Barclays fined lighter payout for sacking veteran without warnings

A former Barclays Bank employee has had a compensation award slashed after the court ruled  millions of shillings were lost through her negligence.

The Court of Appeal in Nairobi reduced the award to Yasmin Namsi Athman from twelve months’ salary to four, but ruled her sacking was unfair.

While the court acknowledged that Athman was negligent in her duties during a multi-million shilling fraud, it ruled that the bank’s failure to follow a mandatory warning process rendered her dismissal unlawful.

The court heard that the fraud involved the account of a customer which had been dormant for two years and had been flagged by the bank’s fraud monitoring system with a requirement that all transactions be verified before processing. 

But two large withdrawals totalling Sh 4.6 million shillings were processed between December 5 and 7, 2012. 

Athman, then acting as a branch operations officer, authorised these transactions and several M-Pesa transfers without referring them to the fraud monitoring system, known as BASIS, even though the account had been flagged with a caution. 

Not long after, the real account holder disputed seven transactions totalling Sh5.235 million, pointing out that he was out of the country when some of them occurred. 

Investigations revealed that his account details had been altered and a counterfeit national identity card used to open a parallel account, which then facilitated fraudulent updates to his customer information file.

Following the discovery, Barclays dismissed Athman on May 10, 2013 on grounds of negligence and failure to comply with bank regulations.

The Banking Insurance and Finance Union sued on her behalf, arguing that she had performed due diligence and that the fraud was the result of systemic failures beyond her control. 

It sought reinstatement and maximum compensation.

In her defence, Athman held that based on past practice, an officer could interview the customer and if satisfied, could allow a transaction to proceed.

“In her evidence, the grievant stated that she did not refer the two transactions to the bank’s fraud monitoring system, BASIS, because, based on past practice, she was required to interrogate the customer and verify the supporting documentation. She maintained that she did

so before approving the transactions,” court documents show. 

The bank argued it had exercised leniency “by imposing a lesser sanction of termination with notice instead of summary dismissal". 

The Employment and Labour Court agreed that the dismissal was unfair, noting that Athman had risen through the ranks over 23 years without a single warning and had acted in a higher position without confirmation. The judge awarded her the maximum 12 months’ gross salary, Sh2,178,444.

Barclays appealed.

The Court of Appeal found that the bank breached a collective bargaining agreement by failing to give Athman two prior written warnings before terminating her employment for negligence. 

 “Its failure to comply with that mandatory procedure rendered the termination procedurally unfair and in breach of contract,” the bench ruled. 

Justices Gatembu Kairu, Pauline Nyamweya and Aggrey Muchelule also highlighted Athman's 23-year record of diligent service without a single warning.

However, the court also noted that Athman failed to refer the flagged transactions to BASIS, conduct that amounted to contributory negligence. 

The judges therefore set aside the maximum payout she had been granted by the Employment and Labour Court.

The court substituted it with four months’ gross salary, ordering Barclays to bear a quarter of the appeal costs.