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ELRCPartially AllowedCause No. 1239 of 2016· [2018] KEELRC 1557 (KLR)

Hamisi Mwinyi Nyerere & 18 others v Uchumi Supermarket [2018] KEELRC 1557 (KLR)

Employment and Labour Relations Court of Kenya
11 June 2018
3,764 words in judgment
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The bottom line

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Uchumi Supermarket's one-month redundancy notices were worthless because staff were barred from working during them, so the Employment Court ordered fair compensation.

What this practically means

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Executive summary

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Nineteen former employees of Uchumi Supermarket sued for damages for unlawful and unfair redundancy and unpaid terminal dues, alleging they were declared redundant on 20 March, 29 March and 7 April 2016 without the notices required by Section 40 of the Employment Act, and that there was no genuine redundancy because the Respondent continued hiring new staff. The Respondent admitted indebtedness only to the extent of benefits itemised in its redundancy notice, attributing the redundancy to closure of the Taj Mall branch and asserting substantial compliance with Section 40. The court found a genuine redundancy situation existed, relying on its earlier ruling of 19 December 2016 that the Respondent was struggling in business, but held that the manner of effecting the redundancy was unlawful: although one-month notices were issued, employees were told not to report to work the following day, rendering the notice cosmetic and depriving employees of the consultation and preparation opportunities Section 40 and the Kenya Airways decision envisage. Each Claimant was awarded one month's salary in lieu of notice, unpaid salary for the months claimed, six months' salary as damages for unlawful redundancy, severance pay at 20 days' salary for each completed year of service, and a certificate of service, with liberty to compute pending leave days and pension contributions. The Respondent was ordered to pay costs and interest at court rates from the date of judgment.

Key legal issues

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01

Compliance with Section 40 of the Employment Act in effecting redundancy

Holding

The redundancy was effected unlawfully because although a one-month notice was issued, employees were asked not to report to work the following day, rendering the notice cosmetic and denying meaningful consultation

Reasoning

The court held that Section 40's notice provisions are mandatory and embody an implicit requirement of consultation, as adopted from the Kenya Airways decision. Notice is meant to enable employees to avert or mitigate terminations and seek alternative employment. Telling employees not to return to work the day after the notice defeated the statutory purpose, so the process fell below legal requirements and was unfair.

p. 2
02

Existence of a genuine redundancy situation

Holding

A genuine redundancy situation existed given the Respondent's financial struggles, so the court would not stand in the way of the redundancy decision itself, only assess its legality

Reasoning

The court relied on its earlier ruling of 19 December 2016 finding it a matter of public notoriety that the Respondent was struggling in business. An employer has a right to declare redundancies where circumstances require, following Kenya Airways v Aviation and Allied Workers Union. The dispute was therefore narrowed to whether the process was lawful, which it was not.

p. 3
03

Entitlement to terminal dues and damages

Holding

Each Claimant was entitled to notice pay, unpaid salary, severance pay at 20 days per year worked, six months' salary as damages, and a certificate of service

Reasoning

The Respondent had admitted indebtedness for specified benefits in its redundancy notice, which the court adopted. The court found the redundancy unlawful due to non-compliance with Section 40, justifying six months' salary compensation per Claimant, and directed that pending leave days and pension contributions be computed and added.

p. 4

Legal principles established

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  • The notices and notice duration under Section 40(1) of the Employment Act are mandatory and the requirement of consultation is implicit in the Employment Act
  • A redundancy notice is not merely informational but must give employees an opportunity to prepare and seek alternatives
  • All conditions in Section 40 of the Employment Act must be met for a redundancy to be lawful

Court orders

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  1. 1.Payment to each Claimant of one month's salary in lieu of notice
  2. 2.Payment of unpaid salary earned for the months claimed (March to June 2016 as applicable)
  3. 3.Six months' salary as damages for unlawful/unfair redundancy for each Claimant
  4. 4.Severance pay at 20 days' salary for each completed year of service for each Claimant
  5. 5.Issuance of a Certificate of Service to each Claimant
  6. 6.Liberty to compute any pending leave days and pension contributions to be made part of the judgment as admitted in the redundancy notice
  7. 7.Respondent to pay costs of the claim and interest at court rates from the date of judgment

Authorities

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Legislation

  • Employment ActSection 40(1)
  • Employment ActSection 40(1)(b)
  • Employment ActSection 49
  • Labour Relations Act, 2007Part VIII, Section 62(4)
  • Retirement Benefits Authority (RBA) Regulationnull
  • ILO Convention No. 158 - Termination of Employment Convention, 1982null

Cases cited (2)

  • Kudheihia Workers Vs The Aga Khan University Hospital Nairobi
    [2015] Eklr
  • Kenya Airways Limited vs Aviation and Allied Workers Union Kenya and Others
    Civil Appeal No. 46 of 2013
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act (claim for unfair redundancy and terminal dues)

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, "Hamisi Mwinyi Nyerere & 18 others v Uchumi Supermarket [2018] KEELRC 1557 (KLR)", Case Analysis (2018). Cause No. 1239 of 2016. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2018/1557/eng@2018-06-11

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