Court Awards Former Family Bank Manager Sh2 Million Over Unfair Dismissal Based on Vague Targets

The Employment and Labour Relations Court has ruled that Family Bank PLC unfairly terminated a senior manager’s contract by using ambiguous and unmeasurable performance targets. Justice James Rika found that the lender failed to provide a clear objective framework for performance evaluation, leading to a Sh2 million compensation award for the aggrieved former employee

The ruling follows a petition by the former manager, who was dismissed in late 2024 on grounds of “underperformance.” The claimant argued that the bank’s management frequently shifted key performance indicators (KPIs) without formal communication or training. Furthermore, the court heard that the bank did not conduct the mandatory performance improvement plan (PIP) before deciding to terminate the employment contract.

Justice Rika noted that employment laws require employers to set specific, measurable, achievable, relevant, and time-bound (SMART) goals. The judge observed that Family Bank’s appraisal system appeared “subjective and opaque,” leaving employees at the mercy of individual supervisors’ whims rather than factual output. This lack of clarity, the court ruled, violated the claimant’s right to fair labor practices under the Constitution

“An employer cannot hide behind the veil of ‘poor performance’ to terminate an employee without providing verifiable evidence of how they failed to meet clearly defined goals,” Justice Rika stated in the judgment delivered on Wednesday. “Vague targets are a recipe for industrial disharmony and serve only to create a climate of fear rather than productivity.”

The court awarded the former manager twelve months’ salary in compensation, citing the emotional distress and professional reputational damage caused by the summary dismissal. The judge also ordered the bank to issue a certificate of service and pay for all outstanding leave days. This decision is seen as a major win for mid-level managers in the banking sector, who often face high-pressure environments with fluctuating corporate objectives.

Legal experts suggest that this ruling will force financial institutions to audit their human resource policies and ensure that performance management systems are legally defensible. Family Bank has yet to issue a statement on whether it intends to appeal the decision at the Court of Appeal.