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ELRCDismissedIndustrial Court Cause (memorandum of claim dated 27th February 2012, filed 28th February 2012)· [2014] KEELRC 136 (KLR)

Joseph Kiplangat Ngeno & 13 others v Kenya Investment Authority [2014] KEELRC 136 (KLR)

Industrial Court of Kenya (Employment and Labour Relations Court)
7 November 2014
2,768 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~11 min to read original · ~4 min brief

The bottom line

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Kenya's Industrial Court upheld a retrenchment of 14 employees because the employer proved a genuine business reason and followed fair procedure under the Employment Act.

What this practically means

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Executive summary

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Fourteen former employees of the Kenya Investment Authority (formerly the Investment Promotion Centre) sued challenging their retrenchment effected by letters of early retirement dated 8th September 2008 following a restructuring driven by the Investment Act No. 6 of 2004. They sought declarations of wrongful and unlawful retirement, reinstatement, accumulated salaries at new salary scales, payment for the remainder of their contracts to age 60, pension dues under the Respondent's Trust Deed, and general and exemplary damages, alleging the retrenchment was malicious and breached the contracts and the staff Rules and Regulations. The Respondent admitted the retrenchment and payment of packages but denied unlawfulness, asserting the exercise was necessitated by restructuring pursuant to the Investment Act and Government policy, with wide consultation and approvals including from the Head of Public Service. The court framed three issues: validity of the reason, fairness of the procedure, and remedy. It found a lawful and justifiable reason for restructuring, an objective selection process via placement interviews by an independent team, advance training and timeous notification, and a package exceeding the Section 40(1) Employment Act minimums. Relying on Williams v Compair Maxam and adopting Feisal Ahmed v Nokia International, it held the Claimants failed to prove malice, discrimination or unfairness. The suit was dismissed with no order as to costs, each party bearing its own costs, the court noting the Claimants lost their employment through no fault of their own.

Key legal issues

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01

Whether the retrenchment was for a valid reason

Holding

There was a lawful and justifiable reason: restructuring following the Investment Act 2004 which replaced the Investment Promotion Centre with Kenya Investment Authority, backed by Government policy and approvals including Head of Public Service approval

Reasoning

The court found as fact that the new Investment Act 2004 created the Kenya Investment Authority in place of the IPC; a new Strategic Plan and restructuring programme followed Government policy; the old outfit was bloated with a mismatch between staff and new structure; a rationalisation report was prepared in advance; the Board resolved on restructuring on 2nd October 2007; and the Head of Public Service approved retrenchment of the fourteen staff with a package.

p. 6
02

Whether the retrenchment followed a lawful and fair procedure

Holding

Procedure was fair: all staff were invited to apply for at least three positions, trained in advance, subjected to objective placement interviews by an independent team, notified timeously, and paid a package exceeding Section 40 minimums

Reasoning

The court found the interviews objective and independent, providing an opportunity to match skills and competency to the new job descriptions. The Claimants failed to prove on a balance of probabilities that the exercise was not objectively done. There was no evidence of discrimination or malice, and the notification, training and enhanced package satisfied the requirements of Section 40(1) of the Employment Act, adopting the reasoning in Feisal Ahmed v Nokia International.

p. 6
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What remedy is available to the Claimants

Holding

None; the suit was dismissed, though the court declined to award costs against the Claimants because they lost their employment through no fault of their own

Reasoning

Having found both a valid reason and fair procedure, no remedy lay. However, the court exercised discretion on costs, recognising the Claimants' grievance was understandable despite the Respondent's compliance with the law, and ordered each party to bear its own costs rather than load costs on the losing Claimants.

p. 7

Legal principles established

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  • The requirements of Section 40(1)(b), (c), (e), (f) and (g) of the Employment Act go to the fairness of the retrenchment process, not to the validity of the reason for redundancy
  • An employer who complies with all requirements of Section 40 of the Employment Act and uses objective selection criteria commits no wrong even where employees lose employment through no fault of their own

Court orders

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  1. 1.The suit by the fourteen (14) Claimants is dismissed
  2. 2.All parties will bear their own costs of the suit
Jurisdiction invoked
Original employment jurisdiction of the Industrial Court; suit initially filed in the High Court and transferred to the Industrial Court

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, "Joseph Kiplangat Ngeno & 13 others v Kenya Investment Authority [2014] KEELRC 136 (KLR)", Case Analysis (2014). Industrial Court Cause (memorandum of claim dated 27th February 2012, filed 28th February 2012). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2014/136/eng@2014-11-07

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