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Court of AppealDismissedCivil Appeal No 601 of 2019· [2023] KECA 106 (KLR)

Kimathi v Ericsson Kenya Limited (Civil Appeal 601 of 2019) [2023] KECA 106 (KLR)

Court of Appeal of Kenya
3 February 2023
8,102 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~32 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal confirmed that redundancy is a valid ground for termination, but employers must use fair, transparent selection criteria or face unfair dismissal findings.

What this practically means

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Executive summary

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This was a first appeal to the Court of Appeal at Nairobi against an Employment and Labour Relations Court judgment that found the appellant's retrenchment unfair but awarded her only four months' gross salary (Kshs 1,214,960/-) as compensation for unlawful termination, having declined her claims of pregnancy-based discrimination and payment for outstanding sick leave. The appellant, employed as Service Excellence Manager from June 2009 and terminated on grounds of redundancy in August 2014, sought 12 months' gross salary, payment in lieu of five leave days and exemplary damages for discrimination. The Court of Appeal re-evaluated the evidence as on a first appeal and dismissed the appeal entirely, with costs to the respondent. While affirming the trial court's finding that the redundancy was unfair, the Court departed from the trial court's reasoning: redundancy is itself a valid reason for termination, and the unfairness lay in the non-transparent selection criterion and process. The Court held that making an employee apply for her own job is not per se a fair selection criterion, drawing on South African authority, and that such restructurings must be closely scrutinised. It declined to disturb the discretionary four-month award under section 49 of the Employment Act, finding no misdirection by the trial judge. On discrimination, the Court applied the burden-of-proof framework under sections 47(5) and 43 of the Employment Act and held that neither the discrimination nor the alleged harassment was proved to the required standard. The leave claim was overtaken by events, and the authenticity of the letter to the Labour Officer could not be raised for the first time on appeal.

Key legal issues

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01

Whether the retrenchment was a sham and the redundancy unfair

Holding

The redundancy was unfair because the selection criterion used was not transparent, not because redundancy is an invalid reason for termination

Reasoning

The Court affirmed the trial court's finding of unfair redundancy but departed from its reasoning: redundancy is itself a valid reason for dismissal under the statutory definition. The unfairness lay in the selection process. The respondent led no evidence of a clear, transparent criterion, of why the appellant alone was required to apply for relocation to South Africa, or of formal consultation meetings. Making an employee apply for her own job is not a selection criterion and such restructurings must be closely scrutinised as they can be used to eradicate unwanted employees.

p. 11
02

Whether the award of 4 months' compensation should be increased to 12 months

Holding

No; the trial court's discretionary award was properly made and the appellate threshold for interference was not met

Reasoning

Remedies under section 49 are discretionary, guided by the 13 considerations in section 49(4). An appellate court interferes only where the judge misdirected himself, misapprehended the facts, considered extraneous factors or failed to consider relevant ones. The trial court considered the five years of service and the terminal dues already paid. No failure to consider the statutory factors was demonstrated, so the discretionary award stood.

p. 12
03

Whether the appellant proved discrimination on account of pregnancy and motherhood

Holding

No; the appellant failed to discharge her burden of proof and the respondent proved the discrimination did not occur

Reasoning

Article 27(4) of the Constitution and section 5 of the Employment Act prohibit discrimination on grounds including pregnancy, and section 46 makes pregnancy-related reasons unfair grounds for dismissal. However, section 47(5) places the burden of proof on the employee, after which the employer must justify under section 43. The respondent showed it approved 21 days' sick leave, allowed working from home and offered a right of refusal for the South African role; the appellant's allegations were not proved to the required standard.

p. 14
04

Claim for 5 unpaid sick leave days and authenticity of the Labour Officer letter

Holding

The leave claim was overtaken by events as the pay slip showed a leave allowance paid; the authenticity issue was raised too late on appeal

Reasoning

The parties' submissions did not align with the ground of appeal on leave allowance, but the pay slip showed an allowance of Kshs 43,391.44 was paid. On the letter to the Labour Officer, the authenticity objection was never raised before the trial court; under Warehousing and Forwarding v Jafferali and Visram & Karsan v Bhatt a new point on appeal is only entertained if the facts, if fully investigated, would have supported it, which was not established.

p. 14

Legal principles established

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  • Section 40 of the Employment Act is couched in mandatory terms and compliance is necessary but not conclusive of fairness; the wider guarantees of fair administrative action and natural justice also apply to retrenchment.
  • A redundancy is a valid reason for termination; unfairness in a redundancy lies in an unfair or non-transparent selection criterion or its unfair application.
  • Making an employee re-apply for their own job is not, per se, a fair selection criterion and such processes must be closely scrutinised by courts.
  • A dismissal based on a selection criterion that is not fair and objective, or not applied consistently and transparently, is substantively unfair.
  • Under sections 47(5) and 43 of the Employment Act, an employee alleging unfair discrimination bears the burden of proving it, after which the employer must prove it did not occur or was justified.
  • A new point of law not raised before the trial court cannot be argued on appeal unless the facts, if fully investigated, would have supported the plea.

