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ELRCPartially AllowedCause No. 1077 of 2011· [2015] KEELRC 1159 (KLR)

Isaiah Eyahonga Eshikati v Social Services League, MP Shah Hospital [2015] KEELRC 1159 (KLR)

Employment and Labour Relations Court
5 May 2015
1,857 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan hospital's flawed redundancy process cost it 13 months of an employee's salary because it failed to give proper notice under the Employment Act.

What this practically means

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Executive summary

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The Claimant, employed by the Respondent on 2/5/1997 as a Credit Officer and rising to Deputy Chief Accountant with a basic salary of Kshs.101,400/=, claimed wrongful/unfair and illegal dismissal or redundancy and refusal to pay terminal dues and medical expenses, pleading dues exceeding Kshs.7 million. The Respondent, through the Federation of Kenya Employers, asserted that the Claimant left on 14/3/2011 on grounds of redundancy, that notice was communicated to the Ministry of Labour, that terminal dues of Kshs.771,008/= were paid, and that medical reimbursement was subject to an annual ceiling of Kshs.100,000/=. The court framed four issues: whether the Claimant was declared redundant, whether due procedure was followed, entitlement to medical reimbursement, and to what extent. On the first issue, the court held the contemporaneous letters showed the Claimant was declared redundant on account of hospital restructuring, notwithstanding the Respondent's resignation narrative. On procedure, applying Section 40(1) of the Employment Act, the court found the notice to the Labour Officer of 14/2/2011 did not conform with the requirement of simultaneous service, and that no one month's notice was given to the Claimant, rendering the redundancy procedurally unfair. On medical reimbursement, the court found the benefit was subject to a Kshs.100,000/= ceiling and the Claimant's 75% contention was unsupported by evidence. The court awarded one month's salary in lieu of notice (Kshs.101,400/=) and twelve months' salary for the unfair redundancy (Kshs.1,216,800/=), totaling Kshs.1,318,200/=, with costs to the Respondent. The wider claim for over Kshs.7 million failed.

Key legal issues

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01

Whether the Claimant was declared redundant or resigned

Holding

The Claimant was declared redundant; the Respondent's assertion that he resigned was inconsistent with the contemporaneous correspondence

Reasoning

The letter of 14/3/2011 expressly informed the Claimant his position was no longer required due to structural re-organization and set out severance entitlements. On the same day the Claimant sought unpaid study leave, which the Respondent declined while accepting his resignation and paying dues. The court held the resignation narrative did not flow from this communication, concluding the Claimant was in fact declared redundant.

p. 3
02

Whether due procedure under Section 40(1) of the Employment Act was followed

Holding

Due process was not followed; the Claimant was not given the requisite notice of redundancy

Reasoning

Under Section 40(1)(f) the employer must pay not less than one month's notice or wages in lieu, and under Section 40(1)(b) notice to the labour officer must be served simultaneously with personal notice to the employee. The Claimant was informed of the redundancy only on 14/3/2011, and the notice to the Labour Officer of 14/2/2011 did not conform. The requisite notice to the Claimant was therefore not given.

p. 4
03

Entitlement to medical expenses reimbursement

Holding

Medical reimbursement was payable only up to a ceiling of Kshs.100,000/= per annum; the claim beyond the amount paid was not tenable

Reasoning

The Respondent's Appendix 10 dated 11/2/1998 provided for medical treatment at 25% employee participation for outpatient and 50% inpatient subject to a ceiling of Kshs.100,000/= per annum per family. The Claimant's contention that the benefit was 75% of cost was not supported by any evidence, and he admitted in cross-examination he had no evidence of any such change.

p. 4

Legal principles established

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  • An employer must serve notice of intended redundancy simultaneously on the employee personally and the labour officer as envisaged under Section 40(1)(b) of the Employment Act
  • Failure to give the requisite one month's notice of redundancy under Section 40(1)(f) entitles the employee to one month's salary in lieu of notice

Court orders

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  1. 1.One month's salary in lieu of notice of Kshs.101,400/= awarded to the Claimant
  2. 2.Twelve months' salary for the unfair redundancy awarded (Kshs.1,216,800/), total award Kshs.1,318,200/=
  3. 3.Respondent to meet the costs of the case
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act (claim for unfair termination/redundancy and terminal dues); Employment Act, Section 40(1)

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, "Isaiah Eyahonga Eshikati v Social Services League, MP Shah Hospital [2015] KEELRC 1159 (KLR)", Case Analysis (2015). Cause No. 1077 of 2011. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2015/1159/eng@2015-05-05

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