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ELRCPartially AllowedCause 1160 of 2012· [2013] KEELRC 442 (KLR)

SALMON OGWELA OTIENO v STAMET PRODUCTS (K) LTD [2013] KEELRC 442 (KLR)

Industrial Court of Kenya
25 March 2013
MMMonica Mbaru
1,486 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 a worker excluded from a redundancy deal after a business sale was unfairly terminated and awarded full dues.

What this practically means

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Executive summary

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The claimant, employed by the respondent from 2001 as a Machine Operator at Kshs.550.00 per day, sued for notice pay, service pay and compensation for unfair termination. The respondent was duly served with summons and hearing notices, affidavits of service were filed, but it neither entered appearance nor filed a defence; the matter proceeded undefended. The claimant testified that in late 2011 the respondent sold its business to a third party (Beetle Company) and agreed with the union, KUPRIPUPA, on a redundancy package of 20 days' pay per year served plus outstanding leave for unionised employees. On 3rd January 2012 employees found the premises locked and the claimant, not being unionised, was excluded from the agreement and paid nothing for his over ten years of service. His witness, a union official, corroborated these events. The court held that Section 40 of the Employment Act prescribes mandatory conditions for redundancy - notice to the union or employee personally and the labour officer, fair selection criteria, no disadvantage from union membership or non-membership, cash payment of leave, one month's notice or pay in lieu, and severance of at least 15 days' pay per completed year. None of these were met as regards the claimant, making his termination unfair. The court entered judgment for the claimant: a declaration of unfair redundancy, three months' pay as compensation (Kshs.49,500.00), severance pay (Kshs.82,500.00), pay in lieu of notice (Kshs.16,500.00), and costs of the suit.

Key legal issues

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01

Compliance with Section 40 of the Employment Act in redundancy

Holding

The respondent did not follow the mandatory redundancy procedure; the claimant, who was not unionised, was never personally notified and received no terminal dues despite over 10 years of service, making the termination unfair.

Reasoning

Section 40 sets out mandatory conditions: notice to the union or the employee personally and the labour officer, fair selection criteria, no disadvantage for union membership, cash payment of leave, one month's notice or pay in lieu, and severance of not less than 15 days per completed year. The claimant was locked out on 3rd January 2012 with no notice, and the union agreement covered only unionised employees, leaving him unpaid. Lack of consideration of his terminal dues after over 10 years' service had no justification.

p. 3
02

Entitlement to severance, notice pay and compensation

Holding

The claimant was awarded severance at 15 days' pay per year for 10 years, one month's pay in lieu of notice, and three months' pay as compensation for unfair termination.

Reasoning

Having found the redundancy unfair, the court applied the statutory minimums: severance of 15 days' pay per completed year of service computed on the monthly wage of Kshs.16,500.00 equivalent; one month's pay in lieu of the notice never given; and three months' pay as compensation for the unfair declaration of redundancy.

p. 4

Legal principles established

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  • The conditions in Section 40 of the Employment Act for redundancy are mandatory and must all be complied with; failure renders the termination unfair.

Court orders

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  1. 1.A declaration that the claimant was unfairly declared redundant
  2. 2.Compensation of three (3) months pay at Kshs.49,500.00
  3. 3.Severance pay at Kshs.82,500.00
  4. 4.Pay in lieu of notice at Kshs.16,500.00
  5. 5.Costs of the suit

Authorities

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Legislation

  • Employment ActSection 40
Jurisdiction invoked
Employment and labour relations jurisdiction over a claim of unfair redundancy under the Employment Act (Section 40)

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, "SALMON OGWELA OTIENO v STAMET PRODUCTS (K) LTD [2013] KEELRC 442 (KLR)", Case Analysis (2013). Cause 1160 of 2012. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2013/442/eng@2013-03-25

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