Michelle Noelle Ochieng v Virtual Works Limited [2015] KEELRC 373 (KLR)
The bottom line
#A Kenyan court ruled an employer's redundancy unfair because it skipped mandatory notice and consultation, awarding six months' salary to the employee.
What this practically means
#Executive summary
#Key legal issues
#Validity of unilateral contract variation
The claimant was bound by the signed addendum reducing her leave days to 21 per year
Section 10(1) and (5) of the Employment Act requires changes to written contracts to be in writing and in consultation with the employee, but section 13 provides for a written statement of any change in particulars. Once the claimant signed the addendum, she became bound by its terms. Any protest that the change was unilateral was undocumented and merely verbal, and the duty to disprove acceptance through coercion, misrepresentation or forgery rested on her.
Whether the termination was a redundancy requiring compliance with section 40 of the Employment Act
The termination was a redundancy effected without the mandatory general notice and consultation, rendering it unfair
The court found the reason for termination was the respondent's bad financial position and the failure to secure the anticipated EMC distribution business. Such a situation is defined in law as a redundancy process under section 40. The claimant was entitled to prior general notice specific to her position and to consultation before termination. Payment of personal notice did not cure the absence of the general redundancy notice, and the vague termination letter which failed to state reasons compounded the unfairness.
House allowance claim
The claim for house allowance was declined as the contract provided an all-inclusive net salary
Clause 4.1(a) of the contract gave a monthly net salary inclusive of basic salary and all allowances. The court reasoned that had house allowance been intended as a separate entitlement, it would have been expressly stated and outlined in the contract, as was done for the telephone allowance. Consolidated net pay therefore covered any house allowance claim.
Compensation for unfair termination
Compensation awarded at six months' salary based on the last paid salary of Kshs. 227,564.00, amounting to Kshs. 1,365,384.00
Upon the finding of unfair termination, compensation was due. Most terminal dues (August 2014 salary, notice pay and accrued leave) had already been paid, so the only remaining remedy was compensation. The court used the last paid salary of Kshs. 227,564.00 and awarded six months' salary as fair compensation.
Legal principles established
#- Changes to core terms of a written employment contract must be done in writing in consultation with the employee, but where an employee signs to such changes, the burden rests on the employee to disprove acceptance by coercion, misrepresentation or forgery
- An employee cannot agree to or accept a redundancy; redundancy is a business decision of the employer unrelated to the employee's skills
- General notice of a redundancy process is a mandatory requirement under section 40 of the Employment Act; payment of personal notice does not cure its absence, and termination without such notification and without stated reasons is an unfair labour practice
- A redundancy is a process entailing notification and consultation with affected employees before termination
Court orders
#- 1.Judgment entered for the claimant for compensation of Kshs. 1,365,384.00 being six months' salary
- 2.Claimant awarded costs of the suit
- 3.Claims for house allowance and holiday pay declined
- Jurisdiction invoked
- Employment and labour relations jurisdiction under Article 162(2) of the Constitution (Employment and Labour Relations Court); claim brought under the Employment Act, 2007
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Michelle Noelle Ochieng v Virtual Works Limited [2015] KEELRC 373 (KLR)", Case Analysis (2015). Cause No 1794 of 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2015/373/eng@2015-09-21
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.