Skip to content
AI-generated case briefs sourced from Kenya Law · Not legal advice
Caselaw
AI-generated case brief
Case Brief · caselaw.co.ke
ELRCPartially AllowedCause No. 421 of 2012· [2014] KEELRC 929 (KLR)

Addah Adhiambo Obiero v Ard Inc [2014] KEELRC 929 (KLR)

Industrial Court of Kenya
19 March 2014
MOMaureen Onyango
3,546 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~14 min to read original · ~4 min brief

The bottom line

#

A flawed redundancy still ends a Kenyan job - the worker gets compensation of a few months' salary, not the full remaining contract value.

What this practically means

#

Executive summary

#
The Claimant, employed by ARD Inc. in November 2009 and successively redesignated within the USAID-funded SUWASA project, was terminated on grounds of redundancy by letter handed to her on 20 January 2012. She sought declarations of nullity and breach, plus Kshs. 20,712,814.24 for salary, pension, severance and leave for the unexpired contract term. The Respondent maintained that section 40 of the Employment Act was complied with, including notification of the Claimant and the Labour Officer and payment of notice, leave and severance. The court framed two issues: the validity of the redundancy and entitlement to the prayers. It held that although the Respondent complied with payment obligations and applied an objective selection criterion (the Claimant's duties were merged into a role she was not qualified to occupy), it failed to prove that the Claimant and the Labour Officer were notified at least one month before the redundancy took effect, both being notified on the very effective date. The redundancy was therefore procedurally unfair, but not null and void; the consequence was remedies under section 49. The declaration of nullity was dismissed, as was the claim that SUWASA's management terminated the contract, the termination having been effected by the Respondent's Chief of Party. Anticipatory benefits for the unexpired term were refused following the proportionality and mitigation principles in Menginya S. Salim Murgani v KRA and D.K. Njagi Marete v TSC. The court awarded Kshs. 1,095,000 - one month's salary in lieu of notification and two months' compensation - subject to taxation, and declined costs to the substantially unsuccessful Claimant. Judgment delivered on 19 March 2014 by Lady Justice Maureen Onyango.

Key legal issues

#
01

Validity of redundancy procedure under section 40 of the Employment Act

Holding

The redundancy was substantively valid but procedurally unfair because the Claimant and the Labour officer were notified on the very date the redundancy took effect rather than at least one month before.

Reasoning

Section 40 requires notification of the employee (or union) and the Labour officer at least one month before redundancy, fair non-discriminatory selection and terminal benefits including severance. The Respondent complied with payment obligations and demonstrated objective selection based on merger of the Claimant's duties, but failed to prove the one-month prior notification, rendering the termination unfair and triggering section 49 remedies.

p. 4
02

Whether procedural unfairness renders a redundancy null and void

Holding

No; it only entitles the employee to remedies under section 49 of the Employment Act.

Reasoning

The court distinguished the substantive validity of a redundancy from the procedure followed. Non-compliance with section 40's notification requirement makes the termination unfair but does not invalidate it or revive the contract; the consequence is compensation within the statutory scheme, not a declaration of nullity or enforcement of the unexpired contract term.

p. 5
03

Entitlement to anticipatory benefits for the unexpired contract term

Holding

Rejected; remedies must be proportionate, anticipatory salaries for the unexpired term are not a fair remedy, and the employee must mitigate.

Reasoning

Following Menginya S. Salim Murgani v Kenya Revenue Authority and D.K. Njagi Marete v Teachers Service Commission, the court held that damages should not rest on sanguine assessments of prospects; the Claimant was employable, had done a two-month consultancy, and needed to move on. The unparticularised claim of Kshs. 20,712,814.24 for future salary, pension, severance and leave was dismissed.

p. 6
04

Authority of the Chief of Party to terminate and whether the contract subsists

Holding

The termination was by the Respondent through its Chief of Party to whom the Claimant reported under the contract; the claim of nullity failed.

Reasoning

The contract expressly provided that the Claimant would report to and be supervised by the ARD Chief of Party in Nairobi. The letterhead naming SUWASA was explained as a consequence of Tetra Tech's acquisition of ARD. SUWASA's management therefore did not terminate the contract; the Respondent did, through a properly authorised officer.

p. 5
05

Appropriate remedies for the unfair termination

Holding

One month's salary in lieu of the missed notification period and two months' salary as compensation for unfair termination, totalling Kshs. 1,095,000, subject to taxation.

Reasoning

Although the Claimant did not specifically pray for it, the court found it just and equitable to award the equivalent of one month's salary for the notification period that should have been given. Taking into account her just over two years of service and all circumstances, compensation equivalent to two months' salary was reasonable, calculated at her last salary of US$4560 (Kshs. 365,000 per month).

p. 6

Legal principles established

#
  • Under section 40 of the Employment Act, an employee and the Labour officer must be notified of the reasons for and extent of a redundancy at least one month before it takes effect; failure renders the termination unfair and entitles the employee to remedies under section 49, but does not render the redundancy null and void.
  • Foreign redundancy authorities are of little probative value where the claimant has not shown that the foreign law interpreted mirrors Kenyan law.
  • Employment remedies must be proportionate to economic injuries suffered and are not meant to facilitate unjust enrichment; an employee must mitigate losses.

Court orders

#
  1. 1.Award of Kshs. 1,095,000 being one month's salary in lieu of notification and two months' salary as compensation for unfair termination, subject to taxation
  2. 2.Dismissal of the claim for a declaration that the termination was null and void
  3. 3.Dismissal of the claim for future anticipatory benefits of Kshs. 20,712,814.24
  4. 4.Respondent to bear its own costs, the Claimant having substantially failed to prove her claim

Authorities

#

Legislation

  • Employment ActSection 40
  • Employment ActSection 49(1)(b)
  • Employment ActSection 49(4)(g) and (l)

Cases cited (8)

  • Williams v Compare Maxam Ltd
    (1982) ICR 156
  • Protective Service (Contract) Ltd v Livingstone
    (1991) EAT 269/91
  • Aviation and Allied Workers Union v Kenya Airways Limited & 3 others
    [2012]
  • King & Others v Eaton Ltd
    (1996) IRLR 199
  • Polkey v A E Dayton Services Ltd
    (1987) UKHL
  • Isabel Wayua Muasu v Copy Cat Limited
    [2013] eKLR
  • Menginya S. Salim Murgani v Kenya Revenue Authority
    High Court Civil Case No. 1139 of 2002
  • D.K. Njagi Marete v Teachers Service Commission
    eKLR
Jurisdiction invoked
The Industrial Court's jurisdiction over employment and labour relations disputes (Employment Act, sections 40 and 49)

Key timeline

#

Practical implications

#

Frequently asked questions

#

Later judgments citing this (9)

#

Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

#

Cite this brief

Caselaw, "Addah Adhiambo Obiero v Ard Inc [2014] KEELRC 929 (KLR)", Case Analysis (2014). Cause No. 421 of 2012. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2014/929/eng@2014-03-19

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