Skip to content
AI-generated case briefs sourced from Kenya Law · Not legal advice
AI-generated case brief
Case Brief · caselaw.co.ke
ELRCPartially AllowedCause No 922 of 2017· [2020] KEELRC 649 (KLR)

Jacob Chacha v Lti Kisii Safari Inns Ltd t/a Kaskazi Beach Hotel [2020] KEELRC 649 (KLR)

Employment and Labour Relations Court
16 July 2020
2,477 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~10 min to read original · ~4 min brief

The bottom line

#

A Kenyan hotel's flawed redundancy cost it over Kshs. 3.4 million because it skipped mandatory legal steps before ending the employee's job.

What this practically means

#

Executive summary

#
The Claimant, employed as Chief Financial Officer from 1st February 2012, was declared redundant with effect from 31st December 2014 as part of a restructuring and downsizing exercise. He claimed unpaid salary and leave arrears, notice pay, severance pay, compensation and general damages, alleging that the redundancy violated Section 40 of the Employment Act and was driven by bias and discrimination. The Respondent filed a Reply and Counterclaim alleging professional negligence by the Claimant, including failure to remit statutory taxes and an irregular payment of Kshs. 600,000 to a former employee, and claimed that sum plus general damages. The Respondent did not attend the hearing despite due notification. The Court framed three issues: the lawfulness and fairness of the termination, entitlement to remedies, and the counterclaim. It held that apart from the termination letter, there was no evidence of compliance with the mandatory conditions in Section 40, including notification of the Labour Officer and an objective selection criteria, and that unproved accusations of poor performance and misconduct cast doubt on the genuineness of the redundancy. The redundancy was found to be coloured and the termination substantively and procedurally unfair. The Court awarded six months' salary in compensation (Kshs. 1,500,000), unpaid salary and leave arrears (Kshs. 1,718,200) and severance pay (Kshs. 250,000), totaling Kshs. 3,468,200 with interest at court rates and costs to the Claimant. Pay in lieu of notice and general damages were refused, and the counterclaim failed for want of evidence.

Key legal issues

#
01

Whether the redundancy was lawful and fair under Section 40 of the Employment Act

Holding

The redundancy was substantively and procedurally unfair; apart from the termination letter, there was no evidence of compliance with Section 40, and the accusations of poor performance and misconduct cast doubt on the genuineness of the redundancy

Reasoning

The Court set out the seven conditions in Section 40 grouped into notices, objective selection criteria and statutory dues. Only a termination letter dated 2nd November 2014 was produced; there was no notification to the Labour Officer, no selection criteria, and no proof of payment of statutory dues. The Respondent, which did not attend the hearing, also introduced unproved accusations of poor performance and misconduct, suggesting the termination was motivated by reasons other than redundancy.

p. 4
02

Whether the Claimant was entitled to the remedies sought

Holding

Compensation of six months' salary, unpaid salary and leave arrears and severance pay were awarded; pay in lieu of notice and general damages were refused

Reasoning

The Court considered the Claimant's length of service and the Respondent's failure to observe the law in fixing compensation at six months' salary. Salary and leave arrears were uncontested and payable, and a declared redundant employee is entitled to severance pay at 15 days' pay per completed year. Notice pay was disallowed because notice had been given, and general damages were dismissed for lack of basis.

p. 5
03

Whether the Respondent's counterclaim was proved

Holding

The counterclaim failed as it was unsupported by evidence

Reasoning

The Respondent alleged professional negligence, including an irregular payment of Kshs. 600,000 to a former employee named Campbell, and claimed that amount plus interest and general damages. The Respondent did not attend the hearing despite due notification, and the accusation was not supported by any evidence, so the counterclaim was unproved.

p. 5

Legal principles established

#
  • Section 40 of the Employment Act requires two separate and distinct notices of at least 30 days each for a valid redundancy - a redundancy notice to the employee/union and Labour Officer, and a termination notice
  • The conditions under Section 40 of the Employment Act are mandatory, not optional, and a redundancy undertaken outside them is an unfair termination
  • Where the selection criteria for redundancy is non-existent or opaque, the statutory threshold of Section 40(1)(c) is not met

Court orders

#
  1. 1.Judgment entered in favour of the Claimant for 6 months' salary in compensation of Kshs. 1,500,000
  2. 2.Payment of outstanding salary and leave pay arrears of Kshs. 1,718,200
  3. 3.Severance pay for 2 years of Kshs. 250,000 (total award Kshs. 3,468,200)
  4. 4.Interest at court rates from the date of judgment until payment in full
  5. 5.The Claimant awarded the costs of the case

Authorities

#

Legislation

  • Employment ActSection 2 (definition of redundancy)
  • Employment ActSection 40(1)(a)-(g)
  • Employment ActSection 45
  • Labour Relations ActSection 2 (corresponding definition of redundancy)
  • ILO Recommendation No 119: Termination of Employment Recommendation 1963 (Supplementary Provision)Article 15

Cases cited (5)

  • Gerrishom Mukhutsi Obayo v DSV Air and Sea Travel Limited
    [2018] eKLR
  • Thomas De La Rue (K) Limited v David Opondo Omutelema
    [2013] eKLR
  • Kenya Airways Limited v Aviation and Allied Workers Union Kenya & 3 others
    [2014] eKLR
  • Hesbon Ngaruiya Waigi v Equitorial Commercial Bank Limited
    [2013] eKLR
  • Francis Maina Kamau v Lee Construction
    [2014] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act and Labour Relations Act (original claim for unfair termination)

Key timeline

#

Practical implications

#

Frequently asked questions

#

Cite this brief

#

Cite this brief

Caselaw, "Jacob Chacha v Lti Kisii Safari Inns Ltd t/a Kaskazi Beach Hotel [2020] KEELRC 649 (KLR)", Case Analysis (2020). Cause No 922 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2020/649/eng@2020-07-16

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