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ELRCPartially Allowed· [2015] KEELRC 1275 (KLR)

Kenya Petroleum Oil Workers Union v Sarman Energy Ltd & Engen [K] Ltd [2015] KEELRC 1275 (KLR)

Industrial Court (Employment and Labour Relations Court)
23 March 2014
2,570 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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When a business changes hands, laying off all staff is a redundancy requiring strict Section 40 procedure; Total Kenya paid 13 workers KSh 1,027,117 for skipping it.

What this practically means

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Executive summary

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A trade union sued on behalf of 13 grievants, all pump attendants at a petrol station in Nyali, seeking notice pay, 12 months' compensation and damages for discrimination, aggregating ksh.1,907,503. The grievants worked for the 2nd respondent until 19/4/2012, when it handed the station to the 1st respondent under a Dealership Agreement and served a one-month termination notice on 20/3/2012, paying salary, leave and public holiday dues. The 1st respondent engaged the grievants from 20/4/2012 but dismissed them by SMS on 30/4/2012. The 1st respondent denied employing the grievants and did not attend the hearing; the 2nd respondent contested jurisdiction, arguing the dispute had not been conciliated. The court dismissed the jurisdiction objection, holding that a dispute alleging retrenchment without notice may be filed under Section 74(b)(ii) of the Labour Relations Act without prior conciliation under Section 62. It found the 2nd respondent's termination of the whole staff on handover of the business was redundancy, effected in breach of the mandatory procedure in Section 40 of the Employment Act, and therefore unfair. Against the 1st respondent, the court found an implied casual employment relationship lasting 10 days; since the grievants were casuals engaged for less than a month, one day's notice sufficed, and an SMS was valid notice given technological advancement, so that termination was not unfair. Judgment was entered against the 2nd respondent only, for ksh.1,027,117 (one month's notice pay plus six months' gross salary per grievant) to be shared equally among the 13 grievants, with costs to the claimant.

Key legal issues

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01

Jurisdiction - whether prior conciliation under Section 62 LRA was a precondition

Holding

The objection was dismissed; suits brought under Section 74(b)(ii) LRA qualify to be filed without prior conciliation.

Reasoning

The 2nd respondent relied on KUDHEIHA v PAPILION LAGOON REEF, where a union needed prior conciliation to sue under Section 73 LRA. The court accepted that position but distinguished it: this dispute was brought under Section 74(b)(ii), an urgent window for retrenchment without notice, which Parliament created to avoid prejudice from the conciliation process. The suit, filed under certificate of urgency alleging retrenchment without notice, therefore fell within the exception and the objection, raised just before judgment, was dismissed as an afterthought.

p. 4
02

Whether the 2nd respondent's termination of the grievants was unfair

Holding

It was unfair and unlawful for violating Section 40 of the Employment Act.

Reasoning

The transfer of the business to the 1st respondent and laying off the entire staff amounted to redundancy. Section 40 mandatorily requires written notice to the labour officer and the union (or employee), a fair selection process, and payment of notice, accrued benefits and severance pay. Only an ordinary termination notice was issued; no redundancy notice to the union or labour officer was proved, and the multinational employer could have transferred staff to other stations. Non-compliance rendered the termination unfair.

p. 5
03

Whether the 1st respondent's termination by SMS was unfair

Holding

It was not unfair; the grievants were casual employees engaged for less than a month, so only one day's advance notice was required under Section 35(1), and the SMS sufficed.

Reasoning

Despite denying the employment relationship, the 1st respondent employed the grievants from 20/4/2012 under an implied contract and paid them a full month's salary. The engagement, being under a month, attracted Section 35(1)'s notice equal to the pay interval, i.e. one day for casuals. The court held SMS to be a valid method of communication given technological advancement. The 1st respondent adduced no rebutting evidence.

p. 5

Legal principles established

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  • Termination of all staff on closure or handover of a business is redundancy and must strictly comply with Section 40 of the Employment Act, failing which it is unfair termination.
  • A trade union may refer a retrenchment-without-notice dispute to the Industrial Court under Section 74 of the LRA without first undergoing conciliation under Section 62.
  • An implied contract of employment may arise from conduct where a new dealer takes over a station and the workers continue serving without objection.
  • Notice of termination of a casual employee's employment may validly be given by SMS, the law being interpreted in line with technological advancement.

Court orders

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  1. 1.Judgment entered for the claimant against the 2nd respondent for the aggregate sum of ksh.1,027,117 to be shared among the 13 grievants equally
  2. 2.The 2nd respondent to pay the claimant's costs

Authorities

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Legislation

  • Labour Relations ActSection 62
  • Labour Relations ActSection 73
  • Labour Relations ActSection 74(b)(ii)
  • Employment ActSection 40
  • Employment ActSection 35(1)

Cases cited (1)

  • KUDHEIHA VS PAPILION LAGOON REEF
    [2014] KLR
Jurisdiction invoked
Section 74(b)(ii) of the Labour Relations Act (dispute referred as a matter of urgency concerning retrenchment without notice)

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, "Kenya Petroleum Oil Workers Union v Sarman Energy Ltd & Engen [K] Ltd [2015] KEELRC 1275 (KLR)", Case Analysis (2014). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2015/1275/eng@2015-03-23

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