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ELRCPartially AllowedCause 240 of 2011· [2013] KEELRC 408 (KLR)

CAROLINE ATIENO OSWETA V KENYA YUNGHENG PLATE MAKING LIMITED [2013] KEELRC 408 (KLR)

Industrial Court of Kenya
10 April 2013
1,933 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 threw out an employee's signed discharge note and awarded only one month's notice pay because the redundancy itself was genuine.

What this practically means

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Executive summary

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The Claimant, formerly Human Resource Manager of the Respondent, sued for unfair termination of employment, alleging her 7th July 2009 termination on grounds of redundancy was a cloak masking an unlawful dismissal, and claiming loss of earnings of Kshs. 540,000 and damages. The Respondent maintained that the redundancy following restructuring of its operations was lawful, that the Claimant's position was abolished with the HR function transferred to the Financial Controller, and that her terminal dues were tabulated and paid in full and final settlement. The court first disregarded the discharge note executed by the Claimant, following its own decision in the Taifa Sacco case, holding that no discharge can cure non-compliance with the law. On substantive justification, the court found the redundancy genuine and in good faith: the position was abolished, the Claimant herself prepared her offer letter and tabulated her terminal benefits, and her claim that she was misled to leave Thermopak Limited could not be verified. Procedurally, there was no evidence of notification of the redundancy to the Labour Officer as required by Section 40(b) of the Employment Act, but this omission was held not to render the otherwise lawful exercise unlawful. Leave was paid in full. The Claimant, having served slightly less than a year, did not qualify for severance pay. The court awarded the Claimant Kshs. 52,000 as one month's pay in lieu of notice, finding she had not been given due notice, and ordered each party to bear their own costs.

Key legal issues

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01

Effect of a discharge note executed by a departing employee

Holding

The discharge note is disregarded; an employer cannot rely on it to escape statutory obligations.

Reasoning

The court adopted its prior reasoning in the Taifa Sacco case, taking judicial notice that discharge notes are a common employer requirement, but holding that parties must act within the law and that a discharge cannot circumvent statutory obligations or cure irregularities.

p. 3
02

Substantive justification for the redundancy

Holding

The redundancy was genuine and exercised in good faith; termination was substantively justified.

Reasoning

The Claimant prepared and co-signed her own offer letter and tabulated her own terminal benefits; the Respondent's witness testified that her position was abolished and the HR function transferred to the Financial Controller. The court found no evidence of bad faith or collateral purpose and was unable to verify the Claimant's claim that she was misled to leave her previous job.

p. 3
03

Procedural fairness under Section 40 of the Employment Act

Holding

There was no evidence of notification of the redundancy to the Labour Officer, but the omission did not render the exercise unlawful; however, the Claimant was not given due notice and was awarded one month's pay in lieu.

Reasoning

Conditions (a) and (d) of Section 40 were inapplicable as the Claimant was not a union member and there was no collective agreement; condition (e) was satisfied as leave was paid. The failure to notify the Labour Officer was held not to vitiate the redundancy, but the absence of notice attracted an award of one month's salary in lieu of notice.

p. 4

Legal principles established

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  • A discharge note cannot cure an employer's non-compliance with the law in terminating employment; where the law is not followed, no form of discharge can cure the irregularity.
  • An employer's right to declare redundancy must be exercised judiciously and in good faith, with a bona fide economic rationale.
  • Retrenchment becomes a colourable exercise if done for the collateral purpose of getting rid of an employee; the court has a duty to investigate whether managerial prerogative was exercised reasonably and in good faith.
  • Section 40 of the Employment Act, 2007 sets out conditions precedent that an employer must meet before terminating employment on account of redundancy.

Court orders

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  1. 1.The discharge note executed by the Claimant is disregarded
  2. 2.The Claimant is awarded the sum of Kshs. 52,000 being one month's pay in lieu of notice
  3. 3.Each party will bear their own costs

Authorities

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Legislation

  • Employment Act, 2007Section 2 (definition of redundancy)
  • Employment Act, 2007Section 40
  • Labour Relations Act, 2007corresponding section on definition of redundancy

Cases cited (3)

  • Simon Muguku Gichigi Vs Taifa Sacco Society Limited
    Industrial Court Cause No. 681 of 2012
  • Super Group Supply Chain Partners Vs Arthur Dlamini & Another
    JA 77/10
  • Aviation & Allied Workers Union Vs Kenya Airways & 3 Others
    Industrial Court Cause No. 1616 of 2012
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over unfair termination of employment claims (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 (3)

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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, "CAROLINE ATIENO OSWETA V KENYA YUNGHENG PLATE MAKING LIMITED [2013] KEELRC 408 (KLR)", Case Analysis (2013). Cause 240 of 2011. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2013/408/eng@2013-04-10

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