Skip to content
AI-generated case briefs sourced from Kenya Law · Not legal advice
AI-generated case brief
Case Brief · caselaw.co.ke
ELRCDismissedCause No. 637 (N) of 2009· [2016] KEELRC 1512 (KLR)

Bakery Confectionery Food Manufacturing & Allied Workers Union (K) v Spin Knit Dairy Limited & another [2016] KEELRC 1512 (KLR)

Employment and Labour Relations Court of Kenya
18 March 2016
2,484 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~10 min to read original · ~4 min brief

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

#
The Claimant Union sued on behalf of all unionisable employees of Spin Knit Dairy Limited, alleging unlawful, malicious and wrongful redundancy declared on 6th October 2009 in anticipation of a takeover by Brookside Dairy Limited, and sought declarations that the redundancy was illegal, permanent injunctions, reinstatement and payment of full CBA entitlements. The Respondents admitted declaring all employees redundant and paying terminal dues, with all employees subsequently absorbed by Brookside on fresh contracts. The court examined the merger agreement tendered under seal and held that the transaction was an acquisition of the entire business and assets of Spin Knit by Brookside as a going concern, not a merger, with liabilities including terminal benefits remaining with Spin Knit. On the redundancy, the court found notice had been given to the union and the District Labour Officer on 6th October 2009 for redundancy effective 1st November 2009; terminal dues including leave, one month's salary in lieu of notice and severance pay were paid in full; no selection criteria was required since all employees were declared redundant; and no discrimination was pleaded or proved. The only defect was that the notice fell one week short of the one-month period required by section 40(1)(a) of the Employment Act, 2007, but no prejudice to the Claimant or employees was demonstrated. The court criticised both the union and management for intransigence during conciliation, commended the takeover in which all terminal benefits were paid and all employees taken up in new employment, and dismissed the suit with no order as to costs, holding the respondent's failure to attend conciliation meetings contributed to the unnecessary filing of the suit.

Key legal issues

#
01

Nature of the transaction - acquisition or merger

Holding

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

Reasoning

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.

p. 3
02

Lawfulness and fairness of the redundancy under section 40 of the Employment Act, 2007 and clauses 7 and 8 of the CBA

Holding

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

Reasoning

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.

p. 5
03

Entitlement to reliefs sought

Holding

The Claimant was not entitled to the reliefs sought; the suit was dismissed

Reasoning

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.

p. 5

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. 1.The suit is dismissed with no order as to costs as against the Claimant Union
  2. 2.No award for costs against the Respondent given its failure to attend conciliation meetings

Authorities

#

Legislation

  • Employment Actsection 2
  • Employment Actsection 40
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.