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ELRCPartially AllowedCause No 1045 of 2012· [2016] KEELRC 1786 (KLR)

Caroline Wanjiru Luzze v Nestle Equatorial African Region Limited [2016] KEELRC 1786 (KLR)

Employment and Labour Relations Court of Kenya at Nairobi
29 January 2016
LNLinnet Ndolo
2,756 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 Nestle unfairly terminated an employee's job through a flawed redundancy, awarding her about Kshs. 875,000 plus costs and interest.

What this practically means

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Executive summary

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The claimant, formerly Human Resource Administration Executive at Nestle Equatorial African Region Limited from 2009 until termination effective 10th February 2012, sued claiming one month's salary in lieu of notice, twelve months' compensation for unfair termination, costs and interest. She contended the redundancy declared on 4th January 2012 was not bona fide since her functions were not abolished, and that it followed a disputed withdrawal of a Performance Improvement Plan and a warning letter. The respondent maintained the redundancy arose from a genuine restructuring that rendered her position superfluous, that notices were issued in accordance with the law, and that redeployment was offered and declined. The Court framed two issues: the lawfulness of the redundancy and entitlement to reliefs. It held that redundancy must always pass the test of bona fides and fairness; that the withdrawal of the PIP accompanied by a warning was an irregular, unlawful and unfair labour practice which coloured the subsequent redundancy; that the respondent failed to give the two distinct written notices of not less than one month required under Section 40 of the Employment Act; and that no selection criteria existed, so the statutory threshold was not met. Citing Francis Maina Kamau v Lee Construction, the redundancy amounted to unfair termination under Section 45. The Court awarded four months' salary (Kshs. 827,580.00) computed on monthly salary including monthly allowances, plus Kshs. 47,500.00 difference in notice pay, totalling Kshs. 875,080.00, with interest at court rates from the date of the award and costs to the claimant. The claim succeeded only partially, as the twelve months' compensation sought was not awarded.

Key legal issues

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01

Whether there was a justifiable (bona fide) reason for the redundancy

Holding

The redundancy was tainted by the earlier unjustified withdrawal of the PIP and unlawful disciplinary warning, so it lacked bona fides

Reasoning

The Court found the withdrawal of the PIP, accompanied by a written warning, replaced a performance improvement process with disciplinary action without due process — an unfair labour practice. This occurrence was connected to the eventual redundancy; the time lag did not create remoteness, so the redundancy was coloured and not bona fide.

p. 4
02

Whether the statutory notice requirements under Section 40 of the Employment Act were met

Holding

The Respondent failed to comply with the mandatory notice requirements, rendering the redundancy unprocedural and unlawful

Reasoning

Relying on Thomas De La Rue, the Court held that where an employee is not a union member, written notice must be given both to the employee and the labour officer, each of not less than one month. The Respondent's notices fell short of this requirement, and redundancy cannot be communicated orally.

p. 5
03

Whether a redundancy selection criteria existed

Holding

The absence of criteria meant the statutory threshold under Section 40 was not met

Reasoning

The Court found no criteria in the redundancy programme and, following Kenya Airways v Aviation & Allied Workers Union, held that where selection criteria are non-existent or opaque, the statutory threshold cannot be said to have been met.

p. 5
04

The appropriate remedies and computation of the award

Holding

Four months' salary as compensation plus difference in notice pay, computed on gross monthly salary including monthly allowances

Reasoning

Having regard to the Claimant's length of service, employment record and the Respondent's conduct, the Court awarded four months' salary. Salary for purposes of Section 49 includes allowances paid as monthly remuneration but excludes one-off or facilitative payments; the adopted figure was Kshs. 206,895.00.

p. 6

Legal principles established

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  • Redundancy is a lawful means of employee separation but must pass the test of bona fides and fairness
  • An employer seeking to terminate employment on account of redundancy must give two distinct written notices of not less than one month each
  • A redundancy effected without observing the conditions in Section 40 of the Employment Act constitutes unfair termination under Section 45
  • Compensation under Section 49 is computed on monthly salary, including allowances paid as monthly remuneration, not basic pay only

Court orders

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  1. 1.Award of 4 months' salary in compensation for unlawful redundancy of Kshs. 827,580.00
  2. 2.Award of difference in notice pay of Kshs. 47,500.00
  3. 3.Total award of Kshs. 875,080.00 to the Claimant
  4. 4.Interest at court rates on the award from the date of the award until payment in full
  5. 5.Costs of the case to the Claimant

Authorities

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Legislation

  • Employment ActSections 2, 40, 45, 49
  • Labour Relations ActSection 2
  • ILO Termination of Employment Convention No. 158 of 1982 / Recommendation No. 166Article 13 of Recommendation No. 166

Cases cited (3)

  • Thomas De La Rue (K) Limited v David Opondo Omutelema
    [2013] eKLR
  • Kenya Airways Limited v Aviation & Allied Workers Union Kenya & 3 Others
    [2014] eKLR
  • Francis Maina Kamau v Lee Construction
    [2014] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (first-instance employment cause)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (10)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Caroline Wanjiru Luzze v Nestle Equatorial African Region Limited [2016] KEELRC 1786 (KLR)", Case Analysis (2016). Cause No 1045 of 2012. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2016/1786/eng@2016-01-29

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