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ELRCPartially AllowedCause No. 94 of 2018· [2019] KEELRC 192 (KLR)

Samuel Githinji Kariuki v Comply Industries Limited [2019] KEELRC 192 (KLR)

Employment and Labour Relations Court of Kenya at Nakuru
28 November 2019
1,322 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 upheld an employer's redundancy as lawful but ordered it to pay a worker Kshs.12,300 for undercounting his years of service.

What this practically means

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Executive summary

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The claimant, employed as a supervisor in the security department at the respondent's Njoro branch from January 2010 to 28 October 2016 on a daily wage of Kshs.820.00 paid weekly, sued claiming notice pay, house allowance, accrued leave, compensation for unfair termination, severance pay, a certificate of service and costs. He alleged the termination on 28 October 2016 was without reason, on short notice and without due process, and disputed the tabulation of terminal dues paid at Kshs.134,644.00. The respondent's case, through its human resource manager Nicodemus Musyoka, was that the claimant's employment was terminated by redundancy following installation of CCTV cameras which reduced the need for guards; that he received one month's written notice on 28 September 2016 which he signed in acknowledgement; that a labour officer was informed; and that he was paid notice pay, severance for 5 years and leave days, in compliance with section 41 of the Employment Act. The court held the redundancy lawful and procedural under section 40(1) of the Employment Act, 2007, since an operational reason was given and written notice issued. The house allowance claim failed because the wage paid exceeded the applicable Wage Order minimum inclusive of house allowance, amounting to unjust enrichment. The accrued leave claim failed as the amount paid exceeded what was claimed. However, severance had been wrongly computed on 5 rather than 6 full years of service, leaving a shortfall of Kshs.12,300.00. The court dismissed the claims but ordered payment of Kshs.12,300.00 in severance arrears, subject to mandatory tax deduction under section 49(2), with each party bearing its own costs.

Key legal issues

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01

Lawfulness and procedure of the redundancy

Holding

The termination by redundancy was lawful and procedural under section 40(1); installation of CCTV cameras was a valid operational reason and one month's written notice was issued and acknowledged.

Reasoning

The court found that the respondent installed CCTV cameras reducing the need for security guards. The claimant received written notice on 28 September 2016 effective 28 October 2016, signed in acknowledgement, and was paid in lieu of notice. The respondent therefore complied with section 40, and no compensation for unfair termination was due.

p. 2
02

House allowance claim

Holding

Rejected; the daily wage of Kshs.820.00 exceeded the applicable Wage Order minimum inclusive of house allowance.

Reasoning

The applicable Wage Orders for Njoro as of October 2016 entitled the claimant to a daily wage of Kshs.336.30 (about Kshs.10,089 monthly), inclusive of house allowance. The claimant's actual daily wage of Kshs.820.00 far exceeded that even when the monthly wage plus house allowance is applied, so a further house allowance claim amounts to unjust enrichment.

p. 2
03

Severance pay tabulation

Holding

Partially allowed; severance should have been computed on 6 full years, not 5, entitling the claimant to Kshs.73,800.00, of which Kshs.12,300.00 remains unpaid.

Reasoning

Both parties confirmed employment subsisted from 11 January 2010 to 28 October 2016, being 6 full years and 3 months. At 15 days' pay per full year (820 x 15 x 6), severance is Kshs.73,800.00. The claimant was paid Kshs.61,500.00 based on 5 full years, in error, leaving a shortfall of Kshs.12,300.00.

p. 3
04

Taxation of redundancy dues

Holding

The total redundancy dues are subject to mandatory taxable pay deduction under section 49(2).

Reasoning

The court held that the total dues payable in redundancy fall within section 49(2) of the Employment Act and any deductions therefrom are mandatory. This qualifies the net amount the claimant ultimately receives on the shortfall awarded.

p. 3

Legal principles established

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  • Section 40 of the Employment Act permits lawful termination by redundancy where the employee is issued notice and given operational reasons
  • Where the wage paid already exceeds the statutory minimum inclusive of house allowance, no separate house allowance is payable
  • Severance pay is due at 15 days' pay for each full year worked, and redundancy dues are subject to mandatory PAYE deduction

Court orders

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  1. 1.The claims made are found without merit and are dismissed
  2. 2.The respondent to pay the claimant Kshs.12,300.00 paid less in severance pay
  3. 3.Each party shall meet own costs

Authorities

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Legislation

  • Employment Actsection 41
  • Employment Act, 2007section 40 (including section 40(1))
  • Employment Act, 2007section 49(2)
  • Wage Orders (applicable as of October 2016)minimum wage for Njoro area
Jurisdiction invoked
Employment and labour relations dispute under the Employment Act, 2007 (ELRC original jurisdiction)

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 Githinji Kariuki v Comply Industries Limited [2019] KEELRC 192 (KLR)", Case Analysis (2019). Cause No. 94 of 2018. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2019/192/eng@2019-11-28

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