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Court of AppealDismissedMemorandum of Appeal dated 3rd April 2020

Mathai v Keroche Breweries Limited (Civil Appeal 20 of 2020) [2024] KECA 1697 (KLR)

Court of Appeal
22 November 2024
1,887 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~8 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal confirmed that a genuine business redundancy is lawful if properly communicated, even when an employee challenges it as unfair termination.

What this practically means

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Executive summary

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This is a first appeal to the Court of Appeal at Nakuru against the judgment of the Employment and Labour Relations Court at Nairobi (Mbaru, J.) of 21st November 2019. The appellant, an electrical technician hired on a two-year contract from 27th January 2014 and retained until 3rd May 2016, was declared redundant when the respondent restructured. The trial court dismissed his claim for unfair termination but awarded him Kshs.6,125 in leave pay and Kshs.102,375 in overtime. On appeal, the appellant complained that the awards were computed on only four months of service and that his termination was unfair. The respondent's counsel appeared but there was no appearance for the appellant despite service. The Court identified two issues: entitlement to leave pay, and whether termination was unfair. It held that redundancy is never disciplinary nor founded on employee blameworthiness but a response to business dictates, relying on Kenya Airways Ltd v Aviation & Allied Workers Union, and found the termination justified under sections 40 and 45(2) of the Employment Act. It also upheld the leave and overtime awards as within the trial judge's discretion and generous. The Court affirmed the judgment below and dismissed the appeal with no order as to costs, each party bearing their own costs.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.How much leave pay was the appellant entitled to?
  2. 2.Was the appellant's termination unfair and calling for compensation?

Key legal issues

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01

Whether the termination by redundancy was unfair

Holding

Termination was fair, being for valid and procedural operational reasons under sections 40 and 45(2) of the Employment Act; the employee had been informed of the restructuring.

Reasoning

The appellant admitted being informed of the restructuring and receiving the redundancy letter notifying him of termination. Redundancy follows business needs and is not disciplinary or fault-based. The learned judge properly directed herself on the law of redundancy, and the Court found no fault in her reasoning, so the claim for compensation could not lie.

p. 4
02

Quantum of leave pay and overtime

Holding

The leave award of Kshs.6,125 under section 28(1)(b) and the overtime award of Kshs.102,375 for 78 days were within the judge's discretion and would not be disturbed.

Reasoning

Section 28(1)(b) entitled the appellant to leave days per completed month, and the award was the minimum allowable, exercised within discretion without perversity. The 78 overtime days did not relate only to the four-month period as the appellant supposed; the award was generous and required no interference.

p. 4

Legal principles established

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  • Redundancy is not a disciplinary measure nor founded on employee blameworthiness; it is a response to business dictates, including restructuring or adoption of more efficient technology, and need not rest on imminent threat of economic collapse.
  • On a first appeal, the appellate court must subject the entire evidence to a fresh and exhaustive analysis and draw its own inferences, while making allowance for not having heard the witnesses.

Court orders

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  1. 1.Upholding the judgment of the Employment and Labour Relations Court
  2. 2.Dismissal of the appeal
  3. 3.No order as to costs

The bench

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One judgment of the whole court — no separate or dissenting opinions.

Mohamed Abdulahi Warsame
M. WarsameJA
Currently serving
majority
majority
majority
On appeal from
Employment and Labour Relations Court at Nairobi
Jurisdiction invoked
First appeal under the Court of Appeal Rules, 2022, Rule 31(1)(a)

Relief refused

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Compensation for allegedly unfair termination

Termination was on valid and procedural grounds of redundancy under sections 40 and 45(2) of the Employment Act

p. 4

Recomputation of leave pay beyond Kshs.6,125

The award was the minimum allowable under section 28(1)(b) and within the judge's discretion

p. 4

Enhanced overtime award beyond Kshs.102,375

The award of 78 days' overtime pay was generous and not inadequate

p. 4

Costs

No order as to costs; each party to bear their own costs

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

The same is never a disciplinary action against, and is not founded on any blameworthiness on the part of, an employee. Rather, it is a response to the dictates of business which may militate against retaining employees in service.
p. 3Nature of redundancy
As this is a first appeal, our duty is to subject the entire evidence to a fresh and exhaustive analysis and re-appraisal so as to draw our own independent inferences of fact.
p. 2Duty of a first appellate court
The totality of our consideration of this matter is that the learned judge made a fair and just determination and we uphold the judgment and dismiss this appeal, but with no order as to costs. Order accordingly.
p. 4Disposition

Issues in the judgment

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minor

The memorandum of appeal is undated as to case number and the judgment does not state the ELRC case number; also ground 3 refers to section 28(1)(b) while ground 2 suggests section 27(1)(b) was the provision applied by the trial judge.

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Mathai v Keroche Breweries Limited (Civil Appeal 20 of 2020) [2024] KECA 1697 (KLR)", Case Analysis (2024). Memorandum of Appeal dated 3rd April 2020. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2024/1697/eng@2024-11-22

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