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ELRCPartially AllowedCause No 736 of 2012· [2013] KEELRC 223 (KLR)

Loice Rose Obengo v Nyanza Reproductive Health Society [2013] KEELRC 223 (KLR)

Industrial Court of Kenya at Nairobi
Invalid Date
2,805 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court ruled that disguising a firing as 'redundancy' without following redundancy rules was unlawful, awarding the employee Kshs 674,500.

What this practically means

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Executive summary

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The Claimant, employed as Stores Manager on 15 November 2008 at a monthly salary of Kshs 45,000 (later Kshs 69,300), sued the Respondent seeking notice pay, leave pay, leave allowance, and compensation for the unexpired term of a contract due to expire on 31 July 2012, alleging unlawful and unfair termination. Her services were terminated by letter dated 10 January 2012 following an interdiction and a meeting of 4 January 2012 which she contended was not a proper disciplinary hearing. The Respondent maintained the termination was contractual and all dues were paid. The court found, on the face of the termination letter, that the Claimant's position was abolished following a restructuring - in substance a retrenchment. The court held the Respondent disguised a termination for alleged misconduct as abolition of office, failing to comply with section 40 of the Employment Act (notice to the labour officer and employee, selection criteria, severance pay), and that the conduct showed extreme bad faith. The Respondent failed to prove the reason for termination under section 43(1), and the Claimant proved unlawful and unfair termination under sections 47(5) and 45(2). The court awarded one month's notice pay (Kshs 69,300), payment in lieu of 22 leave days (Kshs 50,800), December 2011 salary (Kshs 69,300) which the Respondent failed to rebut with records, and compensation of 7 months' salary (Kshs 485,100) under section 49(1)(c). The claim for leave allowance was dismissed as unproven. Total award: Kshs 674,500. The judgment did not pronounce on costs despite costs having been claimed.

Key legal issues

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01

Whether the termination of the Claimant's contract was lawful and fair

Holding

The termination was unlawful and unfair ab initio because the Respondent disguised a termination for alleged misconduct as abolition of office, in violation of sections 40, 43(1) and 45(2) of the Employment Act

Reasoning

The letter of termination stated the position was abolished following restructuring, amounting to redundancy. The court examined the reasons and found the office was abolished due to alleged incompetence and a new undefined position was created inviting re-application, indicating bad faith. No notice was given to the labour officer or the employee, no selection criteria were applied, and no severance was paid as section 40 requires. The Respondent failed to prove a valid reason under section 43(1), and the termination was not in accordance with fair procedure under section 45(2)(a) and (c).

p. 5
02

Whether the Claimant was owed December 2011 salary

Holding

The Claimant was owed Kshs 69,300 being salary for December 2011

Reasoning

The Claimant testified on oath that she was not paid December 2011 salary. The Respondent, as custodian of employment records, had a duty to rebut this evidence by producing a payslip for that month but did not do so. In the absence of rebuttal the court accepted the Claimant's uncontroverted evidence and found the month's salary due.

p. 6
03

Whether the Claimant was entitled to compensation for the unexpired term of the contract

Holding

The court awarded compensation equivalent to 7 months' salary (Kshs 485,100) under section 49(1)(c) of the Employment Act instead of the full unexpired term

Reasoning

The court invoked section 12(3) empowering it to award compensation. Although the Claimant prayed for the unexpired term of 7 months (Kshs 315,000), the court found the contract was unlawfully breached, that her career prospects were cut short and she lost income and entitlements until 31 July 2012, and exercised discretion to award 7 months' salary as compensation for the unlawful termination under section 49(1)(c).

p. 6

Legal principles established

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  • A termination disguised as abolition of office (redundancy) without complying with section 40 of the Employment Act is an unlawful and unfair termination
  • Redundancy requires notification to the labour officer and the employee, fair selection criteria, notice pay and severance pay at not less than 15 days' pay per completed year of service
  • The employer bears the burden of proving the reason for termination under section 43(1) of the Employment Act, and the employee need only prove the termination on a balance of probabilities under section 47(5)

Court orders

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  1. 1.Respondent to pay the Claimant one month's salary in lieu of notice in the sum of Kshs 69,300
  2. 2.Respondent to pay Kshs 50,800 being payment in lieu of 22 days leave
  3. 3.Respondent to pay Kshs 69,300 being salary for December 2011
  4. 4.Respondent to pay compensation equivalent to 7 months' salary in the sum of Kshs 485,100 under section 49(1)(c) of the Employment Act
  5. 5.Total award of Kshs 674,500

Authorities

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Legislation

  • Employment ActSection 2 (definition of redundancy)
  • Employment ActSection 40
  • Employment ActSection 43(1)
  • Employment ActSection 45(2)(a) and (c)
  • Employment ActSection 47(5)
  • Employment ActSection 49(1)(c)
  • Employment ActSection 12(3)
  • ILO Recommendation 166Duty to consider alternatives to termination

Cases cited (3)

  • Swaziland Agricultural and Plantations Workers Union and Royal Swaziland Sugar Corporation Limited
    Industrial Court of Swaziland Case No 60/05
  • Anthantis Diesel Engine (Pty) Ltd v NUMSA
    1994 ILJ 1242 (A)
  • Sfonza v Lekato Vet AG Ltd
    1994 ICJ 408 (IC)
Jurisdiction invoked
Section 12(3) of the Employment Act empowering the court to order specific performance and/or award compensation

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (6)

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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, "Loice Rose Obengo v Nyanza Reproductive Health Society [2013] KEELRC 223 (KLR)", Case Analysis (). Cause No 736 of 2012. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2013/223/eng@2013-08-13

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