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ELRCDismissedCause 1274 of 2011· [2013] KEELRC 359 (KLR)

ALICE WAMBUKU KAGO V EAST AFRICAN WOMEN’S LEAGUE HARRISON HOUSE MANAGEMENT COMMITTEE [2013] KEELRC 359 (KLR)

Industrial Court of Kenya
3 May 2013
JRJames Rika
4,411 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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The Industrial Court upheld an employer's redundancy, confirming that proper consultation and notices under Section 40 of the Employment Act make a redundancy fair.

What this practically means

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Executive summary

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The Claimant, employed by the Respondent from 1st April 1993 as Assistant Supervisor and rising to Senior Supervisor, was declared redundant with effect from 31st January 2011 after 17 supervisory positions were abolished. She challenged both the substantive justification and the process, claiming terminal benefits of Kshs. 316,000 under Clause 18 of the KUDHEIHA CBA, six months' notice pay, ten days' leave, gratuity and damages for unlawful and unfair dismissal. The Respondent maintained it was a genuine redundancy occasioned by unsustainable financial losses, conducted with full consultation with the Union, the Labour Office and the FKE, and that it had offered severance, notice, leave and holiday pay totalling Kshs. 183,942.95 which the Claimant declined to collect. The Court found a real redundancy situation supported by financial statements and 2008 minutes, and held the procedure met the requirements of Section 40 of the Employment Act 2007. It held the Claimant remained covered by the CBA despite promotion, but that Clause 17, not Clause 18, governed redundancy, entitling her to severance of fifteen days' pay per completed year. All heads of relief were refused, the Respondent's offer was upheld, and the Claim was dismissed with no order as to costs. The Court commended the Respondent's exemplary consultation practices.

Key legal issues

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01

Whether a real redundancy situation existed

Holding

The Respondent proved a genuine redundancy: the Home was operating at a loss and on the road to closure; the exercise was not a sham or colourable.

Reasoning

The financial statements for 2009 and minutes from 2008 showed financial difficulties predating the 2010 redundancy. The claimant had been invited to voluntary early retirement in 2008. The higher salary paid to the incoming CEO did not negate genuine redundancy, as enterprises in financial difficulty may recruit a more effective CEO at a higher rate. Allegations of disparagement were irrelevant to the redundancy justification.

p. 5
02

Whether the redundancy procedure was fair and lawful

Holding

The procedure met the requirements of Section 40 of the Employment Act 2007 and the CBA: consultations with the Union, Labour Office and FKE, written notices, individual notice with effective date, and an offer of re-employment.

Reasoning

Consultations began in 2008. Written notifications were issued to the Union and Labour Office on 17th November 2010 and to the Union, Labour Office and FKE on 30th November 2010. Individual notices with an effective termination date of 31st January 2011 were issued and served. The offer of re-employment in less glamorous positions exceeded common practice and the Court commended the Respondent's meticulous conduct.

p. 6
03

Whether terminal benefits were payable under Clause 17 or Clause 18 of the CBA

Holding

Clause 17, which regulates redundancy, applied; severance at fifteen days' pay per completed year of service, as calculated by the Respondent, was the correct approach.

Reasoning

Redundancy is a form of termination specifically regulated under Clause 17, which provided severance pay at fifteen days' pay per completed year of service at the rate applicable at redundancy. Clause 18 related to retirement and regular termination. The claimant declined early retirement which would have engaged Clause 18. The Respondent's offer of Kshs. 183,942.95 was computed on the correct basis and upheld.

p. 6

Legal principles established

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  • An employee promoted to a senior supervisory position does not cease to be covered by a CBA unless exclusion from it is explicit in the promotion letter; exclusion is not implied.
  • A redundancy claimant may claim terminal benefits under the CBA clause regulating redundancy only, not under both redundancy and retirement/termination clauses.
  • Section 40(1)(f) of the Employment Act 2007 requires not less than one month termination notice or one month notice pay in lieu on redundancy.
  • An employer that consults the Union, the Labour Office and employees, issues proper notices, and offers re-employment meets the threshold of fair procedure under Section 40 of the Employment Act 2007.

Court orders

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  1. 1.The Claim is dismissed with no order on the costs
  2. 2.The Court upholds the offer of Kshs. 183,942.95 made to the Claimant by the Respondent; the Claimant is at liberty to collect this money from the Respondent
  3. 3.The Claimant may collect her redundancy payment as offered by the Respondent

Authorities

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Legislation

  • Employment Act 2007Section 40
  • Employment Act 2007Section 40(1)(f)
Jurisdiction invoked
Jurisdiction of the Industrial Court of Kenya over disputes in employment under the Employment Act 2007

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (2)

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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, "ALICE WAMBUKU KAGO V EAST AFRICAN WOMEN’S LEAGUE HARRISON HOUSE MANAGEMENT COMMITTEE [2013] KEELRC 359 (KLR)", Case Analysis (2013). Cause 1274 of 2011. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2013/359/eng@2013-05-03

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