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ELRCPartially AllowedCause No 827 of 2016· [2018] KEELRC 1667 (KLR)

Fredrick Alambe & 15 others v Papius Thuku Kinyua & another [2018] KEELRC 1667 (KLR)

Employment and Labour Relations Court
18 January 2018
OMOnesmus MakauLNLinnet Ndolo
1,944 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 that a genuine business reason for redundancy cannot excuse an employer who skips the mandatory legal redundancy procedure, awarding 16 former club workers nearly Kshs.3 million.

What this practically means

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Executive summary

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Sixteen claimants employed by the respondents at Salambo Club Mombasa on diverse dates between 1983 and 2013 had their services terminated on 8 June 2016 on account of redundancy without prior notice. They sued claiming salary in lieu of notice, compensation for unfair termination, salary underpayment, redundancy pay and certificates of service. The respondents defended the suit arguing the redundancy was genuine owing to business decline caused by terror attacks in Mombasa, and that some claimants were casual employees not entitled to the reliefs. The court framed two issues: whether the terminations were unfair and whether the reliefs were payable. It accepted the reason for redundancy was valid, taking judicial notice of the coastal hotel industry downturn from 2010, but found the mandatory procedure under section 40 of the Employment Act - one month's notice to employees and the labour officer, fair selection, and payment of dues - was not followed, rendering the termination unfair under section 45. It further held that casual employees who worked continuously had converted to term contract employees under section 37 and Regulation 18 of the Hotel and Catering Trades Order. Each claimant was awarded one month's salary in lieu of notice, six months' compensation under sections 49 and 50, and underpayment arrears from November 2013 to June 2016 computed on minimum wage plus 15% house allowance. Severance pay was disallowed as already compensated; certificates of service were granted. Judgment was entered for the claimants in the aggregate sum of Kshs.2,969,234.65 plus costs and interest from the date of judgment.

Key legal issues

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01

Whether the termination of the claimants on account of redundancy was unfair

Holding

The termination was substantively justified (business decline due to terror threats) but procedurally unfair because the mandatory section 40 procedure was not followed; the termination was therefore unfair under section 45 of the Employment Act

Reasoning

The court took judicial notice of the downturn of hotel businesses in Mombasa from 2010 due to terror threats, so the reason for redundancy was not challenged. However, the employer gave no prior notice to the employees or the labour officer, no fair selection, and no payment in lieu of notice or severance. Failure to follow the mandatory section 40 procedure rendered the terminations unfair within section 45.

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02

Whether claimants alleged to be casual employees qualify for protection

Holding

Casual employees who worked continuously converted to term/regular contract employees under section 37 of the Employment Act and Regulation 18 of the Hotel and Catering Trades Order, and are protected from unfair termination

Reasoning

The respondent did not challenge evidence that the ninth to sixteenth claimants worked continuously as casuals until termination. Under section 37(1)-(3), casual employment converts to a term contract after continuous service equivalent to one month. Regulation 18 of the Wages Order deems temporary/seasonal employees regular after six months' continuous service.

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What reliefs the claimants are entitled to

Holding

Each claimant awarded one month's salary in lieu of notice, six months' compensation under sections 49 and 50, underpayment arrears from November 2013 to June 2016 based on minimum wage plus 15% house allowance, and a certificate of service; redundancy/severance pay disallowed

Reasoning

Having found unfair termination, the court awarded notice pay and six months' compensation, considering long service and absence of employee misconduct. Underpayment was evident against Legal Notices 197 of 2013 and 117 of 2015. Severance pay was disallowed because the unfair termination was already compensated. Certificate of service is a statutory right under section 51.

p. 3

Legal principles established

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  • Termination of employment is unfair where the employer fails to prove both a valid and fair reason and a fair procedure
  • Compliance with section 40 of the Employment Act (one month's notice to employee and labour officer, fair selection, and payment of dues) is mandatory before redundancy termination
  • Casual employment converts to a term contract under section 37 of the Employment Act where the employee works continuously for the equivalent of not less than one month
  • Under Regulation 18 of the Regulation of Wages (Hotel and Catering Trades) Order, temporary or seasonal employment exceeding six months converts to regular terms of employment

Court orders

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  1. 1.Judgment entered for the Claimants in the aggregate sum of Kshs.2,969,234.65
  2. 2.Costs of the suit to the Claimants
  3. 3.Interest on the decretal sum from the date of judgment
  4. 4.Per-claimant awards of salary in lieu of notice, six months' compensation for unfair termination and salary underpayment arrears (November 2013 to June 2016) as itemised in the summary of award
  5. 5.Certificate of service to be issued to each claimant under section 51 of the Employment Act

Authorities

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Legislation

  • Employment ActSection 45(2)
  • Employment ActSection 40
  • Employment ActSections 49 and 50
  • Employment ActSection 51
  • Employment ActSections 2, 35(1)(c), 37(1), (2) and (3)
  • Regulation of Wages (Hotel and Catering Trades) OrderRegulation 18
  • Legal Notice No.117 of 2015Minimum wage order
  • Legal Notice No.197 of 2013Minimum wage order
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over employment disputes (Employment Act; the judgment does not cite a specific constitutional provision)

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 Alambe & 15 others v Papius Thuku Kinyua & another [2018] KEELRC 1667 (KLR)", Case Analysis (2018). Cause No 827 of 2016. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2018/1667/eng@2018-02-22

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