Kombo Kai Mtoro v Panel Freighters Ltd [2013] KEELRC 589 (KLR)

Section 40 requires an employer to notify the employee (or trade union) and the local Labour Officer at least one month before redundancy. The Respondent's witness admitted in cross-examination that the Labour Officer was not informed, and the termination letter was not copied to the Labour Officer. Non-compliance with even one of the prescribed procedures rendered the termination procedurally unfair.

The court held that redundancy termination falls within section 45(2)(b)(ii) as one based on operational requirements, which the employer must prove to be valid and fair. The Respondent merely asserted cost-cutting and office relocation without producing financial statements or other evidence of financial distress. The claim of a need to cut costs was therefore unsubstantiated and the termination was substantively unfair.

Although the claimant sought the maximum 12 months' compensation, the award is discretionary and must be grounded on the 13 factors in section 49(4) of the Employment Act. Since severance pay had been agreed between the parties and the claimant's gross monthly earnings were Kshs 21,200, the court considered one month's gross pay appropriate in the circumstances.

The Respondent's letter showed 59 pending leave days. The claimant took leave from 16 May 2011 until termination on 8 June 2011, roughly 17 working days (excluding 1 June 2011, a public holiday), leaving 42 days. Applying the customary formula (basic salary plus house allowance divided by 26), the daily rate was Kshs 796, yielding Kshs 33,438.