Court orders

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  1. 1.The appeal is dismissed
  2. 2.The appellant shall pay the costs of the appeal to the respondent

Authorities

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Legislation

  • Employment Act, 2007Section 2 (definition of redundancy)
  • Employment Act, 2007Section 30
  • Employment Act, 2007Section 40(1)(a)-(g)
  • Employment Act, 2007Section 43
  • Employment Act, 2007Section 45
  • Employment Act, 2007Section 46
  • Employment Act, 2007Section 47(5)
  • Employment Act, 2007Section 5
  • Employment Act, 2007Section 49(1)(c) and 49(4)(a)-(m)
  • Employment Act, 2007Section 50
  • Constitution of Kenya, 2010Article 27(4)
  • Evidence Act (Cap 80) Laws of KenyaSections 107(1)(2) and 112
  • South African Labour Relations ActSection 189(7)(b)

Cases cited (24)

  • Andrew Waithaka Kiragu v Grain Pro Kenya Inc Ltd
    [2017] eKLR, Cause 2404 of 2012
  • Jane Khalechi v Oxford University Press
    [2013] eKLR
  • Kenya Airways Limited v Aviation & Allied Workers Union Kenya & 3 Others
    [2014] eKLR
  • Nzoia Sugar Company Limited v Francis Oyatsi
    [2019] eKLR, Civil Appeal 47 of 2012
  • Rose Achieng Mihudhi v Jos Hansen and Soehne (EA) Limited
    [2015] eKLR
  • VMK v CUEA
    [2013] eKLR
  • GMV v Bank of Africa Kenya Limited
    [2013] eKLR
  • Ol Pejeta Ranching Limited v David Wanjau Muhoro
    [2017] eKLR
  • Kenya Ports Authority v Kuston (Kenya) Limited
    [2009] 2EA 212
  • Selle and Another v Associated Motor Boat Company Limited & 2 Others
    [1968] EA 123
  • Jabane v Olenja
    [1986] KLR 661
  • SA Breweries (Pty) Ltd v Louw
    [2018] 39 ILJ 189 (LAC)
  • National Union of Metalworkers of South Africa and Others v Lectropower (Pty) Ltd
    (JS1151/2014) [2018] ZALCJHB 266
  • Singh and Others v Mondi Paper
    [2000] 4 BLLR 446 (LC)
  • National Union of Metalworkers of South Africa and Others v Columbus Stainless (Pty) Ltd
    (JS529/14) [2016] ZALCJHB 344
  • NUM and others v Anglo American Research and Laboratories (Pty) Ltd
    [2005] 2 BLLR 148 (LC)
  • Van Rooyen and others v Blue Financial Services (SA) (Pty) Ltd
    (2010) 31 ILJ 2735 (LC)
  • Grieg v Afrox Ltd
    [2001] 22 ILJ 2102 (ARB)
  • Wolfaardt and Another v Industrial Development Corporation of South Africa Ltd
    (J869/00) [2002] ZALC 61
  • Co-operative Bank of Kenya Ltd v Banking Insurance & Finance Union
    CA No. 188 of 2014
  • Coffee Board of Kenya v Thika Coffee Mills Limited & 2 Others
    [2014] eKLR
  • Warehousing and Forwarding Co v Jafferali
    [1963] EA 385
  • Connecticut Fire Insurance Co v Kavanagh
    [1892] AC 473
  • Visram & Karsan v Bhatt
    [1965] EA 789
On appeal from
Employment and Labour Relations Court
Not stated in judgment
Jurisdiction invoked
First appeal to the Court of Appeal under the applicable appellate statute (not expressly cited in the judgment)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (3)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Kimathi v Ericsson Kenya Limited (Civil Appeal 601 of 2019) [2023] KECA 106 (KLR)", Case Analysis (2023). Civil Appeal No 601 of 2019. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2023/106/eng@2023-02-03

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.