When Trust Is the Job Description: What Kenyan Employment Decisions Mean for Employees and Employers

Article By Z.O.G

When trust is the job description, accountability is part of the legal standard.

Employees entrusted with an employer's financial resources, sensitive information, supervisory authority or operational controls occupy a particularly important position within an organisation. Their responsibilities often extend beyond the ordinary performance of contractual duties. They are expected to exercise judgment, diligence and fidelity commensurate with the trust placed in them.

But there is an equally important legal principle on the other side of the employment relationship: the seriousness of an allegation does not dispense with the employer's obligation to conduct a fair disciplinary process.

Recent Kenyan employment jurisprudence illustrates this balance. The courts have recognised the legitimate expectations placed upon employees occupying positions of responsibility while simultaneously insisting that employers establish the factual basis for alleged misconduct and provide employees with a genuine opportunity to respond.

Three themes emerge with particular clarity.

1. Employees in Positions of Financial or Supervisory Trust Are Held to a Higher Standard

An employee's responsibilities matter when assessing alleged misconduct.

Where an employee is entrusted with financial resources, transaction approvals, supervision of other employees, institutional assets or sensitive operational functions, the consequences of a failure to exercise appropriate care may be significantly more serious than an equivalent lapse by an employee with limited responsibility.

This is particularly apparent in banking and other financial institutions, where employees operate within systems of authorisation, verification, segregation of duties, audit controls and compliance requirements.

The law does not, however, impose an abstract or unlimited duty of perfection. The relevant question is whether the employee failed to discharge duties that actually formed part of their role and whether the alleged failure was sufficiently serious to constitute a valid ground for disciplinary action.

The role of the employee matters

In assessing alleged negligence or misconduct, employers should therefore identify precisely:

• what responsibilities were assigned to the employee;
• what level of authority the employee possessed;
• what financial or supervisory responsibilities accompanied that authority;
• what policies or controls governed the employee's functions;
• whether the employee was aware of those requirements; and
• how the alleged conduct departed from the standard reasonably expected of someone in that position.

The distinction is important.

An employee who merely processes information may not bear the same responsibility as an employee authorised to approve a transaction. Similarly, a supervisor may have obligations to detect, prevent or report irregularities that would not ordinarily fall upon a junior employee.

Accordingly, the employee's position is relevant to determining the standard against which the conduct should be assessed.

2. Negligence Does Not Automatically Equal Gross Misconduct

Employers should also be careful not to equate every failure to follow procedure with gross misconduct.

A disciplinary allegation must be supported by evidence and assessed in context.

Section 44 of the Employment Act, 2007 recognises circumstances in which an employee's conduct may justify summary dismissal, including certain forms of wilful neglect or careless and improper performance of duties.

But whether conduct crosses that threshold is a question of fact.

For an employee occupying a position of financial trust, the Court may reasonably take into account the seriousness of the responsibility entrusted to that employee. A negligent failure affecting a critical financial control may be substantially more serious than an isolated administrative error.

The employer should nevertheless establish the connection between:

the employee's responsibility → the applicable safeguard → the alleged breach → and the resulting risk or consequence.

A disciplinary case becomes considerably stronger when that chain is supported by contemporaneous documentation.

3. Employers Must Establish the Reason for Termination

The fact that an employer genuinely suspects misconduct is not, by itself, sufficient.

Section 43 of the Employment Act places the burden upon the employer to prove the reason or reasons for termination.

The Court of Appeal in Kenfreight (E.A.) Limited v Benson K. Nguti [2016] eKLR emphasised the distinction between the employer's right to terminate employment and the statutory requirement that termination be substantively and procedurally fair. The subsequent Supreme Court proceedings in Kenfreight (E.A.) Limited v Benson K. Nguti [2019] eKLR further demonstrate the importance of the statutory framework governing termination. Kenya Law+1

The practical lesson is significant.

An employer should not proceed from the allegation:

"The employee was responsible, therefore the employee must be at fault."

Instead, the employer should be able to demonstrate, through evidence, why the employee's conduct constituted a breach of the applicable standard.

This is especially important in cases involving negligence, because negligence often turns upon what the employee knew, what the employee was required to do, what the employee actually did and whether the omission or conduct was reasonably attributable to the employee.

4. Meaningful Disclosure Is Part of a Fair Disciplinary Process

Perhaps one of the most important lessons from Postal Corporation of Kenya v Andrew K. Tanui [2019] eKLR concerns disclosure.

