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ELRCPartially AllowedCause No. 861 of 2019, consolidated with Kisumu CMELRC Cause No. 408 of 2019· [2020] KEELRC 190 (KLR)

Kenya Union of Commercial Food and Allied Workers & another v Choppies Enterprises Kenya Limited & 3 others [2020] KEELRC 190 (KLR)

Employment and Labour Relations Court
13 November 2020
MOMAUREEN ONYANGO
5,172 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~21 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court ruled redundancy pay must be calculated on gross salary, not basic pay, and awarded affected workers the difference.

What this practically means

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Executive summary

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This judgment of the Employment and Labour Relations Court at Nairobi, delivered by Maureen Onyango, J on 13th November 2020, determined two consolidated claims arising from the 1st Respondent's redundancy declared on 31st August 2019 affecting 188 employees and a further notice of 15th November 2019 targeting 543 employees. The 1st Claimant union claimed redundancy benefits for affected employees, while the 22 individual 2nd Claimants claimed unpaid terminal benefits of Kshs.1,246,452 over and above the Kshs.1,573,322 paid, including gratuity, service pay, salary increment arrears, house and soap allowances, leave travelling allowance and refunds of deductions. The Respondents maintained the redundancy was lawful and procedural, that dues were computed and agreed with the union and paid, and that the claims were fraudulent and an abuse of process. The court held that the redundancy itself complied with section 40 of the Employment Act except that the notice to the labour officer, though issued and copied to county offices including Kisumu, was not issued one month before the redundancy took effect. It found the dues were wrongly computed on basic rather than gross pay and awarded the difference. It held that no double benefit of severance pay and gratuity was due, as severance at 18 days per year had been paid under the heading of service gratuity. Claims for salary increment arrears, house allowance (settled by consent at Kshs.59,426) and leave travelling allowance failed for lack of proof; soap allowance was awarded at Kshs.100 per month; deductions for absent days and unreturned company property were to be refunded; and Said Abuka was held entitled to redundancy payments. The Claimants were awarded costs, and parties were directed to tabulate and report back on 18th January 2021 for adoption of the final figure.

Key legal issues

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01

Basis of computation of terminal dues - gross vs basic pay

Holding

Dues were incorrectly computed on basic pay; Claimants entitled to the difference based on gross pay

Reasoning

Section 49(1)(c) of the Employment Act bases payments on gross monthly wages, and courts have generally granted terminal benefits on gross pay. The CBA did not specify a basis of computation, so the statutory minimum favouring the employee applies. Union representation at computation does not cure this, as statutory minimums cannot be waived.

p. 6
02

Compliance with section 40(1)(a) - notice to labour officer

Holding

Notice was issued to the Ministry of Labour and copied to county labour offices including Kisumu, but was received in September, the same month the redundancy took effect, so the one-month timeline was not met

Reasoning

The redundancy notice dated 31st August 2019 was addressed to the Ministry of Labour and Social Protection and copied to county labour offices including Kisumu, satisfying the requirement of notifying the labour officer. However, section 40(1)(a) requires the notice to issue not less than one month before the intended termination, and the notice was only received in September, the month the redundancy took effect.

p. 7
03

Entitlement to both gratuity and severance pay

Holding

No double benefit; the payment labelled service gratuity was in substance the severance pay due on redundancy

Reasoning

Clause 19(d) of the CBA provides severance pay of 18 days per completed year on redundancy, while Clause 30 provides gratuity of 18 days per year upon termination by either party. The redundancy payments included a sum styled service gratuity at 18 days per year; this satisfied the severance pay obligation, so no separate gratuity or service pay is due.

p. 7
04

Refund of deductions

Holding

Respondent to refund deductions for absent days and unreturned company property as it adduced no proof justifying them

Reasoning

The Claimants alleged that deductions were made on account of absence from work and unreturned company property. The Respondent did not adduce any evidence to justify these deductions, and so the Claimants are entitled to a refund of the amounts deducted.

p. 7
05

Said Abuka's entitlement

Holding

Entitled to all redundancy payments notwithstanding the Respondent's claim of gross misconduct dismissal

Reasoning

The Respondent contended that Said Abuka was terminated for gross misconduct after a disciplinary hearing, but the Claimants produced a letter of termination dated 31st August 2019 on account of redundancy. On the documents, his termination was by redundancy and he is entitled to the same payments as the other grievants.

