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ELRCPartially AllowedCause number not stated on the face of the judgment (heard together with Cause No. 1593 of 2013)· [2015] KEELRC 1403 (KLR)

Didacus Odhiambo Ahago v Midroc Water Drilling Limited [2015] KEELRC 1403 (KLR)

Employment and Labour Relations Court
6 February 2015
ANAbuodha J. N.
2,105 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court ruled that employers must follow the Employment Act's redundancy procedure even in financial hardship, awarding two workers compensation for unfair termination.

What this practically means

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Executive summary

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The Employment and Labour Relations Court at Nairobi, Abuodha J., heard this cause together with Cause No. 1593 of 2013, the issues and respondents being common. On realising that the sole issue was the legality of the declaration of redundancy of the claimants, the Court dispensed with oral evidence and directed written submissions. The claimants, Mr. Namada appearing, submitted that the respondent failed to comply with section 40(1)(b) of the Employment Act: no prior written personal notice of redundancy was issued and the Labour Office was not notified, and the respondent had not declared insolvency to invoke the protection of sections 40(2) and 66. The respondent, through Mr. Wangila, conceded the redundancy but argued that the abrupt termination of its construction contract with the National Water Conservation and Pipeline Corporation, and its lack of funds, made compliance impracticable, that the claimants were not union members, and that first-in-last-out selection was impossible where operations ceased entirely, relying on authority that the Act prescribes no form of notification. The Court held that section 40 provides no qualification or waiver of the redundancy procedure except in insolvency situations under section 66, and that the respondent had neither been declared insolvent under section 67 nor claimed to be. The redundancy therefore amounted to wrongful and unfair termination under section 45. The Court awarded each claimant notice pay and five months' salary for unfair termination, with service pay, leave and salary arrears for the first claimant, subject to taxes and statutory deductions, and ordered issuance of certificates of service. No costs order appears on the face of the judgment.

Key legal issues

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01

Compliance with section 40(1) of the Employment Act in declaring redundancy

Holding

The respondent did not comply with the mandatory conditions in section 40(1); financial distress and termination of the underlying contract did not excuse non-compliance.

Reasoning

The Court found that the respondent conceded it declared the claimants redundant due to reduction of operations following termination of its contract with NWCPC. Section 40(1) sets out mandatory conditions including written personal notice to non-union employees and notification of the labour officer, none of which were met. The only statutory exception is insolvency under Part VIII, and the respondent had not been adjudged bankrupt, wound up, or placed under administration as defined in section 67, nor claimed insolvency protection under section 40(2).

p. 4
02

Whether the termination was unfair

Holding

The declaration of redundancy constituted wrongful and unfair termination within section 45 of the Employment Act.

Reasoning

Having found non-compliance with section 40(1), the Court held that the flouting of the statutory procedure rendered the termination unlawful and unfair, entitling the claimants to compensation. The Court accepted the claimants' submission, supported by cited authorities, that termination which flouts the redundancy procedure amounts to unfair termination.

p. 4
03

Whether the abrupt termination of the main contract qualified section 40 requirements

Holding

No such qualification exists; the requirements apply even where the employer's operations stop entirely.

Reasoning

The respondent argued that where the main construction contract was abruptly cancelled and the entire operation ceased, requirements such as notification and first-in-last-out selection could not be observed, and that the employer without funds could not pay notice. The Court rejected this, holding that section 40 contains no waiver except for insolvency, which the respondent had not invoked or established under sections 40(2) and 67.

p. 4

Legal principles established

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  • The procedural requirements for declaring redundancy under section 40(1) of the Employment Act are mandatory and admit of no waiver except in situations of insolvency.
  • A redundancy declared without compliance with section 40 amounts to wrongful and unfair termination under section 45 of the Employment Act.
  • An employer who has not been declared insolvent within the meaning of section 67 of the Employment Act cannot rely on financial hardship to escape the redundancy procedure.

Court orders

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  1. 1.Award to Didacus Odhiambo Ahago: one month's salary in lieu of notice (Kshs 25,000), service pay for 3 years (Kshs 37,500), leave balance for 2012 (Kshs 9,996), 13 days worked in February (Kshs 10,829), and 5 months' salary for unfair termination of employment (Kshs 125,000), totalling Kshs 208,325
  2. 2.Award to Joseph Kipkirui Langat: one month's salary in lieu of notice (Kshs 25,000), salary arrears for January 2013 (Kshs 1,000), 1 day worked in February 2013 (Kshs 10,829), and 5 months' salary for unfair termination of employment (Kshs 125,000), totalling Kshs 161,829
  3. 3.The awards are subject to taxes and statutory deductions
  4. 4.The respondent shall issue the claimants with certificates of service

Authorities

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Legislation

  • Employment Actsection 40(1)(a)-(g), 40(2)
  • Employment Actsection 45
  • Employment Actsection 66(1)
  • Employment Actsection 67
  • Law of Succession Actreferred to in section 67 definition of insolvency

Cases cited (4)

  • Kenya Union of Journalists v. Nation Media Group
    (2013) eKLR
  • Paul Ngeno v. Pyrethrum Board of Kenya
    (2013) eKLR
  • Banking and Finance Union v. CFC Stanbic Bank
    (2014) eKLR
  • Banking Insurance and Finance Union vs. Kirinyaga District Co-operative Union and Another
    (2014) eKLR
Jurisdiction invoked
Jurisdiction under the Employment Act over a claim for unfair termination on account of redundancy

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, "Didacus Odhiambo Ahago v Midroc Water Drilling Limited [2015] KEELRC 1403 (KLR)", Case Analysis (2015). Cause number not stated on the face of the judgment (heard together with Cause No. 1593 of 2013). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2015/1403/eng@2015-02-06

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