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ELRCPartially AllowedNot stated in the judgment· [2017] KEELRC 1999 (KLR)

Samuel Gechiko & 21 others v Kapil Bakery Limited & another [2017] KEELRC 1999 (KLR)

Employment and Labour Relations Court of Kenya
22 November 2017
RSRadido Stephen
955 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 ordered an employer facing a redundancy suit to deposit Kshs 400,000 as security because the company had wound up and its director was leaving the country.

What this practically means

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Executive summary

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Twenty-two Claimants sued on 25 May 2017 alleging unlawful termination of employment on account of redundancy, underpayment of wages, and non-payment of annual leave and overtime. Their Memorandum of Claim was accompanied by a chamber summons seeking a warrant of arrest against the 2nd Respondent, Kantilal V. Rabadiya, a director and Indian citizen, and an order that he deposit Kshs 10,000,000/- as security for his appearance and to answer any eventual decree. The application was certified urgent by Wasilwa J, referred back to Kisumu, and the Cause was later transferred to the Eldoret sub-registry. The Respondents, though initially unrepresented at interlocutory stages, filed a replying affidavit and argued the application on 21 November 2017. They did not dispute that the redundancy notices stated the main director was relocating; they contended that they had consulted the County Labour Office and paid the benefits due, which the Claimants acknowledged. The Court observed that while the claims included pay in lieu of notice, overtime, annual leave, severance pay and compensation for wrongful termination, the Respondents' schedules showed only severance pay had been paid. Applying section 40 of the Employment Act, 2007, the Court found that accrued leave had at the very least not been factored in, but declined to determine the merits. Balancing the risk of an unsatisfied decree against the Claimants' modest average wage of about Kshs 16,000/-, the Court allowed the application in reduced terms: a deposit of Kshs 400,000/- as security with the County Labour Office, inspection of employee records on leave, a report by 15 December 2017, and directions on filing of pleadings. Costs were in the Cause.

Key legal issues

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01

Whether security for due discharge of any decree should be ordered against the 2nd Respondent

Holding

Yes, but in a reduced sum: the Respondents were to deposit Kshs 400,000/- with the County Labour Office as security

Reasoning

The Court noted the redundancy notices admitted that the main director was relocating, and the 2nd Respondent was an Indian citizen on the verge of leaving the jurisdiction, risking an unsatisfied decree. Weighing this against the average wage of about Kshs 16,000/- per Claimant, the Court found the 10,000,000/- sought excessive and tailored security to at least cover accrued leave pay. The full merits of the claims were left open for determination.

p. 3
02

Whether accrued leave had been paid out on redundancy

Holding

At the very least, pay in lieu of accrued leave was not factored into the payments made

Reasoning

The Court compared the memorandum of claim, which sought pay in lieu of notice, overtime pay, annual leave, severance pay and compensation for wrongful termination, with the Respondents' benefits schedules, which showed only severance pay was paid. It did not determine the merits but found leave and the fairness of the redundancies remained live issues, and directed the County Labour Officer to inspect employee records and report.

p. 3

Legal principles established

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  • On termination on account of redundancy, an employee is entitled to pay for outstanding leave and, where notice is not given, at least one month's pay in lieu of notice
  • A court may order a defendant who is a foreign citizen about to leave the jurisdiction to deposit security to answer an eventual decree

Court orders

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  1. 1.The Respondents to deposit with the County Labour Office Kshs 400,000/- as security within the next 10 days
  2. 2.The County Labour Officer to inspect and examine the Respondents' employee records with a view to determining any outstanding leave due
  3. 3.The County Labour Officer to file a report with the Court on or before 15 December 2017
  4. 4.Respondents to file and serve a Response and other requisite documents before 30 November 2017
  5. 5.Claimants to take a date in the registry for further directions
  6. 6.Costs in the Cause
Jurisdiction invoked
Original jurisdiction under the Employment Act, 2007 over employment claims (redundancy, leave, overtime) and incidental interlocutory security for due discharge of decree

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, "Samuel Gechiko & 21 others v Kapil Bakery Limited & another [2017] KEELRC 1999 (KLR)", Case Analysis (2017). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2017/1999/eng@2017-11-22

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