The case arose from allegations surrounding the PostaPay product and financial losses suffered by the Postal Corporation. A forensic audit had identified issues relating to the product and the conduct of senior management.

The Court of Appeal considered the requirements of procedural fairness under Section 41 of the Employment Act.

The significance of the decision extends beyond its particular facts.

An employee cannot reasonably be expected to answer allegations where the material facts underlying those allegations are withheld from them.

This is particularly important where an employer relies upon:

• an audit report;
• an investigation report;
• transaction records;
• emails or correspondence;
• customer complaints;
• system-generated records;
• witness statements;
• financial reconciliations; or
• other documentary evidence.

If the employer intends to rely materially upon such evidence in reaching a disciplinary decision, fairness requires the employee to be given sufficient information about the case they are required to answer.

The Court of Appeal's approach is therefore better understood as requiring meaningful disclosure rather than a merely formal invitation to attend a disciplinary hearing. Kenya Law+1

5. A Disciplinary Hearing Must Be Meaningful, Not Merely Formal

There is a crucial distinction between giving an employee a hearing and giving an employee a meaningful opportunity to be heard.

An employer may technically invite an employee to a disciplinary meeting, but if the employee has not been given adequate information about the allegations or material relied upon, the opportunity to respond may be illusory.

This is consistent with the Court of Appeal's treatment of Section 41 in Postal Corporation of Kenya v Andrew K. Tanui [2019] eKLR.

The disciplinary process is not required to replicate a court trial. Nevertheless, procedural fairness requires that an employee understand the allegations and be afforded a reasonable opportunity to respond to them.

The principle was subsequently reiterated in Kenyan employment jurisprudence. The courts have continued to treat disclosure of the case to be answered and a genuine opportunity to respond as central elements of procedural fairness. Cliffe Dekker Hofmeyr+1

6. Internal Investigations Should Precede Disciplinary Action

The importance of investigation is equally significant.

An employer should ordinarily establish the factual basis of an allegation before deciding that an employee is culpable.

In Ruth Mungai v Kache Limited [2018] KEELRC 419 (KLR), the Court emphasised that it is not sufficient merely to make allegations of misconduct. The employer should have internal systems and processes for investigating and verifying the alleged misconduct before arriving at the decision to terminate. Kenya Law

This principle has particular relevance to financial misconduct cases.

Where a transaction has gone wrong, for example, the employer should establish:

• who initiated the transaction;
• who reviewed it;
• who authorised it;
• what controls applied;
• whether those controls were followed;
• whether the employee had authority to act;
• whether another employee was involved;
• whether the employee raised any concerns;
• whether the system itself contributed to the error; and
• whether there is evidence of negligence, recklessness or deliberate misconduct.

The purpose of an investigation is not simply to build a case for dismissal. It is to establish what actually happened.

7. Documentation Is the Employer's Best Defence

A recurring practical lesson from these decisions is the importance of documentation.

In a subsequent claim before the Employment and Labour Relations Court, the employer will ordinarily need to demonstrate both the substantive basis for the decision and the fairness of the procedure followed.

That makes the disciplinary record critically important.

For an employer, the record should ideally demonstrate a clear chronology:

complaint/allegation → investigation → evidence gathered → employee notified → disclosure → employee's response → consideration of response → disciplinary decision → reasons for decision.

The absence of this documentary trail can create significant difficulty.

For example, if an employer asserts that an employee ignored a particular financial control, the employer should ideally be able to produce the policy or procedure establishing the control, evidence that the employee was aware of it, evidence of the relevant transaction and evidence connecting the employee to the alleged breach.

A general statement that an employee "failed in their responsibilities" may be considerably weaker than a properly documented evidentiary record.

8. The Employer's Belief Must Have an Evidentiary Foundation

The decision in Kenya Revenue Authority v Reuwel Waithaka Gitahi & 2 Others [2019] eKLR is also important when considering the employer's state of mind in termination decisions.

The courts recognise that an employer does not necessarily have to prove misconduct to the criminal standard. Employment disputes operate within the statutory framework governing fairness and the applicable civil standard.

However, the employer's belief that misconduct occurred must have a proper factual foundation.

The employer should therefore be able to demonstrate the material that informed its decision.

This is particularly important where the allegation is based on suspicion.

Suspicion may trigger an investigation. It should not ordinarily substitute for one.

9. Positions of Trust Do Not Create Automatic Liability

The phrase "position of trust" should therefore be used carefully.

It does not mean that an employee holding a senior or sensitive position is automatically liable whenever something goes wrong.

