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ELRCPartially AllowedCase No. 4 of 2015· [2015] KEELRC 1649 (KLR)

Rizwana Mohamed Salim v Coolxtreme Limited [2015] KEELRC 1649 (KLR)

Industrial Court of Kenya
13 November 2015
1,765 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kisumu court ruled an employee's termination was an unlawful redundancy, awarding her over Shs.275,000 in terminal dues but refusing extra damages.

What this practically means

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Executive summary

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The claimant, employed by the respondent from 6 October 2008 as Office/Administration Clerk at its Kisumu branch and earning a last salary of Shs.35,999, had her employment terminated effective 31 January 2014 on grounds of a review of the Western Branch's operations. She claimed unpaid terminal dues, interest at bank rates, and punitive and aggravated damages for breach of contract and violation of statutory and constitutional rights. The respondent denied liability, asserting the claimant was responsible for missing Nakumatt stock, that it was ready to pay terminal dues once she signed the computed workings, and that her 2011 annual leave was forfeited because she took maternity leave that year. The court framed five issues covering quantum of terminal benefits, breach of rights, exemplary damages, and interest. It held that the closure or scaling down of the Kisumu branch causing involuntary job loss without fault was in substance a redundancy, and since the Section 40 Employment Act procedure (one month's notification, notification of the Labour Officer, and termination notice) was not followed, the termination was unlawful. The claimant was awarded Shs.275,695 less statutory deductions, comprising Shs.35,999 for pay in lieu of notification, Shs.90,000 severance, Shs.113,697 annual leave (including 21 days for 2011, since a female employee on maternity leave does not forfeit annual leave under Section 29(1) and (7)), and Shs.35,999 for January 2014. Claims for exemplary damages failed under the Rookes v Barnard principles, and interest was awarded at court rates from the date of judgment rather than bank rates.

Key legal issues

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01

Whether the termination of the claimant's employment was a lawful redundancy

Holding

The termination was in substance a redundancy but the Section 40 Employment Act procedure was not followed, rendering the termination unlawful and entitling the claimant to terminal dues including pay in lieu of notification, severance/service pay, annual leave and January 2014 salary

Reasoning

The closure or scaling down of the Kisumu branch caused involuntary loss of employment without fault, meeting the definition of redundancy. Section 40 requires at least one month's notification of intended redundancy, notification of the Labour Officer, and a termination notice. Only a termination notice was given; pay in lieu of the missing notification and other dues were awarded. Service pay in lieu of severance was at the same rate so no further payment was due.

p. 3
02

Whether annual leave for 2011 was forfeited on taking maternity leave

Holding

No - the claimant is entitled to her 2011 annual leave of 21 days in addition to other accrued leave, totalling 94.75 days

Reasoning

Section 29(1) and (7) of the Employment Act entitles a female employee to three months' maternity leave with full pay and provides she does not forfeit her annual leave for that year. The respondent's omission of the 2011 leave from the final dues computation was therefore wrong, and leave was recalculated at 94.75 days.

p. 3
03

Whether punitive and exemplary damages were payable

Holding

Rejected - the respondent's conduct did not fall within the Rookes v Barnard categories for exemplary damages

Reasoning

Following Rookes v Barnard as applied in Kenya Revenue Authority v Menginya Salim Murgani, exemplary damages lie only for oppressive, arbitrary or unconstitutional action by government servants, or conduct calculated to profit the defendant beyond compensation payable. Neither ingredient existed here; asking the claimant to conduct stock-taking of a branch she managed was not a breach of her contractual or constitutional rights.

p. 4

Legal principles established

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  • Closure or scaling down of operations leading to involuntary loss of employment without fault amounts to redundancy, attracting the procedure in Section 40 of the Employment Act
  • Failure to follow the Section 40 redundancy procedure (one month's notification, notice, and notification of the Labour Officer) renders the termination unlawful
  • A female employee on maternity leave does not forfeit her annual leave for that year
  • Exemplary damages are available only in the two Rookes v Barnard categories - oppressive, arbitrary or unconstitutional action by government servants, or profit-making conduct exceeding compensation

Court orders

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  1. 1.Payment of terminal dues totalling Shs.275,695 less statutory deductions (notification Shs.35,999; severance Shs.90,000; annual leave Shs.113,697; pay for January 2014 Shs.35,999)
  2. 2.Interest on the award at court rates from the date of judgment

Authorities

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Legislation

  • Employment ActSection 40
  • Employment ActSection 29(1) & (7)

Cases cited (4)

  • Rookes v Barnard
    [1964] 1 ALL ER 367
  • Kenya Revenue Authority v Menginya Salim Murgani
    [2010] eKLR
  • Haria Industries v P.J. Products Limited
    [1970] E.A. 367
  • Obongo & another v Municipal Council of Kisumu
    [1971] E.A. 91
Jurisdiction invoked
Employment and labour relations jurisdiction of the Industrial Court of Kenya (employment claim for terminal dues)

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, "Rizwana Mohamed Salim v Coolxtreme Limited [2015] KEELRC 1649 (KLR)", Case Analysis (2015). Case No. 4 of 2015. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2015/1649/eng@2015-11-13

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