Simon Makau Mutuku v Coconut Limited [2016] KEELRC 565 (KLR)
The bottom line
#Kenya's Employment Court ruled a redundancy unlawful because the employer skipped notifying the labour officer and paying dues, awarding the worker over Kshs. 232,000.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the declaration of redundancy complied with Section 40 of the Employment Act 2007
- 2.Whether the termination was lawful and fair under Sections 40 and 41 of the Employment Act
- 3.Whether the Claimant was entitled to house allowance under Section 31 of the Employment Act
- 4.Whether there were unlawful deductions from the Claimant's salary
- 5.Whether the Claimant was in custody of the Respondent's invoices
- 6.What terminal dues and compensation the Claimant was entitled to
Key legal issues
#Compliance with Section 40 redundancy procedure
The redundancy was illegal and unfair because the letter was not copied to the labour officer and terminal dues were not paid
The court held Section 40 couched in mandatory terms requiring notice, copy to labour officer, and payment of dues at termination. It was undisputed the 18th January 2014 letter was not copied to the labour officer and no terminal dues were paid, so the declaration of redundancy missed a key step and was unlawful and unfair.
Entitlement to house allowance under Section 31
Claimant entitled to unpaid house allowance for 31 months as there was no written contract or CBA consolidating salary
Section 31(2) exempts employers where the contract consolidates a housing element in wages or a CBA so provides. Here there was no written contract and no CBA, so the Claimant had an expectation of and legal entitlement to house allowance for the months it was not provided.
Claimed unlawful salary deductions
Claim failed; only non-statutory deductions were loan deductions
The Claimant alleged unlawful deductions between May and December 2013. The court found the only deductions that were not statutory were loan deductions, so no unlawful deduction was proved.
Custody of the Respondent's invoices
Respondent did not prove the Claimant stole or had custody of the invoices
The Respondent alleged the Claimant withheld invoices. The Respondent produced copies of the invoices which did not show the Claimant issued or handled them, so the allegation failed.
Compensation for unfair termination
Nine months' salary compensation awarded under Section 49
Having found the termination unlawful and unfair, the court exercised discretion under Section 49 to award 9 months' salary (Kshs. 135,000/-) rather than the 12 months claimed, subject to statutory deductions.
Legal principles established
#- Section 40 of the Employment Act is mandatory: notice of redundancy must be given and copied to the labour officer, and terminal dues paid at termination
- Failure to notify the labour officer of a redundancy renders the declaration of redundancy illegal and unfair
- House allowance under Section 31 cannot be deemed consolidated absent a written contract or CBA providing consolidation
Court orders
#- 1.Salary in lieu of notice Kshs. 15,000/-
- 2.Salary for January 2014 Kshs. 15,000/-
- 3.Unpaid house allowance for 31 months Kshs. 67,500/-
- 4.Kshs. 135,000/- being 9 month's salary compensation for unlawful termination
- 5.Certificate of service in terms of Section 50 of the Employment Act
- 6.Items (a) to (d) subject to deductions in terms of Section 49 of the Employment Act
- 7.Costs of the suit to the Claimant
- 8.Interest on items (a) to (d) at Court rates from the date of judgment until payment in full
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction over employment disputes (Employment Act 2007); specific enabling provision not cited
Relief refused
#One month's salary in lieu of redundancy (Kshs. 17,250/-)
Not included in the judgment entered; redundancy was itself the unlawful act giving rise to compensation
Severance pay at 15 days for each completed year of service (Kshs. 28,875/-)
Not expressly awarded in the final orders
Refund of unlawfully deducted salary (Kshs. 15,625.16 / 13,000)
The Claimant did not prove unlawful deductions; the only non-statutory deductions were loan deductions
12 months' salary compensation for unfair termination
Court awarded 9 months' compensation instead
Costs
Costs of the suit awarded to the Claimant
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
The provisions under Section 40 above are couched in mandatory terms. There must be notice, the notice must be copied to a labour officer and where the employee is a member of a union to that said union.
This was an abridgement of the law and thus the declaration of redundancy having missed this key step was illegal and unfair.
If the salary was consolidated there should have been a contract or CBA to that effect.
I enter judgment for the Claimant against the Respondent as follows:
Interest on a), b), c), d) above at Court rates from the date of judgment until payment in full.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Simon Makau Mutuku v Coconut Limited [2016] KEELRC 565 (KLR)", Case Analysis (2016). Not stated in judgment (ELC Cause filed 19th August 2014). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2016/565/eng@2016-09-02
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.