Nor does it mean that the employer can dispense with procedural fairness.

Instead, the employee's position helps determine the standard of responsibility reasonably expected of them.

For example, where an employee has express responsibility for verifying a transaction before authorisation, evidence that the employee failed to conduct the required verification may be highly relevant.

But if the employee's role did not include the relevant verification, or if the employer's own systems permitted the transaction without the employee's intervention, the analysis becomes different.

The employer must therefore establish responsibility rather than simply infer it from seniority.

10. What This Means for Employees

Employees occupying positions of financial or supervisory trust should recognise that their responsibilities may expose them to heightened scrutiny.

They should:

• understand the policies governing their functions;
• comply with approval and verification requirements;
• maintain records of decisions and instructions;
• raise concerns where procedures cannot reasonably be followed;
• avoid informal workarounds to established controls;
• report suspected irregularities promptly; and
• preserve relevant correspondence and documentation.

Where disciplinary proceedings are commenced, the employee should also insist upon clarity regarding the allegations and the material relied upon, particularly where the allegations are based upon an audit or investigation.

A meaningful defence requires knowledge of the case being answered.

11. What This Means for Employers

For employers, particularly banks and other regulated institutions, the lesson is equally clear.

A robust disciplinary process should be capable of surviving scrutiny after the event.

Employers should therefore consider adopting a process that ensures:

1. Clear expectations

Employees should have written job descriptions and clearly communicated policies.

2. Proper investigation

Allegations should be investigated before disciplinary conclusions are reached.

3. Meaningful disclosure

The employee should receive sufficient information and relevant material to understand and answer the allegations.

4. A genuine hearing

The employee's representations should actually be considered.

5. Evidence-based decision-making

The disciplinary decision should identify the evidence supporting the finding.

6. Proportionality

The sanction should be considered against the seriousness and circumstances of the misconduct.

7. A complete record

The employer should maintain a coherent documentary trail demonstrating both substantive justification and procedural fairness.

12. The Broader Legal Lesson

The Kenyan jurisprudence demonstrates that employment disputes involving positions of trust are not determined by choosing between two simplistic propositions:

"Employees in positions of trust must be accountable."

or

"Employees must always be protected from dismissal."

Both propositions are incomplete.

The law requires a balance.

An employee entrusted with substantial responsibility may properly be held to a high standard of performance, care and compliance. At the same time, the employer must establish the factual basis for disciplinary action and comply with the statutory requirements governing fair termination.

The stronger the allegation, the more important the quality of the investigation and documentation.

This is particularly true where an employer alleges negligence rather than deliberate misconduct. Negligence requires a careful examination of the employee's actual responsibilities, the applicable standard, the circumstances of the alleged failure and the evidence connecting the employee to it.

Conclusion

The recent Kenyan employment jurisprudence sends a clear message to both sides of the employment relationship.

For employees occupying positions of financial or supervisory trust, trust carries responsibility. The more sensitive the role, the greater the expectation that the employee will observe the controls and safeguards entrusted to them.

For employers, however, responsibility does not eliminate due process.

A disciplinary hearing must be more than a procedural formality. An employee must know the substance of the allegations and be afforded a genuine opportunity to answer them. Where an employer relies upon an audit, investigation or other material evidence, meaningful disclosure becomes particularly important.

And for both sides, documentation matters.

The best disciplinary process is one in which the record tells a coherent story:

What was the employee required to do? What allegedly went wrong? What evidence established that? Was the employee told the case against them? What was their response? Was that response considered? And why was the final decision reached?

Where those questions can be answered clearly and contemporaneously, the employer is in a substantially stronger position to demonstrate fairness. Where they cannot, even an allegation involving a position of significant trust may become difficult to sustain.

Key Applicable Kenyan Authorities

• Postal Corporation of Kenya v Andrew K. Tanui [2019] eKLR.
• Kenfreight (E.A.) Limited v Benson K. Nguti [2016] eKLR; Kenfreight (E.A.) Limited v Benson K. Nguti [2019] eKLR.
• Kenya Revenue Authority v Reuwel Waithaka Gitahi & 2 Others [2019] eKLR.
• Ruth Mungai v Kache Limited [2018] KEELRC 419 (KLR).
• Coca Cola East & Central Africa Limited v Maria Kagai Ligaga [2015] eKLR.
• Walter Ogal Anuro v Teachers Service Commission [2013] eKLR.

Disclaimer: This article is intended for general information only and does not constitute legal advice. The applicable law and outcome will depend on the facts and circumstances of each individual matter.