Despite this, the Employment and Labour Relations Court at Nairobi, has recently elucidated the tenets that govern termination based on poor performance. The court in the case of Namai vs National Bank of Kenya [2023] indicated that employers need to consider any valid grievances raised by underperforming employees before terminating their employment.

In this alert, we will analyse how this new jurisprudence may affect the way in which an employer relies on poor performance as a reason for termination.

Background of case

Mr Vincent Namai (petitioner) was employed by the National Bank of Kenya (respondent) in 1995 and served at the bank for 27 years until his termination in 2022. During his employment, the petitioner worked in different roles, including as a branch operations manager in 2013, a position which he also held at one of the respondent’s top performing branches.

In 2020, the respondent instituted a performance policy entailing a semi-annual review for all its employees. The petitioner was taken through performance reviews in 2020 where he scored 2.15, and 2021 where he scored 2.1. After the completion of both reviews, he was informed that he achieved a moderated score of 2.16, which was below the required target of 3.00. The petitioner was issued with a first warning letter and put under a six-month performance improvement plan (PIP) to improve his performance in line with expected targets.

On completion of the PIP, his performance had not improved. Consequently, the petitioner’s employment was terminated in 2022 after he had been taken through a capability hearing to discuss why he was unable to improve his performance despite receiving PIP support.

The petitioner appealed against the respondent’s decision and set out multiple reasons that contributed to his continued poor performance. Some of the reasons included staff participating in fraudulent activities, lack of business due to poor client relationships and lack of sufficient support mechanisms. Despite the petitioner setting out these issues, the respondent informed him that his appeal had no merit and upheld his termination.

Findings by the court

The court examined the procedures followed during the capability hearings held by the respondent. In line with this, the court perused all the exhibits provided by the parties, including the minutes of the capability hearings. From the minutes, the court identified that the petitioner had raised pertinent issues in his capability hearings and that these were not taken into consideration by the respondent. The court was of the view that the grievances raised were well-grounded, as envisaged by section 46 of the Act. The respondent was consequently found to have acted unreasonably by failing to consider the petitioner’s grievances on the reasons for his poor performance.

The effect of this judgment on employer-employee relationships

Through this judgment, the court has highlighted the unsavoury practice of employers terminating underperforming employees despite the employees raising valid grievances. The court identified that this practice constitutes unfair termination and is in violation of section 45 the Act.

In order to prove fair and procedural termination, employers will be required to provide evidence of all necessary steps taken to mitigate any valid grievances raised by an underperforming employee before termination. An employer’s failure to provide this would constitute unfair termination even if due procedure was followed during the termination. 

Conclusion

We encourage employers to adapt their practices and realign their policies to incorporate mechanisms that can help mitigate valid grievances raised by underperforming employees before a decision to terminate is made.