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ELRCPartially AllowedCause No 1356 of 2011· [2014] KEELRC 989 (KLR)

Leodip Lemuse v Wadia Construction Company [2014] KEELRC 989 (KLR)

Industrial Court of Kenya
14 May 2014
1,597 words in judgment
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The bottom line

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Kenya's Industrial Court ruled that ending a worker's job for lack of work is a redundancy requiring legal procedures, and awarded Kshs. 78,000.

What this practically means

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Executive summary

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The claimant, employed by the respondent as a night watchman from about 11th July 2008 at a salary of Kshs. 7,500 without a written contract, claimed notice pay, service pay, off-day compensation, salary underpayment, overtime, uniform allowance, compensation for unfair termination and house allowance following the termination of his employment on 1st February 2011 when the construction site he guarded was completed. The respondent admitted the employment but contended that the claimant worked normal hours, was issued uniform and protective clothing, and that his contract simply lapsed on completion of the assignment; it also relied on an executed agreement for Kshs. 60,000 which the claimant allegedly refused to collect. The court found that the undocumented terms meant the claimant's account of terms would be adopted under Sections 9(2) and 10(7) of the Employment Act. It characterized the termination as a redundancy, and because the respondent complied with none of the conditions in Section 40, it was unfair under Section 45, attracting 3 months' salary compensation and one month's notice pay. House allowance at 15% was awarded since no consolidation of housing into salary was documented, and service pay was allowed as there was no evidence of pension scheme membership. The claims for salary underpayment, overtime and uniform allowance were dismissed as unproved. A cumulative award of Kshs. 78,000 was made, with costs to the claimant and interest at court rates from the date of the award until payment in full.

Key legal issues

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01

Whether the termination of the Claimant's employment on completion of the construction project was unfair termination or lawful lapse of a fixed contract

Holding

The termination was in substance a redundancy, and because the Respondent complied with none of the conditions in Section 40 of the Employment Act, it was unfair under Section 45; compensation of 3 months' salary plus one month's salary in lieu of notice awarded.

Reasoning

The Respondent's Memorandum of Reply indicated the Claimant's employment ended because there was no more work, which fits the statutory definition of redundancy. Section 40 prescribes conditions precedent, including notification of the union and labour officer, payment of leave, one month's notice and severance at fifteen days' pay per completed year. No evidence of compliance with any condition was adduced, so the termination was unfair, entitling the Claimant to compensation.

p. 3
02

Whether the Claimant was entitled to house allowance

Holding

House allowance awarded at 15% of salary, raising the monthly salary adopted for tabulation to Kshs. 8,625, since the Respondent did not document terms and no intention that salary was inclusive of house allowance was shown.

Reasoning

Section 31(1) and (2) of the Employment Act obliges the employer to provide housing or pay a rent sum unless the contract consolidates a housing element into the wage. As the employer failed to issue a written contract, the court interpreted the terms, found no expressed intention that salary included house allowance, and awarded 15% of salary as house allowance, adopting Kshs. 8,625 as the monthly salary.

p. 4
03

Whether the Claimant was entitled to service pay

Holding

Service pay for 2 completed years of service awarded at the adopted monthly salary of Kshs. 8,625 as there was no evidence of membership in a pension scheme.

Reasoning

Service pay is payable under the Employment Act where an employee is not a member of a pension or provident fund scheme. The court found no evidence that the Claimant belonged to any such scheme, and therefore allowed the claim for service pay computed on the adopted salary for the two completed years of service.

p. 4
04

Undocumented terms of employment

Holding

In the absence of a written contract, the court adopts the Claimant's account of terms under Section 10(7) of the Employment Act.

Reasoning

It was common ground that the Claimant was employed but that terms and conditions were not documented as required by law. Section 9(2) places responsibility for drawing the contract on the employer; the sanction for failure is that the court adopts the employee's version of terms under Section 10(7). This underpinned the awards on house allowance and service pay.

p. 2

Legal principles established

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  • Where an employer fails to draw a written contract of employment as required by section 9(2) of the Employment Act, the court will adopt the employee's account of the terms and conditions of employment under section 10(7).
  • Termination of employment on account of redundancy must comply with the conditions in Section 40 of the Employment Act, failing which it is unfair under Section 45.
  • Where an employer fails to document terms of employment, it is left to the court to interpret those terms, including whether salary was inclusive of house allowance.

Court orders

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  1. 1.Award of 3 months' salary (Kshs. 25,875) in compensation for unfair termination
  2. 2.Award of 1 month's salary in lieu of notice (Kshs. 8,625)
  3. 3.Award of house allowance for 31 months (Kshs. 34,875)
  4. 4.Award of service pay for 2 completed years of service (Kshs. 8,625)
  5. 5.Total award of Kshs. 78,000 in favour of the Claimant
  6. 6.Award of the costs of the case to the Claimant
  7. 7.Award amount to attract interest at court rates from the date of the award until payment in full

Authorities

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Legislation

  • Employment ActSection 9(2)
  • Employment ActSection 10(7)
  • Employment ActSection 2
  • Employment ActSection 40
  • Employment ActSection 45
  • Employment ActSection 31(1) and (2)
  • Labour Relations Act, 2007Section 2 (corresponding definition of redundancy)

Cases cited (1)

  • Robai Musinzi Vs Safdar Mohamed Khan
    [2012] eKLR
Jurisdiction invoked
Jurisdiction of the Industrial Court of Kenya over employment and labour relations disputes (Cause No 1356 of 2011)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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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, "Leodip Lemuse v Wadia Construction Company [2014] KEELRC 989 (KLR)", Case Analysis (2014). Cause No 1356 of 2011. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2014/989/eng@2014-05-14

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