Highlands Mineral Water Company Limited v Shaeen (Civil Appeal 183 of 2018) [2023] KECA 1133 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed that closing a workplace is redundancy, and employers must follow section 40(1) of the Employment Act or pay.
What this practically means
#Executive summary
#Key legal issues
#Whether the closure of the Nairobi depot disclosed in the termination letter amounted to redundancy
The Court held that the reasons offered disclosed termination on grounds of redundancy, affirming the trial court
Redundancy is defined in the Employment Act and Labour Relations Act as loss of employment by involuntary means through no fault of the employee where services are superfluous, including abolition of office or occupation. The termination letter stated the depot was closing, which is precisely loss of employment on operational requirements. Since redundancy is a matter of law, the trial judge could properly characterise it even though redundancy was not pleaded by the parties.
Whether the termination was procedurally fair and lawful
The termination was unfair for non-compliance with sections 40(1), 43 and 45 of the Employment Act
Termination on redundancy requires compliance with the conditions in section 40(1), including notification, payment of leave due, one month's notice or wages in lieu, and severance pay of not less than fifteen days' pay per completed year of service. Termination must be both substantively and procedurally fair, and the employer must prove the reasons for termination under sections 43 and 45. The notice given was less than one month, contrary to the contract, and the statutory conditions were not met.
Whether the appellant's counter-claim premised on an audit-discovered loss was merited
The counter-claim was correctly dismissed
The alleged loss was not the reason stated in the termination letter; the respondent was not given an opportunity to reply to the audit findings or interviewed by the auditors; and an employer cannot introduce new termination grounds after the fact. The employer's remedy lay in civil or criminal proceedings. Even on the merits, the audit report's own conclusion attributed the loss to weak controls and process failures, and mere production of the report did not meet the civil standard of proof.
Whether the compensation awarded by the trial court was merited
The award was proper and not excessive
Section 50 of the Employment Act obliges courts to apply the factors in section 49 in determining suits for wrongful dismissal or unfair termination, including wages due on notice, proportionate wages, and the equivalent of up to twelve months' gross monthly wages. The discretion is judicial and a matter of fairness to both parties. No argument was advanced that the award was excessive, and nothing suggested improper exercise of discretion by the trial judge.
Legal principles established
#- A court of law may raise on its own motion a point of law not relied upon by the parties, provided it does not exceed the limits of the case as defined by the claims of the parties
- Termination by way of closure of a workplace or abolition of office, where the employee's services become superfluous through no fault of the employee, constitutes redundancy within the meaning of the Employment Act and the Labour Relations Act
- An employer cannot cite specific grounds for termination and thereafter introduce other allegations that were not part of the stated reasons for the termination
- A notice of termination shorter than the notice period expressly provided in the contract is a breach of contract; termination on notice involves both notification of termination and giving of notice
- Once employment ends, the environment for a disciplinary inquiry melts away; an employer who issues a termination letter with no mention of pending disciplinary issues cannot require the employee to answer charges never put to them, but may pursue recourse through the criminal or civil justice systems
Court orders
#- 1.The appeal is dismissed
- 2.Costs of the appeal awarded to the respondent
- 3.The trial court's award of Kshs. 1,288,083/= to the respondent (six months' salary compensation, one month's salary in lieu of notice, leave pay and December 2012 salary) stands
- 4.The dismissal of the appellant's counter-claim stands
- On appeal from
- Industrial Court (Employment and Labour Relations Court) at Nairobi
- Memorandum of claim dated June 18, 2013 (number not stated)
- Jurisdiction invoked
- First appellate jurisdiction over the Industrial Court (now ELRC), exercising the role of a first appellate court in re-evaluating evidence
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (1)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Mistry V. Naran Mulji & Co v Ali (Civil Appeal E055 of 2023) [2026] KECA 497 (KLR)[2026] KECA 497 (KLR)13 Mar 2026followed
Cite this brief
#Cite this brief
Caselaw, "Highlands Mineral Water Company Limited v Shaeen (Civil Appeal 183 of 2018) [2023] KECA 1133 (KLR)", Case Analysis (2023). Civil Appeal No 183 of 2018. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2023/1133/eng@2023-09-22
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.