Court upholds dismissal of cashier over Sh1.2 million loss

The Court of Appeal has asserted the high threshold of trust, diligence, and accountability required of employees entrusted with handling finances.

This was demonstrated when an appeal was dismissed of a former Nairobi City Water and Sewerage Company Limited cashier who was fired over the loss of Sh1.2 million.

In a judgment delivered on January 16, 2026, Justices Francis Tuiyott, Asike-Makhandia Muchelule and George Odunga upheld an earlier decision of the Employment and Labour Relations Court (ELRC).

The decision found that Stephen Ndolo had been lawfully and fairly dismissed from his employment. 

Ndolo had challenged a December 9, 2016 judgment by ELRC Judge Linnet Ndolo, which dismissed his claim against his former employer.

The record showed that Ndolo was initially employed as a Clerical Officer II before rising through the ranks to become a cashier and later a Cashier Verification Supervisor in the Finance Department. 

"His broad function was to provide support to the Revenue Accountant in the collection and banking of cash and cheque receipts that were then audited," court records show.

Trouble arose in 2013 when Ndolo went on leave on September 16. 

While he was away, the company discovered that Sh1.2 million he had collected while on duty had not been banked or accounted for. 

When questioned, Ndolo claimed he had paid out the money as an I.O.U. on August 24, 2013, to two individuals who allegedly had been sent by the company’s Managing Director to collect funds for staff attending games at Kasarani.

He argued that the trial court failed to properly evaluate the evidence, wrongly found him negligent, shifted the burden of proof to him, and ignored alleged systemic failures in the company’s cash management procedures, particularly relating to the handling of imprests and I.O.U.s.

"The appellant’s complaint in his memorandum of claim was that 

there was no valid reason for his dismissal, and that the disciplinary process he was taken through was not fair," they further note.

The employer rejected this explanation.

It emerged that the individuals who received the funds were not employees of Nairobi City Water, the alleged authorisation letter from the Managing Director was a forgery, and the I.O.U. had neither been properly documented nor surrendered, the judgement notes. 

The company also maintained that internal instructions required all daily collections to be banked and prohibited cash payments before banking.

In reaching its termination decision, it noted that Ndolo failed to record the payment in the relevant register, shared an office with a colleague who did not witness the transaction, and went on leave without surrendering the imprest. 

"He was contacted to return from leave to come and account for the money. Several requests were made for him to return. He was unwilling to return. Until he overstayed his leave," the company observed.

He was later suspended, subjected to a disciplinary process and summarily dismissed for alleged gross misconduct.

At trial, the ELRC found that Ndolo had paid a substantial sum of money to people unknown to him without exercising the level of care expected of an officer of his seniority and experience.

The court also found that the disciplinary process complied with Section 41 of the Employment Act, which guarantees procedural fairness. His claim was dismissed.

This being a first appeal, the Court of Appeal restated its mandate under Rule 31(1) of the Court of Appeal Rules, 2022, to re-evaluate the evidence and arrive at its own conclusions on both fact and law, while bearing in mind that it did not have the benefit of seeing or hearing witnesses testify.

It was Ndolo’s counsel submissions at the appellate court that the loss resulted from institutional weaknesses rather than individual negligence.

He submitted that there were no proper controls, no specimen signatures for verification, and that crucial evidence such as CCTV footage was not produced.

It was also argued that Ndolo had not been charged with any criminal offence and that similar payments had previously been made without incident.

The company, however, maintained that the dismissal was justified, pointing to internal reconciliation reports showing that the funds had remained unbanked for months, the lack of proper documentation for the I.O.U., and an internal memo issued earlier prohibiting the use of cash collections for payments. 

In its analysis, the Court of Appeal narrowed the key issue to whether there was a valid reason to terminate Ndolo’s employment. 

The judges emphasised that employees entrusted with financial responsibilities owe their employers a heightened duty of care. 

"There cannot be any doubt that the appellant owed the respondent a duty of care when receiving, and accounting for the money on daily basis," the judges observed.

The court posed a central question: given the amount involved, the fact that Ndolo did not personally know the recipients of the money, and his failure to confirm the instructions with the Managing Director, did he exercise due diligence commensurate with his rank?

Answering in the negative, the court held that honesty and trust are fundamental in roles involving the handling of money. 

"In a situation where the employee has been charged with handling and accounting of finances, honesty is key," the bench said.

The court further notes where an employee’s conduct undermines that trust, the employer is entitled to terminate the employment relationship. 

The judges found that Ndolo’s actions fell short of the standards expected of him and led to the loss of a substantial sum.

“The test,” the court stated in substance, “is whether the conduct complained of led to a breakdown of the employment relationship.” 

In this case, the court was satisfied that it did.

Consequently, the appeal was dismissed with costs to the respondent, cementing the principle that employees in finance-related roles bear a heavy burden of trust, and that failure to meet that standard can lawfully justify dismissal.

The appellate court ruled that the employer had valid reasons to terminate his services, underscoring that honesty and due care are central to employment relationships involving financial responsibility.