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ELRCPartially AllowedCause No. 240 of 2017· [2019] KEELRC 218 (KLR)

Stephen Kathenya v Keroche Breweries Limited [2019] KEELRC 218 (KLR)

Employment and Labour Relations Court of Kenya at Nakuru
21 November 2019
2,013 words in judgment
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The bottom line

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A Kenyan court upheld Keroche's redundancy process but ordered the brewer to pay an ex-employee Ksh.145,000 in unpaid overtime and leave because it kept no records.

What this practically means

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Executive summary

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The claimant, employed as Technical Manager by Keroche Breweries Limited, sued for unpaid terminal dues following termination of his employment by redundancy on 3rd May 2016 on account of restructuring. He claimed outstanding leave days (Ksh.10,000), overtime pay for 2,848 hours (Ksh.938,461.54), 15 days' severance pay (Ksh.25,000) and compensation of Ksh.600,000 for unfair redundancy, asserting he earned Ksh.50,000 monthly and had worked five years. The respondent filed three defences through three firms of advocates, asserting the claimant was employed from 2nd January/1st June 2014, was notified of the restructuring in advance, and was paid all dues including overtime and encashed leave; the respondent did not attend the hearing or call evidence despite proper service. The court framed two issues: whether the redundancy declaration was unfair, and whether the remedies sought were due. It held the claimant was advised of the operational reasons for termination and notice was issued, satisfying sections 40 and 45 of the Employment Act, so no unfair termination or compensation arose. Severance of 60 days for 4 years already paid exceeded the statutory minimum of 15 days per completed year for the roughly two years under the contract dated 1st June 2014. However, lacking any work records from the respondent, the court accepted overtime of three hours daily over 18 months, awarding Ksh.135,000, plus Ksh.10,000 for six unencashed leave days. Judgment was entered accordingly with costs of the suit to the claimant, dues subject to section 49(2) of the Employment Act. Judgment delivered at Nakuru on 21st November 2019 by M. Mbaru, Judge.

Key legal issues

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01

Whether the redundancy declaration was unfair

Holding

The redundancy was not unfair; the claimant was advised of the operational reasons and notice was issued, satisfying section 40(1) of the Employment Act.

Reasoning

The court applied section 45(2) of the Employment Act on unfair termination and section 40 on redundancy. The claimant himself pleaded he was advised of termination on account of restructuring/redundancy. Notice was given and reasons relating to operational requirements were stated; there was no claim of being singled out. The court distinguished Court of Appeal authorities on consultation requirements and found no unfairness.

p. 3
02

Whether further severance pay was due

Holding

No further severance was due; the payment of 60 days' pay for 4 years exceeded the statutory minimum of 15 days per completed year for the claimant's roughly 2 years of service.

Reasoning

Section 40(1)(g) requires severance of not less than 15 days' pay per completed year. The written contract dated 1st June 2014 governed, giving about 1.9 years to termination on 3rd May 2016. Severance already paid at 60 days for 4 years was generous, more than the minimum of about Ksh.25,000 based on gross salary.

p. 3
03

Whether overtime pay was due

Holding

Overtime pay of Ksh.135,000.00 awarded for 1,296 hours, the respondent having produced no work records to rebut the claim.

Reasoning

The respondent alleged overtime was computed and remitted monthly but filed no work records or evidence of payment. The claimant testified he worked 7am to 7pm shifts. The court allowed 18 months of overtime (after deducting annual leave) at 3 hours per day over 6 days weekly, computing 1,296 hours worth Ksh.135,000 on the salary paid.

p. 3
04

Whether outstanding leave days were due

Holding

The claimant is entitled to Ksh.10,000.00 for 6 leave days not taken, computed on gross salary.

Reasoning

The defence asserted leave days owing at termination were encashed and paid in full, but no records were produced. The court found 6 leave days outstanding and valued them at Ksh.10,000 on the gross salary of Ksh.50,000 per month.

p. 4

Legal principles established

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  • An employer declaring redundancy must pay severance pay at the rate of not less than fifteen days' pay for each completed year of service.
  • An employer bears the burden of proving valid reason and fair procedure for termination; failure to produce work records means unchallenged claims of unpaid overtime may be accepted.
  • A new contract of employment with specific terms supersedes and removes any prior subsisting employment terms.

Court orders

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  1. 1.Judgment entered for the claimant against the respondent for overtime pay of Ksh.135,000.00
  2. 2.Award of Ksh.10,000.00 for 6 leave days not taken
  3. 3.Costs of the suit awarded to the claimant

Authorities

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Legislation

  • Employment Act, 2007section 40
  • Employment Act, 2007section 40(1)
  • Employment Act, 2007section 40(1)(g)
  • Employment Act, 2007section 45(1)
  • Employment Act, 2007section 45(2)
  • Employment Act, 2007section 49(2)

Cases cited (4)

  • Kenya Airways Limited versus Aviation & Allied Workers Union Kenya & 3 Others
    [2014] eKLR
  • Barclays Bank of Kenya Ltd & another versus Gladys Muthoni & 20 others
    [2018] eKLR
  • Africa Nazarene University versus David Mutevu & 103 others
    [2017] eKLR
  • Heritage Insurance Company Limited versus Christopher Onyango & 23 others
    [2018] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (unfair termination and terminal dues claim)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Stephen Kathenya v Keroche Breweries Limited [2019] KEELRC 218 (KLR)", Case Analysis (2019). Cause No. 240 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2019/218/eng@2019-11-21

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