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ELRCPartially AllowedStatement of Claim dated 23rd December 2013 ( filed 24th December 2013)· [2017] KEELRC 1664 (KLR)

Fredrick Mulwa Mutiso v Kenya Commercial Bank Limited [2017] KEELRC 1664 (KLR)

Employment and Labour Relations Court
3 March 2017
3,327 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 KCB's redundancy of its audit director was a sham, awarding him over Kshs.16 million because mandatory procedures were skipped.

What this practically means

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Executive summary

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The Claimant, formerly Director, Audit at Kenya Commercial Bank, challenged the termination of his employment on 20th June 2013 on account of redundancy following a staff restructuring programme. He sought a declaration that the termination was unlawful and unfair, reinstatement, or alternatively compensation up to retirement age of Kshs.142,125,675 plus twelve months' salary. The Respondent maintained the position of Director-Audit MLF was scrapped in a Board-approved restructuring, that the Claimant was engaged and consulted, that he did not apply for the new Director-Audit MLE position, and that his dues were paid above statutory rates. The Court framed two issues: whether the redundancy was justifiable and fair, and whether the Claimant was entitled to the remedies sought. The Court found the Respondent failed to prove the downgrade from MLF to MLE followed any objective job evaluation, and that the mandatory procedure under Section 40 of the Employment Act was not complied with: no specific redundancy notice was issued to the Claimant and the Labour Officer was notified only three days before departure. The hasty same-day exit, supervised by the Security Manager, led the Court to conclude the redundancy was a facade for an unlawful and unfair termination. The Court awarded twelve months' gross salary, entering judgment for Kshs.16,429,908 subject to statutory deductions with interest from judgment. The claim for compensation up to retirement age was dismissed as an unproven prayer for specific performance. Costs were awarded to the Claimant.

Key legal issues

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01

Whether the redundancy was carried out in accordance with Section 40 of the Employment Act

Holding

It was not; no specific redundancy notice was issued to the Claimant and the Labour Officer was notified only three days before termination

Reasoning

The Court reviewed correspondence between the Claimant and the CEO and found discussions but no specific redundancy notice under Section 40(b). The Labour Officer was notified only three days before departure, which the Court held to be a misapprehension of the law given the dual purpose of such notice. The hasty exit on the day of the termination letter, witnessed by the Security Manager, reinforced the unfairness.

p. 6
02

Whether the downgrading of the position of Director, Audit was justified by an objective process

Holding

The Respondent failed to prove the downgrade was informed by any objective process

Reasoning

The Respondent's own Human Resource policies required a job evaluation before downgrading a position. Although the Respondent's witness claimed an evaluation had been done, no evaluation report was available and the Job Grading Procedures Manual had no approval date. The Court could not establish the job value impact of hiving off the Forensic Services Unit.

p. 5
03

Whether the termination was a genuine redundancy

Holding

The Court concluded the redundancy was a facade for an unlawful and unfair termination

Reasoning

In the absence of credible explanation for the procedural failures and the unusual manner of the Claimant's exit, the Court reached the conclusion that the purported redundancy masked an unlawful and unfair termination. Redundancy must be justifiable and follow the mandatory procedure under Section 40 of the Employment Act.

p. 7

Legal principles established

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  • An employer declaring redundancy must issue two separate notices of at least one month each - a general notice and a specific notice to affected employees - plus one month's notice to the local Labour Officer.
  • The notice to the Labour Officer serves a dual purpose: to elicit advice on redundancy modalities and to act as a control measure against unlawful terminations clothed in redundancy language.

Court orders

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  1. 1.Judgment entered in favour of the Claimant in the sum of Kshs.16,429,908/= subject to statutory deductions
  2. 2.The award to attract interest at court rates from the date of judgment until payment in full
  3. 3.Claim for compensation for loss of employment up to retirement age of 60 years dismissed
  4. 4.Claimant awarded twelve months' gross salary in compensation
  5. 5.Costs of the case awarded to the Claimant

Authorities

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Legislation

  • Employment ActSection 40
  • Employment ActSection 2
  • Labour Relations Actdefinition of redundancy

Cases cited (3)

  • Thomas De La Rue v David Opondo Omutelema
    [2013] eKLR
  • Kenya Airways Limited v Aviation & Allied Workers Union of Kenya & 3 Others
    [2014] eKLR
  • Bernard Misawo Obora v Coca Cola Juices Kenya Limited
    [2015] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (first-instance employment claim)

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, "Fredrick Mulwa Mutiso v Kenya Commercial Bank Limited [2017] KEELRC 1664 (KLR)", Case Analysis (2017). Statement of Claim dated 23rd December 2013 ( filed 24th December 2013). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2017/1664/eng@2017-03-03

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