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ELRCPartially AllowedNot stated in judgment· [2016] KEELRC 1002 (KLR)

Martin Kalama Mwatzuma & another v Coastal Quarry Limited [2016] KEELRC 1002 (KLR)

Employment and Labour Relations Court
1 July 2016
1,303 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Mombasa court ruled the workers' redundancy unlawful because the employer skipped mandatory notice and severance steps under Kenyan law.

What this practically means

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Executive summary

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The Claimants, Martin Kalama Mwatsuma (a security guard employed on 26.2.2014 at kshs 6,270 per month) and Frankline Ndaa Tune (a machine operator employed in April 2010 at kshs 10,000 per month), sued the Respondent for unfair termination of employment. CW1 was terminated on 16.9.2014 after the Respondent decided to outsource security services, having declined an offer of an alternative 4-month job crushing stones; CW2 was told on 30.9.2014 that work had reduced and he should take a rest. The Respondent admitted the Claimants were permanent employees and that its operations ended on 14.11.2014. The court framed four issues: validity of the reason, fairness of procedure, unfairness of termination, and reliefs. It held the reasons (reduction of work and outsourcing) were valid and fair reasons amounting to redundancy, but that the procedure was in breach of the mandatory procedure under section 40 of the Employment Act, requiring at least one month's written notice to the employee or union and the Labour Officer, fair selection, and payment of accrued dues plus severance pay. The breach rendered the terminations unfair and unlawful. Both Claimants were awarded six months' salary as compensation; CW1 was additionally awarded one month's notice pay, CW2 having already been paid salary in lieu. Leave and gratuity claims were declined: the Respondent proved CW2's leave was paid, and the Claimants were NSSF contributors with no contractual gratuity entitlement. Judgment was entered for the Claimants for an aggregate of kshs 103,890 plus costs and interest.

Key legal issues

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01

Whether there was a valid and fair reason for termination

Holding

Yes - reduction of work at the quarry and outsourcing of security services were valid and fair reasons amounting to redundancy

Reasoning

The court found the reason for terminating CW1 was the decision to outsource security services, while CW2 was terminated due to reduction of work leading to closure of the quarry operations in November 2014. It held these were valid and fair reasons for terminating the Claimants through redundancy, so the reason limb was satisfied.

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02

Whether fair procedure was followed

Holding

No - the employer did not comply with the mandatory redundancy procedure in section 40 of the Employment Act

Reasoning

The court held that in redundancy situations, section 40 of the Employment Act requires at least one month's written notice to the employee or union and the Labour Officer, fair selection, and payment of accrued dues plus severance pay. The employer offered only a 4-month alternative job to CW1 and terminated CW2 without notice (though paying salary in lieu). The statutory procedure was never followed, rendering the procedure unfair.

p. 3
03

Whether the termination was unfair

Holding

Yes - although the reasons were valid, the breach of the mandatory statutory procedure rendered the terminations unfair and unlawful

Reasoning

Termination is unfair if the employer fails to prove both a valid and fair reason and a fair procedure. Since the reasons were valid but the procedure breached section 40, the default to comply with the strict statutory procedure rendered the termination unfair, and the court declared it unlawful.

p. 3
04

Appropriate reliefs

Holding

Six months' salary as compensation for each Claimant; one month's notice pay for CW1 only; leave and gratuity claims declined

Reasoning

Compensation of six months' salary was awarded because the Claimants did not contribute to their termination through misconduct and the court considered the possibility of securing alternative employment within six months. Notice pay was granted to CW1 only as CW2 had been paid salary in lieu. Leave and gratuity claims failed on proof and NSSF contribution grounds.

p. 3

Legal principles established

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  • Section 40 of the Employment Act prescribes a mandatory procedure for declaring employees redundant, including one month's written notice to the employee or union and the Labour Officer, fair selection, and payment of accrued dues plus severance pay.
  • Termination of employment is unfair if the employer fails to prove a valid and fair reason and a fair procedure; breach of the mandatory statutory redundancy procedure renders the termination unfair even where the reason is valid.

Court orders

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  1. 1.Judgment entered for the Claimants declaring the termination of their employment unlawful
  2. 2.Award to Martin Kalama Mwatsuma: one month notice kshs 6,270 and compensation kshs 37,620, totalling kshs 43,890
  3. 3.Award to Frankline Ndaa Tune: compensation of kshs 60,000
  4. 4.Aggregate award of kshs 103,890 with costs and interest

Authorities

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Legislation

  • Employment ActSection 40
Jurisdiction invoked
Employment and labour relations jurisdiction of the Employment and Labour Relations Court (employment relationship between the parties)

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, "Martin Kalama Mwatzuma & another v Coastal Quarry Limited [2016] KEELRC 1002 (KLR)", Case Analysis (2016). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2016/1002/eng@2016-07-01

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