p. 7

Legal principles established

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  • Terminal dues on redundancy must be computed on gross pay, not basic pay
  • Statutory terms under the Employment Act are minimum terms and cannot be relinquished or varied by agreement
  • Where contractual or collectively bargained terms are more favourable than the statute, the more favourable terms apply
  • Notice to the labour officer under section 40(1)(a) must be issued not less than one month before the redundancy takes effect

Court orders

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  1. 1.Claim for computation of terminal dues based on gross pay allowed; Claimants entitled to the difference between gross salary and basic pay for each due paid
  2. 2.Claim for gratuity and separate claim for service pay dismissed (severance pay already paid at 18 days per year of service)
  3. 3.Claim for September 2018 salary increment arrears dismissed for lack of proof
  4. 4.Claim for house allowance dismissed as settled by consent (Kshs.59,426 paid to 2nd Claimant's advocates)
  5. 5.Soap allowance awarded at Kshs.100 per month
  6. 6.Claim for leave travelling allowance dismissed for lack of proof of entitlement
  7. 7.Respondent directed to refund unexplained deductions for absent days and unreturned company property
  8. 8.Said Abuka entitled to all redundancy payments as his termination letter dated 31st August 2019 was on account of redundancy
  9. 9.Claimants awarded costs of the suit
  10. 10.Parties directed to make tabulations on the basis of the foregoing and report back to court on 18th January 2021 with the final figure for adoption

Authorities

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Legislation

  • Employment ActSection 40
  • Employment ActSection 40(1)(a), (f), (g)
  • Employment ActSection 43
  • Employment ActSection 45
  • Employment ActSection 49(1)(c) (and sections 49 and 50)
  • Employment ActSection 3(6)
  • Employment ActSection 26(2)
  • Employment ActSections 36 and 38
  • Labour Relations Act2007
  • Civil Procedure RulesOrder 21 Rule 1
  • Civil Procedure ActSection 1B
  • Constitution of KenyaArticle 159(2)(d)
  • Constitution of KenyaArticle 48
  • ILO Convention No. 158 / Recommendation 166Article 13 of Recommendation 66

Cases cited (15)

  • Peter Mbugua Kanoi & 5 Others v Coffee Board of Kenya
    [2014] eKLR
  • Benjamin Langwen v National Environment Management Authority
    [2016] eKLR
  • Japheth Kathungumi v Njuca Consolidated Co. Ltd
    [2017] eKLR
  • Pathfinder International Kenya Limited v Stephen Ndegwa Mwangi
    [2019]
  • Kenya Union of Domestic, Hotels, Educational Institutions and Hospital Workers v Mombasa Sports Club
    [2014] eKLR
  • Southern Engineering Company (SECO) v David Anzani Ombeba
    [2015] eKLR
  • Kenya Airways Corporation Limited v Tobias Ogaya Auma & 5 Others
    [2007] eKLR
  • Kenya Airways Limited v Aviation & Allied Workers Union Kenya & Others
    [2014] eKLR
  • Lucas O. Ondoya & 43 Others v Rift Valley Railways Kenya Limited
    HCCC No. 33 of 2009
  • Kavutha Ngonzi & 11 others v Kapric Apparels (EPZ) Ltd
    [2017] eKLR
  • South African Clothing and Textile Workers Union & Others v Discreto
    null
  • Frederick Ngari Muchina, Howoard Kipkoeach Korir & 98 Others v Pyrethrum Board of Kenya
    [2014] eKLR
  • Kenya Union of Commercial, Food an Allied Workers & 5 Others v Alliance One Tobacco (Kenya) Ltd
    [2015] eKLR
  • Party of Independent Candidates of Kenya v Mutula Kilonzo & 2 Others
    HC EP No. 6 of 2013
  • Robric Limited & another v Kobil Petroleum Ltd & another
    Nairobi CA No. 109 of 2015
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment and Labour Relations Court Act (Claims for redundancy benefits and unfair termination 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, "Kenya Union of Commercial Food and Allied Workers & another v Choppies Enterprises Kenya Limited & 3 others [2020] KEELRC 190 (KLR)", Case Analysis (2020). Cause No. 861 of 2019, consolidated with Kisumu CMELRC Cause No. 408 of 2019. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2020/190/eng@2020-11-13

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