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ELRCPartially AllowedCause Number 232 of 2013· [2015] KEELRC 1304 (KLR)

Kenya Hotels and Allied Workers Union v Sheshe Beach Resort T/A Tabora Enterprises Limited & 2 others [2015] KEELRC 1304 (KLR)

Industrial Court of Kenya
20 March 2015
3,597 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~14 min to read original · ~4 min brief

The bottom line

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A Kenyan court ruled that closing a hotel for the 'low season' without promising to rehire staff was a redundancy requiring full redundancy benefits.

What this practically means

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Executive summary

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The Claimant Union, holding a Recognition Agreement with the 1st Respondent Hotel on the South Coast, alleged the Hotel closed in 2013 declaring staff positions redundant, and sought restraints, terminal benefits under the CBA, and a direction that the only Director in the country be confined to the jurisdiction. The Respondents never appeared or gave evidence. The Interested Party, Edmundo Buffa, was joined by consent; he testified he had resigned as Director of Tabora Enterprises but retained a minority shareholding, and had been sent money from Italy to pay Employees' dues. The Court referred the parties to the County Labour Office, which met the Hotel Manager and the Union and computed terminal dues for 47 Employees at Kshs. 7,753,598 by consensus. The Court held that Buffa's Directorship was irrelevant: the question was whether he was an Employer, and his conduct - inquiring into debts, commissioning auditors, receiving and disbursing salary monies and overseeing the business - brought him within the definition of Employer under Section 2 of the Employment Act 2007. The closure of the Hotel with no intention or evidence of recall of Employees constituted redundancy despite the low-season justification. Objections on union membership, CBA validity and prematurity were dismissed as dilatory. The Court adopted the consensual Labour Office Report but restricted it to the 42 Grievants originally claimed, expunging 5 added names including Manager Mustaffa Omar, who should have negotiated his own package. The Respondents were ordered to pay the 42 Grievants' redundancy benefits within 30 days.

Key legal issues

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01

Whether the Interested Party was an Employer notwithstanding his resignation as Director

Holding

He was an Employer within Section 2 of the Employment Act; his role in inquiring into debts, commissioning auditors, receiving money to pay Employees and overseeing the business made him an Employer.

Reasoning

The court held that the question was not whether Buffa was a Director at the material time but whether he was an Employer. Section 2 of the Employment Act defines an employer to include an agent, foreman, manager or factor of a company. Buffa's own evidence showed he inquired into the Respondent's debts including staff dues, commissioned auditors, received money from Italy to pay salaries and oversaw the business, effectively making the response for the absent Respondents.

p. 4
02

Whether the closure of the Hotel amounted to redundancy

Holding

Yes; the Employees lost their jobs involuntarily and permanently on economic grounds, with no intention or evidence of recall on reopening.

Reasoning

Although the Respondents asserted they merely closed for the low season, an intention to reopen in July was never fulfilled and there was no evidence of reopening. The definition of redundancy in Section 2 covers involuntary loss of employment at the initiative of the Employer where services are superfluous. The loss was permanent and dictated by economic or operational reasons.

p. 5
03

Validity of the County Labour Office's consensual computation of terminal dues

Holding

The Report was adopted as it was consensual, made pursuant to a court order, involved all parties, and was never questioned by the Respondents.

Reasoning

The Court had ordered the parties to meet with the Labour Office to compute redundancy dues. The Labour Officers examined employment records at the workplace and tabulated dues by consensus. The Respondents never questioned the Report and the Interested Party could not turn around and challenge matters agreed upon at that late stage. Objections on union membership and CBA validity were dilatory and never raised during the proceedings or conciliation.

p. 5
04

Whether the Claimant Union had locus standi and the Claim was premature

Holding

Both objections failed; union membership and CBA validity were never challenged during the proceedings, and the Claim was certified urgent, not premature.

Reasoning

The dispute was never about membership of the Employees in the Claimant Union or CBA validity; these were never challenged by the Respondents or Interested Party during proceedings or conciliation and were raised belatedly as dilatory tactics. Prematurity failed because the Claim was filed under a certificate of urgency certified by the Court, which cannot be the same thing as prematurity.

p. 5

Legal principles established

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  • An employer under Section 2 of the Employment Act includes a manager, agent or factor; Directorship or shareholding is irrelevant to employer liability.
  • Closure of business with no intention or commitment to recall Employees amounts to redundancy despite a low-season justification.
  • A Hotel Manager fits the description of an Employer under Section 2 of the Employment Act 2007 and his actions bind the Employer.

Court orders

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  1. 1.The Respondents shall pay to the 42 Grievants redundancy benefits as computed in the Report filed in Court by the County Labour Office
  2. 2.The 5 names added to that list from the original list of 42 Grievants are expunged from the list
  3. 3.The redundancy benefits shall be paid within 30 days of the delivery of this Award
Jurisdiction invoked
Industrial Court (Procedure) Rules 2010, Rule 27(1)(a); dispute referred under the Industrial Court's jurisdiction over employment and labour relations

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 Hotels and Allied Workers Union v Sheshe Beach Resort T/A Tabora Enterprises Limited & 2 others [2015] KEELRC 1304 (KLR)", Case Analysis (2015). Cause Number 232 of 2013. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2015/1304/eng@2015-03-20

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