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ELRCPartially AllowedCause No 475 of 2014· [2016] KEELRC 950 (KLR)

Dennis Murithi v Eldoret Mattress Limited & another [2016] KEELRC 950 (KLR)

Employment and Labour Relations Court
15 July 2016
RSRadido Stephen
700 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 an employer's cost-cutting dismissal was an unlawful redundancy, awarding the worker four months' pay because the employer skipped mandatory redundancy steps.

What this practically means

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Executive summary

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The Claimant sued the Respondents on 2 October 2014 alleging unlawful termination of his employment. The matter suffered delays: the Respondents obtained one adjournment because their witness was unavailable and were directed to pay adjournment fees, but nothing on record showed payment; a second adjournment sought on 16 February 2016 was declined. The Claimant elected to rely on his pleadings and submissions. The Court framed two issues: whether the termination was unfair, and if so, the appropriate remedies. The termination letter dated 1 June 2014 cited reasons beyond the employer's control and financial difficulties, leading the Court to conclude the termination was involuntary and in substance a redundancy. Section 40 of the Employment Act, 2007 prescribes conditions for redundancy: apart from one month advance written notice, there was no evidence of how the Claimant was selected, notification of the local Labour Officer, or payment of severance pay and other dues, rendering the termination procedurally unfair. There was also nothing to show the redundancy was for genuine operational requirements under section 45(2)(b)(ii), making it substantively unfair. On remedies, pay in lieu of notice was refused as notice had been given; the overtime claim failed for lack of evidential basis; and severance pay was declined because the Claimant had been paid service pay, to avoid unjust enrichment. Considering about 3 years of service and a gross wage of Kshs 12,000/-, the Court awarded compensation equivalent to 4 months' gross wages, Kshs 48,000/-, payable by the Respondents, with costs to the Claimant.

Key legal issues

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01

Whether the termination was unfair

Holding

The termination was both procedurally and substantively unfair; it was in substance a redundancy that failed to comply with section 40 and was not shown to be for genuine operational requirements

Reasoning

The letter of termination cited reasons beyond the employer's control and financial difficulties, showing the termination was involuntary and amounted to redundancy. Section 40 of the Employment Act, 2007 prescribes conditions an employer must satisfy before terminating on account of redundancy. Apart from one month advance written notice, there was no evidence of how the Claimant was selected, notification of the local Labour Officer, or payment of severance pay and dues, rendering the termination procedurally unfair. Nothing showed the redundancy was for genuine operational requirements under section 45(2)(b)(ii), making it substantively unfair.

p. 2
02

Appropriate remedies for the unfair termination

Holding

Compensation equivalent to 4 months' gross wages (Kshs 48,000/-); claims for pay in lieu of notice, overtime and severance pay declined

Reasoning

The Claimant received one month notice, so pay in lieu of notice was not due. The overtime claim failed for want of evidential basis on working hours. Though severance pay was legally due, the Claimant had received service pay from the 2nd Respondent, and the Court declined a severance award to avoid unjust enrichment. Considering his about 3 years of service and gross wage of Kshs 12,000/- at separation, the Court awarded compensation equivalent to 4 months' gross wages, Kshs 48,000/-.

p. 2

Legal principles established

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  • A termination on account of redundancy must comply with the conditions in section 40 of the Employment Act, 2007, including how the employee was selected, notification of the local Labour Officer, and payment of severance pay and other dues; failure renders the termination procedurally unfair
  • A redundancy must be for genuine operational requirements under section 45(2)(b)(ii) of the Employment Act, 2007, failing which it is substantively unfair
  • Compensation for unfair termination is assessed by reference to length of service and wages at separation

Court orders

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  1. 1.Finding and holding that the termination of the Claimant's employment on account of redundancy was unfair
  2. 2.Respondents ordered to pay the Claimant compensation of Kshs 48,000/-
  3. 3.Claimant to have costs

Authorities

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Legislation

  • Employment Act, 2007Section 40
  • Employment Act, 2007Section 45(2)(b)(ii)
Jurisdiction invoked
Jurisdiction as an Employment and Labour Relations Court over claims of unfair termination of employment under the Employment Act, 2007 (specific enabling provision not stated in the judgment)

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, "Dennis Murithi v Eldoret Mattress Limited & another [2016] KEELRC 950 (KLR)", Case Analysis (2016). Cause No 475 of 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2016/950/eng@2016-07-15

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