Farida Shaeen v Highlands Mineral Water Company Ltd [2014] KEELRC 1378 (KLR)
The bottom line
#A Kenyan court ruled that closing a business position is a redundancy, and skipping the Employment Act's redundancy steps makes the dismissal unfair and costly.
What this practically means
#Executive summary
#Key legal issues
#Whether the termination of the Claimant's employment was lawful and fair
The termination was in substance a redundancy, but the Respondent did not adhere to any of the conditions in Section 40 of the Employment Act; the termination was therefore unfair.
The termination letter dated 6th December 2012 made no mention of misconduct or loss; it stated the Nairobi Depot was closing. The court read the termination as redundancy. Section 40 of the Employment Act sets conditions for redundancy, including notification to the employee personally in writing and the labour officer, payment in lieu of notice and severance pay. The court found the Respondent did not adhere to any of these conditions, rendering the termination unfair, and awarded six months' salary in compensation taking into account length of service and the withholding of terminal dues.
Whether the Claimant is entitled to the reliefs sought
The Claimant was entitled to one month's salary in lieu of notice, leave pay and salary for December 2012; the claim for service/gratuity was dismissed as unproved.
The court held that the effective notice ran from 6th December 2012 when the written termination letter was issued, not from the 30th November conversation, because a termination notice must be issued specifically and in writing. The notice therefore fell below Section 35(1) of the Employment Act and the contract, entitling the Claimant to one month's pay in lieu. Leave pay and December 2012 salary were admitted and payable. The service/gratuity claim was not proved.
Whether the Respondent made out its counterclaim of Kshs. 6,779,726
The counterclaim failed because the Claimant was not involved in the investigations leading to the adverse audit findings, so the evidence was untested.
The Respondent relied on an audit report by Delyde Associates attributing losses of Kshs. 6,779,726 to the Claimant. The court read the auditors' conclusion as showing losses arising from both systemic weaknesses and human intervention, making it impossible to assign any portion of the loss solely to the Claimant. Since the Claimant was never involved in the investigations and could not respond to the adverse findings, the report's veracity was untested and could not support the counterclaim, which was dismissed.
Legal principles established
#- An employer who issues a termination letter with no mention of any pending disciplinary issue cannot later require the employee to answer charges not put to them during or at the end of employment.
- Where an employer fails to observe the conditions set out in Section 40 of the Employment Act when declaring a redundancy, the termination becomes unfair within the meaning of Section 45.
- In redundancy, two notices are required: a general declaration of redundancy and a specific notice of not less than one month to each affected employee.
- A termination notice heralding loss of employment cannot be issued casually in a general conversation; it must be issued specifically and in writing.
- An adverse audit report compiled without involving the employee cannot be used as a basis to deny terminal dues.
Court orders
#- 1.Award of 6 months' salary in compensation for unfair termination of Kshs. 870,000
- 2.Award of 1 month's salary in lieu of notice of Kshs. 145,000
- 3.Award of leave pay of Kshs. 128,083
- 4.Award of salary for December 2012 of Kshs. 145,000
- 5.Total award of Kshs. 1,288,083
- 6.The Respondent will meet the costs of the case
- 7.The award amount to attract interest at court rates from the date of the award until payment in full
- Jurisdiction invoked
- Jurisdiction over an employment dispute under the Industrial Court of Kenya's mandate under Article 162(2) of the Constitution and the Industrial Court Act (claim for unfair termination under the Employment Act, 2007)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Farida Shaeen v Highlands Mineral Water Company Ltd [2014] KEELRC 1378 (KLR)", Case Analysis (2014). Cause No 925 of 2013. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2014/1378/eng@2014-10-29
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.