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ELRCPartially AllowedCause No. 122 of 2000· [2002] KEELRC 2 (KLR)

KENYA UNION OF COMMERCIAL, FOOD & ALLIED WORKERS v ASECO (K) LTD (Cause 122 of 2000) (Civ) [2002] KEELRC 2 (KLR)

Industrial Court of Kenya
15 April 2002
CCCharles P. ChemmuttutAKA.K. KerichJOJ.C. Odaga
2,863 words in judgment
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The bottom line

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Kenya's Industrial Court upheld an employer's right to declare redundancy for genuine reorganisation but ordered payment of the employee's full terminal benefits.

What this practically means

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Executive summary

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The Minister for Labour referred to the Industrial Court a dispute over the redundancy of Janet Nyaoro, a shopsteward, allegedly on account of her trade union activities. The Union, through its Deputy Secretary General, contended that the grievant had been frustrated and victimised since her employment with Mitchell Cotts Shipping Ltd in 1978 - through transfers, denial of duties, denial of medical facilities, and refusal to properly implement the DATA collective agreement's 15.5% wage increase - culminating in two redundancy notices by Aseco (K) Ltd (July 1997, suspended; March 1998). The Union sought reinstatement without loss of benefits and maximum compensation. The Company submitted that the grievant only became its employee on 27th January 1997 when it acquired the shipping franchise, that it implemented the collective agreement fully, and that the redundancy arose from genuine reorganisation, computerisation and poor business performance that abolished the typing pool. The Court held that the Company is a separate legal entity from Mitchell Cotts Shipping Ltd, so pre-1997 frustrations were irrelevant, and that no evidence proved victimisation during the grievant's employment with the Company. Applying the statutory definition of redundancy, it affirmed the employer's inherent right to bona fide reorganisation absent bad faith. Delivered on 15th April 2002 by Chemmuttut, J, with both Members concurring, the Court rejected reinstatement but awarded the grievant her terminal benefits of Kshs.450,990/= plus any other benefits under the applicable collective agreement. No costs order was made.

Key legal issues

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01

Whether the grievant's redundancy was actuated by her trade union activities

Holding

No - there was no evidence of frustration or victimisation on account of trade union activities during her employment with the Company

Reasoning

The Court distinguished her employment with Mitchell Cotts Shipping Ltd (October 1978 to January 1997) from her employment with the Company (January 1997 to March 1998), a separate legal entity. Frustrations predating January 1997 were irrelevant, and no specific act of antagonisation by the Company was alleged or proved; only a general allegation of victimisation was made.

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02

Whether the employer's reorganisation justified the redundancy

Holding

Yes - the redundancy was on account of reorganisation and structural changes due to poor business performance; absent mala fides the Court will not interfere

Reasoning

The Court adopted the statutory definition of redundancy under Section 2 of the Trade Disputes Act. The Company computerised its work stations, closed the typing pool and declared surplus employees, including the grievant, redundant. This was a bona fide exercise of the employer's inherent managerial right under the Trade Disputes Act and Employment Act as amended by the Finance Act 1994.

p. 4
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What remedies flow to the grievant

Holding

Reinstatement refused; the grievant is entitled to her terminal benefits of Kshs.450,990/= plus any other benefits under the collective agreement

Reasoning

Although the Minister's investigator had recommended acceptance of redundancy benefits plus six months' salary for wrongful termination, and the Union rejected that recommendation, the Court found the redundancy lawful. It nonetheless confirmed the grievant's entitlement to the improved terminal benefits package offered in the fresh redundancy notice of 13th March 1998.

p. 4

Legal principles established

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  • An employer has an inherent right to undertake bona fide re-organisation or introduce structural changes and, in consequence, discharge employees on the ground of redundancy, which the Court will not interfere with absent bad faith
  • Mere allegation of victimisation for trade union activities is insufficient; specific acts must be proved

Court orders

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  1. 1.The Union's demand for reinstatement of the grievant is rejected
  2. 2.The grievant is entitled to all her terminal benefits under App. HON. 14(a), i.e. Kshs.450,990/=, and any other benefits the Company may deem fit to grant in accordance with the collective agreement in force when she was declared redundant

Authorities

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Legislation

  • Trade Disputes ActSection 8
  • Trade Disputes ActSection 14(9)(e) and (f)
  • Trade Disputes ActSection 2 (definition of redundancy)
  • Employment ActCap. 226 (as amended by Finance Act 1994)
  • Finance Act1994
Jurisdiction invoked
Section 8 of the Trade Disputes Act, Cap. 234 (reference by the Minister for Labour), with statutory certificates under Section 14(9)(e) and (f)

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, "KENYA UNION OF COMMERCIAL, FOOD & ALLIED WORKERS v ASECO (K) LTD (Cause 122 of 2000)  (Civ) [2002] KEELRC 2 (KLR)", Case Analysis (2002). Cause No. 122 of 2000. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2002/2/eng@2002-04-15

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