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ELRCPartially AllowedCause No. 1647 of 2014· [2016] KEELRC 1808 (KLR)

Geoffrey Nyabuti Onguko v Blow Plant Limited (Cause 1647 of 2014) (Employment and Labour) [2016] KEELRC 1808 (KLR)

Employment and Labour Relations Court of Kenya at Nairobi
21 November 2015
2,351 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Employment Court ruled a redundancy unfair because the employer skipped the required one-month notice and Labour Officer notification, awarding the worker compensation.

What this practically means

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Executive summary

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The Claimant, employed by the Respondent as a machine operator from 2010, was terminated on 28th December 2012 on grounds of redundancy due to reduced work. He claimed notice pay, unpaid salary for November and December 2012, unpaid leave, and a declaration that his termination was unfair with compensation. Both parties admitted the termination was by way of redundancy; the dispute was whether the procedure under section 40 of the Employment Act was followed. The Respondent, through its Human Resource officer, admitted that no notice was given before the termination of 28th December 2012. The court held that section 40 requires a general notification to all employees that redundancy is likely, followed by a personal notice of not less than one month to the affected employee, and that the Labour Officer should be informed. The notice issued to the Claimant was therefore invalid and unlawful, and singling him out without evidence of the decision-making process or that other employees were affected contravened Article 41 of the Constitution guaranteeing fair labour practices. The court declared the termination unfair and awarded six months' gross pay as compensation of Kshs.68,670.00, notice pay of Kshs.11,445.00, severance pay of Kshs.17,167.50 computed at 15 days' wage for each of three inferred years of service (the employer being the legal custodian of employment records), and December 2012 salary of Kshs.11,445.00. The November 2012 salary claim failed as the pay slip showed payment, and unpaid leave was not awarded for lack of particulars. All awards are subject to statutory deductions, and costs were awarded to the Claimant at 50%.

Key legal issues

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01

Compliance with section 40 of the Employment Act in redundancy

Holding

The termination was unfair because the Respondent failed to issue a general notice to employees and a personal notice of not less than one month, and did not involve the Labour Officer

Reasoning

Redundancy is a business decision not arising from the employee's fault, and does not arise overnight; the employer must assess its business and then follow the statutory process. Section 40 requires a general notification of likely redundancy followed by a personal notice of at least one month. Here the Claimant was issued a termination notice on 28th December 2012 and told to collect dues on 31st December 2012, with no general or personal notice and no notification of the Labour Officer, making the notice invalid and unlawful.

p. 3
02

Singling out the Claimant without justification

Holding

Selecting the Claimant alone under the guise of redundancy, without evidence of the decision-making or that other employees were affected, contravened Article 41 of the Constitution

Reasoning

The Respondent's witness did not state when and by whom the layoff decision was taken, nor how declining sales necessitated the Claimant's layoff. No evidence showed other employees were affected. Terminating only the Claimant under the guise of redundancy was contrary to the constitutional guarantee of fair labour practices, warranting compensation for unfair termination.

p. 3
03

Entitlement to severance pay despite absence of employment records

Holding

Severance pay at 15 days' wage for each full year worked is due; absent employer records, the court inferred three years of service (2010 to end of 2012)

Reasoning

Where severance is not agreed, 15 days' wage for each full year worked applies. The Claimant only stated he was employed in 2010 without dates, but sections 73 and 74 of the Employment Act make the employer the custodian of work records. In the absence of the employer's records, the court inferred service for the whole of 2010 and 2011 and termination at the end of 2012, yielding three years' severance.

p. 4
04

Statutory deductions from terminal dues

Holding

Terminal dues are lawfully subject to statutory deductions; the Claimant's refusal to accept dues on the ground that NSSF and NHIF should not be deducted was illegal

Reasoning

Under section 49(2) of the Employment Act, payments on termination are subject to statutory deductions, which belong to the relevant agencies and not the employee. The employer is required to make such deductions, and the Claimant's refusal of his dues on that basis could not justify the claim; had he accepted the dues, his claims would have been reduced.

p. 4

Legal principles established

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  • A redundancy under section 40 of the Employment Act requires a general notice to all employees followed by a personal notice of not less than one month to the affected employee; payment in lieu does not substitute for the notice
  • The Labour Officer responsible for the area must be notified of a redundancy to facilitate legal compliance
  • The employer is the legal custodian of employment records under sections 73 and 74 of the Employment Act, and in the absence of such records the court may draw inferences favourable to the employee on length of service
  • Terminal dues awarded upon termination are subject to statutory deductions such as NSSF and NHIF, which the employer is legally required to make

Court orders

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  1. 1.A declaration that the termination of the Claimant was unfair
  2. 2.Compensation awarded at Kshs.68,670.00 (6 months gross pay)
  3. 3.Notice pay at Kshs.11,445.00
  4. 4.Severance pay at Kshs.17,167.50 (15 days wage for each of 3 years of service)
  5. 5.Salary for December 2012 awarded at Kshs.11,445.00
  6. 6.Costs of the case at 50% awarded to the claimant
Jurisdiction invoked
Employment and labour relations jurisdiction over the claim for unfair termination and unpaid employment dues; Employment Act, sections 40, 41, 49, 73 and 74; Article 41 of the Constitution on fair labour practices

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, "Geoffrey Nyabuti Onguko v Blow Plant Limited (Cause 1647 of 2014)  (Employment and Labour) [2016] KEELRC 1808 (KLR)", Case Analysis (2015). Cause No. 1647 of 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2016/1808/eng@2016-01-11

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