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ELRCPartially AllowedCause No 104 of 2017· [2019] KEELRC 846 (KLR)

Mercy Mbithe Ndunda & another v Habo Group of Companies Limited [2019] KEELRC 846 (KLR)

Employment and Labour Relations Court
26 September 2019
LNLINNET NDOLO
1,357 words in judgment
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The bottom line

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A Kenyan court awarded two former employees over Kshs. 750,000 because their employer skipped the mandatory legal steps for a redundancy.

What this practically means

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Executive summary

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Two claimants, Mercy Mbithe Ndunda (Shipping Secretary, employed 1st December 2011 to 26th July 2016) and Amos Akungu (Operations Manager, employed January 2014 to 8th September 2016), sued Habo Group of Companies Limited for unlawful and unfair termination of employment, seeking notice pay, leave pay, house allowance, salary arrears, service pay, pension, SACCO savings, severance pay and compensation. The Respondent denied ever employing the Claimants and denied terminating their employment, asserting that if any termination occurred it was lawful and that terminal dues were paid. The Court framed two issues: whether unlawful termination was proved, and whether the remedies sought were due. Relying on uncontested termination letters signed on behalf of the Respondent, the Court held the exits were by way of redundancy. Applying Section 40 of the Employment Act, 2007 as explained in Cleophas Omuga v Habo Group of Companies, the Court found the mandatory conditions for redundancy were not observed, rendering the terminations substantively and procedurally unfair. The Claimants were awarded six and four months' salary in compensation respectively, one month's salary in lieu of notice each, and severance pay. Claims for house allowance and service pay were dismissed because salaries were consolidated and the Claimants were NSSF contributors; claims for leave pay, salary arrears, pension and SACCO savings failed for lack of evidence. Judgment totaled Kshs. 450,000 for the 1st Claimant and Kshs. 300,000 for the 2nd, with interest at court rates from the date of judgment, and the Claimants were awarded costs.

Key legal issues

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01

Whether the termination of the Claimants' employment was unlawful and unfair

Holding

The termination was by way of redundancy, but the Respondent failed to comply with the mandatory conditions under Section 40 of the Employment Act, making the termination substantively and procedurally unfair.

Reasoning

The termination letters were not contested and showed the reason for termination was redundancy. The law recognises redundancy as a legitimate mode of termination but imposes stringent conditions under Section 40: redundancy and termination notices, objective selection criteria and prior payment of statutory dues. Following Cleophas Omuga v Habo Group of Companies, the Court held these conditions mandatory. The Respondent did not comply with them, so the termination was unfair and the Claimants entitled to compensation.

p. 3

Legal principles established

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  • The conditions under Section 40 of the Employment Act on redundancy are mandatory and any termination that circumvents them is unfair under Section 45

Court orders

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  1. 1.Judgment entered in favour of the 1st Claimant of Kshs. 450,000 (6 months' salary compensation Kshs. 300,000; 1 month's salary in lieu of notice Kshs. 50,000; severance pay for 4 complete years Kshs. 100,000)
  2. 2.Judgment entered in favour of the 2nd Claimant of Kshs. 300,000 (4 months' salary compensation Kshs. 200,000; 1 month's salary in lieu of notice Kshs. 50,000; severance pay for 2 complete years Kshs. 50,000)
  3. 3.The awards to attract interest at court rates from the date of judgment until payment in full
  4. 4.The Claimants awarded the costs of the case

Authorities

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Legislation

  • Employment ActSection 2
  • Employment ActSection 40
  • Employment ActSection 45
  • The Employment Act 2007Termination pay (referenced in termination letter)

Cases cited (1)

  • Cleophas Omuga v Habo Group of Companies
    [2019] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007

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, "Mercy Mbithe Ndunda & another v Habo Group of Companies Limited [2019] KEELRC 846 (KLR)", Case Analysis (2019). Cause No 104 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2019/846/eng@2019-09-26

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