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ELRCPartially AllowedCause No. 411 of 2014 (lead file), Consolidated with Causes Nos. 408-434, 439-441 of 2014· [2019] KEELRC 1980 (KLR)

Walter Maina Omwenga & 29 others v Equip Agencies Ltd [2019] KEELRC 1980 (KLR)

Employment and Labour Relations Court of Kenya
28 February 2019
1,839 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~7 min to read original · ~4 min brief

The bottom line

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A Kenyan court confirmed an employer's redundancy was lawful, but workers still won leave pay and 15 days' severance per year of service.

What this practically means

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Executive summary

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This consolidated first-instance employment cause, with Cause No. 411 of 2014 as lead file, was brought by 30 former employees of Equip Agencies Ltd who challenged the termination of their employment on grounds of redundancy on 2nd January 2014. The claimants sought declarations that the redundancy was unfair, wrongful and illegal, and payment of leave dues, unremitted NHIF and NSSF contributions, underpayments, severance pay and compensation. The respondent defended the suit on the basis that business decline following competition from plastic and cement electrification poles, and the loss of a Kenya Power tender, justified the redundancy; that a general notice was issued on 26th November 2013 to take effect from 31st December 2013; that the labour officer was consulted and advised on the process; and that tabulated terminal dues of Ksh.353,351.00 remained available for collection. Relying on the Court of Appeal decisions in Kenya Airways v Aviation & Allied Workers Union and Barclays Bank v Gladys Muthoni, the court found the respondent complied with the mandatory requirements of section 40 of the Employment Act, 2007: a general notice was issued, the labour officer consulted, and the affected employees received a full month's wage without work, which amounted to notice pay. The redundancy was therefore procedural and no compensation was due. Judgment was entered for the claimant for leave pay of Ksh.2,792.00 and severance pay of Ksh.13,659.00; under the consolidation, each claimant was awarded leave days due and severance pay at 15 days' wage per full year of service. Claims for NSSF and NHIF remittances and underpayments were declined. Each party was ordered to bear its own costs.

Key legal issues

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01

Compliance with section 40 of the Employment Act in the redundancy

Holding

The respondent complied with the mandatory provisions of section 40: a general notice was issued to employees on 26th November 2013, the labour officer was consulted, and on lapse of the notice the affected employees were informed and paid a full month's wage without work, translating to notice pay.

Reasoning

The court accepted the evidence of Mr Kapadia that a general notice of intended redundancy was issued on 26th November 2013 with effect from 31st December 2013, and that the labour officer was consulted and advised on the process. The claimant was not unionised. Payment statements showed the claimant received full wages for December 2013 and January 2014 despite not working, which the court treated as appropriate notice pay. The court relied on Kenya Airways v Aviation & Allied Workers Union on the requirement of general notice and consultation, and Barclays Bank v Gladys Muthoni that notices may be written or oral.

p. 4
02

Entitlement to leave pay and severance pay

Holding

The claimant is entitled to leave pay assessed by the Labour Officer at Ksh.2,792.00 and severance pay at 15 days' pay for each year worked, computed at Ksh.13,659.00 for two years of service.

Reasoning

The respondent confirmed willingness to pay leave and severance dues. The Labour Officer had assessed the leave pay due, which the court confirmed. Severance was computed on the gross wage of Ksh.13,659.00 per month for the two years of service at 15 days' pay per year worked. These were the only heads granted; the tabulated dues of Ksh.353,351.00 were not awarded beyond these items for the lead claimant.

p. 5

Legal principles established

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  • A redundancy is regulated under section 40 of the Employment Act, 2007, requiring notice to affected employees or their union and consultation
  • Where an employee is not unionised, notice to the employees and consultation with the labour officer satisfies section 40(1)

Court orders

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  1. 1.Judgment entered for the claimant for payment of due leave days at Kshs. 2,792.00
  2. 2.Judgment entered for the claimant for severance pay at Kshs. 13,659.00
  3. 3.Under the consolidation, each claimant entitled to pay for leave days due and severance pay for 15 days wage for each full year of service
  4. 4.Each party shall bear own costs

Authorities

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Legislation

  • Employment Act, 2007section 40
  • Employment Act, 2007section 40(1)

Cases cited (4)

  • KUDHEIHA versus Aga Khan University
    [2015] eKLR
  • Aga Khan University versus KUDHEIHA
    [2016] eKLR
  • 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
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (claims for unfair termination by redundancy and terminal dues)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (2)

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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, "Walter Maina Omwenga & 29 others v Equip Agencies Ltd [2019] KEELRC 1980 (KLR)", Case Analysis (2019). Cause No. 411 of 2014 (lead file), Consolidated with Causes Nos. 408-434, 439-441 of 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2019/1980/eng@2019-02-28

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