum or that such valid grievances. The Court therefore finds that…….the respondent acted unreasonably in breach of Article 47 which imposed upon the respondent the obligation to act reasonably...”
The Court recognized that the Employer had followed the proper process for termination of employment by issuing a notice and conducting a hearing but “…in the full analysis of the petioner’s lamentations, the respondent acted unreasonably by failing to take into account the petitioner’s valid grievances about his work environment at the Kitengela Branch that essentially explained the levelled unsatisfactory performance.”
The court made a finding that his right to fair labor practices under Article 41 of the Constitution had been violated, and with regard to the damages that he was to be awarded, the court considered that his grievances explaining the unsatisfactory performance were completely disregarded. The Court also considered his illustrious 27 years of service, plus the great contributions he had made to the employer’s enterprise and held that
“Taking all the circumstances into account, the petitioner is awarded Kshs. 5, 000, 000.00 for violation of rights in the manner his contract of service was terminated.”
This judgment highlights what the employer is expected to do when dealing with an employee’s poor performance and the use of the Performance Improvement Plan (PIP) as follows:
1. The PIP is recognized in law as a tool for improving an employee’s performance.
2. The employee’s reasons for poor performance and concerns need to be considered when carrying out the PIP.
3. Where there are support structures in the PIP e.g. coaching, they need to be actualized to ensure that the employee does not feel they were denied proper support.
4. If the employer does not address the systemic reasons for poor performance, the Court will find the PIP process to have been flawed.
5. Employers are bound to follow their own policies and processes when dealing with performance-related issues.
6. Where the employee’s challenges have been addressed, the employer ought to keep a record of those interventions as they form part of their evidence in Court.
Under Section 90 of the Employment Act, a claim by an employee against an employer can be filed within 3 years after the end of the employment relationship.
The case cited in this newsletter is Namai vs National Bank of Kenya Limited, Constitutional Petition E039 of 2023 delivered on 22nd June 2023 by Justice Byram Ongaya of the Employment and Labour Relations Court (Principal Judge)
The contents of this newsletter do not constitute legal advice and are provided for general information purposes only.
James Njeri and Company Advocates
Landmark Plaza, 13th Floor,
Argwings Kodhek Rd. Nairobi
Tel: 0719494083
Email: legal@jnadvocates.com
I am enlightened by your articles on employer and employee relations .
My main issue is where we have matters that occurred more than 10 years ago, is there a way in law that one can use to seek redress in court.