Bakery Confectionery Food Manufacturing & Allied Workers Union (K) v Spin Knit Dairy Limited & another [2016] KEELRC 1512 (KLR)
The bottom line
#A Kenyan court upheld a dairy's redundancy of all staff before a takeover, ruling a one-week-short notice wasn't unlawful because no one was actually prejudiced.
What this practically means
#Executive summary
#Key legal issues
#Nature of the transaction - acquisition or merger
The 2nd Respondent acquired the entire business and assets of the 1st Respondent with effect from 6th October 2009; there was no merger, and the 1st Respondent remained responsible for its liabilities including employee terminal benefits
A careful study of the merger agreement submitted under seal showed the 2nd Respondent acquired the entire business and assets as a going concern, the 1st Respondent's operations ceased, liabilities (including terminal benefits) remained with the 1st Respondent under clause 2.4, and no partnership or agency was constituted between the parties.
Lawfulness and fairness of the redundancy under section 40 of the Employment Act, 2007 and clauses 7 and 8 of the CBA
The redundancy was lawful and fairly implemented; notice to the union and labour officer was issued, terminal dues were paid, and the only defect - notice short of one month by a week - caused no demonstrated prejudice
The court found that notice was given on 6th October 2009 for redundancy effective 1st November 2009, terminal dues per clause 8 of the CBA were paid in full, no selection criteria was needed as all employees were declared redundant, and no evidence of discrimination was pleaded or adduced. The one-week shortfall in notice was not shown to have prejudiced the Claimant or employees.
Entitlement to reliefs sought
The Claimant was not entitled to the reliefs sought; the suit was dismissed
Having found the redundancy lawful and fairly implemented, terminal dues paid and all employees absorbed by the 2nd Respondent, the court held the suit lacked merit. The court also faulted both the union and management for intransigence which escalated the dispute, and noted the respondent's failure to attend conciliation meetings contributed to unnecessary litigation.
Legal principles established
#- Where an employer sells its business as a going concern and ceases operations, all employees may lawfully be declared redundant; where all employees are declared redundant no selection criteria need be applied
- A procedural defect in redundancy notice under section 40(1)(a) of the Employment Act does not render the redundancy unlawful absent evidence of prejudice to the claimant or affected employees
- An acquisition of a business with absorption of all employees on fresh terms, with full payment of terminal benefits, is a practice to be encouraged
Court orders
#- 1.The suit is dismissed with no order as to costs as against the Claimant Union
- 2.No award for costs against the Respondent given its failure to attend conciliation meetings
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction over employment and labour relations disputes ( memorandum of claim under the Labour Relations Court framework; Employment Act, 2007 applied)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Bakery Confectionery Food Manufacturing & Allied Workers Union (K) v Spin Knit Dairy Limited & another [2016] KEELRC 1512 (KLR)", Case Analysis (2016). Cause No. 637 (N) of 2009. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2016/1512/eng@2016-03-18
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.