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ELRCPartially AllowedCause No 1972 of 2012· [2013] KEELRC 572 (KLR)

ELIZABETH WASHEKE and 62 Others v AIRTEL NETWORKS (K) LTD & another [2013] KEELRC 572 (KLR)

Industrial Court of Kenya
24 May 2013
MMM. Mbaru
15,452 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~62 min to read original · ~4 min brief

The bottom line

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Airtel was ordered to pay 63 call-centre staff over Kshs. 26 million after a court found moving them to another company without their consent was unfair dismissal.

What this practically means

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Executive summary

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Sixty-three claimants, former customer care service executives of the 1st respondent, sued for terminal dues and compensation after being outsourced in January 2011 to the 2nd respondent, a BPO service provider. They claimed notice pay, compensation for unfair termination, service pay, severance pay and leave pay, contending that the transfer was effected without consultation, under duress, and with loss of benefits and unsecured terminal dues. The respondents contended the claimants accepted new contracts voluntarily on comparable terms with recognition of years of service. The court held that in the absence of a Kenyan statute regulating outsourcing, Article 41 of the Constitution on fair labour practices governs. Following comparative authority, it held that outsourcing requires individual employee consent or transfer as a going concern with terms unaltered. Because the claimants were moved as a group under a pre-negotiated 'deal' they were not party to, without section 35 notice and without secured terminal dues, the arrangement amounted to unfair termination by the 1st respondent under section 45 of the Employment Act. The 2nd respondent was not found liable. The claimants' account of a two-year window to return was accepted only as a public relations statement. Compensation at one month's pay per year of service and two months' notice pay were awarded per schedules; service pay, severance pay and leave pay were declined. The 23rd and 25th claimants, who freely requested the transfer, were dismissed. Judgment was entered for 61 claimants against the 1st respondent for a total of Kshs. 26,431,526.00, with costs against the 1st respondent and each party bearing their own as regards the 2nd respondent.

Key legal issues

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01

Whether the outsourcing/transfer of the claimants to the 2nd respondent constituted termination of their employment by the 1st respondent

Holding

Yes. The 1st respondent's arrangement, made without individual consent and without securing terminal dues, was a termination and an unfair labour practice.

Reasoning

The claimants were issued Certificates of Service and their contracts with the 1st respondent ceased. The outsourcing was negotiated between the respondents in exclusion of the employees and contrary to their individual contracts. No legislation regulates outsourcing in Kenya, so Article 41 on fair labour practices applies. Arrangements stripping employees of benefits made between employers in exclusion of affected employees are unfair labour practices under Article 41 and unfair termination under section 45 of the Employment Act.

p. 19
02

Whether the 1st respondent is liable for unfair termination

Holding

Yes, as against the 1st respondent; the 2nd respondent was not liable.

Reasoning

The employer must establish valid reasons and fair procedure under sections 43 and 45 of the Employment Act. The 1st respondent gave no notice under section 35, excluded employees from negotiations, and left terminal dues unsecured with a third party. The 2nd respondent, which offered comparable employment and recognised years of service, was not found liable; only the 1st respondent bore liability.

p. 20
03

Whether this was a redundancy attracting severance pay

Holding

No; it was a termination, not a redundancy, so severance pay was declined.

Reasoning

Severance pay arises under section 40 in redundancy situations. The court found the circumstances were a termination through a flawed outsourcing rather than a declared redundancy. Similarly service pay was excluded because the claimants belonged to a pension scheme, and leave was not proved. Compensation for unfair termination was instead awarded at one month's pay per year of service up to the statutory maximum of twelve months under section 49.

p. 21
04

Whether the promise of a two-year window to return to the 1st respondent was binding

Holding

No; the court believed it was only a public relations statement, contradicted by the Certificates of Service.

Reasoning

No party documented the Panari Hotel meeting or its outcomes. The 1st respondent contested the promise. With Certificates of Service issued, the employment relationship was severed, and any re-engagement would be on a new contract. The CEO's promise could not override the documented termination of employment.

p. 11

Legal principles established

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  • In an outsourcing or transfer of business, affected employees must give individual consent (or be transferred as a going concern with terms unaltered); transferring them as a group without consent and without securing their terminal dues amounts to unfair termination.
  • In the absence of a specific Kenyan statute regulating outsourcing, Article 41 of the Constitution on fair labour practices supplies the governing standard.
  • Where an employer fails to produce the written contract, the burden of proving or disproving an alleged term of employment rests on the employer.
  • Fairness in labour practices must balance the interests of both employer and employee.

Court orders

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  1. 1.A declaration that the 1st respondent unfairly terminated the claimants' contracts of employment
  2. 2.The 1st respondent to pay compensation for unfair termination at Kshs. 17,500,254.00 as per schedule 'B'
  3. 3.The 1st respondent to pay notice pay at Kshs. 8,931,272.00 as per schedule 'A'; total amount due Kshs. 26,431,526.00
  4. 4.The 1st respondent to pay the costs of the case
  5. 5.The 2nd respondent to meet their own costs
  6. 6.The claim of the 23rd and 25th claimants dismissed
  7. 7.Employment records to be submitted within 7 days for confirmation of the compensation payable

Authorities

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Legislation

  • Constitution of Kenya, 2010Article 41
  • Employment Act, 2007Sections 2, 10(3)(b), 10(7), 35, 35(5), 38, 40, 43, 45, 49, 51
  • Labour Institutions ActGeneral
  • Industrial Court ActJurisdiction
  • Retirement Benefits ActRegistered pension schemes
  • Transfer of Undertakings (Protection of Employment) Regulations, 2006 (UK)Regulations 3, definition of 'relevant transfer'
  • Labour Relations Act, 1999 (South Africa)Section 197
  • Basic Conditions of Employment Act (South Africa)Section 41(4)
  • EU Directive on acquired rights, Directive 2001/23/ECPreamble

Cases cited (11)

  • Aviation and Allied Workers Union versus Kenya Airways Limited and 3 others
    Industrial Cause No. 1616 of 2012
  • Silas Rukungu Karanja vs. Teachers Service Commission
    Industrial Cause No. 567 of 2012
  • Dr. Anne Kinyua vs. Kenya Tea Development Authority and Others
    Industrial Cause No. 1065 of 2012
  • Robert Muriithi Ndegwa vs. Ministry of Tourism
    Petition No. 41 of 2012
  • Council of Mining Unions vs. Chamber of Mines of SA
    (1985) 6 ILJ 293 (IC)
  • National Union of Metalworkers of SA v Vetsak Co-operative Ltd and Others
    1996 (4) SA 577 (A)
  • South African Airways (PTY) Limited versus Aviation Union of South Africa and Others
    Case No. 123 of 2010
  • Crossroads Distribution (pty) Ltd t/a Jowells Transport versus Clover SA (pty) Ltd
    [2008] 6 BLLR 565
  • National Education Health and Allied Workers Union versus University of Cape Town and Four Others
    Case CCT 2/02
  • Landsorganisation I Denmark for Tjnerbudet I Denmark v Ny Molle Kro
    [1987] ECR 5465
  • Kenya Hotel and Allied Workers Union versus Travellers (TIWI) Beach Hotel (owned by Dhanjal Investment Limited)
    2006
Jurisdiction invoked
Industrial Court Act, with labour rights under Article 41 of the Constitution and 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 (25)

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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, "ELIZABETH WASHEKE and 62 Others v AIRTEL NETWORKS (K) LTD & another [2013] KEELRC 572 (KLR)", Case Analysis (2013). Cause No 1972 of 2012. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2013/572/eng@2013-05-24

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