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ELRCDismissedCause 185 of 2015 (consolidating Causes 185, 186 and 187 of 2015)· [2020] KEELRC 1039 (KLR)

Diana Wambui Irungu & 2 others v Nestle Kenya Limited [2020] KEELRC 1039 (KLR)

Employment and Labour Relations Court
22 May 2020
4,951 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Employment Court upheld Nestlé Kenya's 2015 redundancy, ruling that proper notices to employees and the labour officer satisfied the Employment Act.

What this practically means

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Executive summary

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Three employees of the Respondent (Diana Wambui Irungu, Edwin Ndirangu and Joseph Kamau), whose claims were consolidated under Cause 185 of 2015, sued over a redundancy effected on 15th February 2015 following notices issued on 15th January 2015. They sought declarations that the redundancy was unprocedural and unfair, that the selection criteria were unfair, declarations of racial discrimination, a permanent injunction, monetary awards (Kshs.6,537,952.50, Kshs.6,344,867.36 and Kshs.3,890,125 respectively) with interest, certificates of service, general damages and costs. They alleged the Respondent retained expatriates over them contrary to Article 27(5) of the Constitution and Sections 45 and 46 of the Employment Act. The Respondent defended the redundancy as grounded on deteriorating business performance, restructuring and role mergers, contending full compliance with Section 40 including notification of the labour officer on 8th January 2015 and one month's notice. Maureen Onyango J found the redundancy reason valid, supported by KPMG audited accounts showing losses, and held the notices to the claimants and the labour officer complied with Section 40(1)(b), one month in advance. Applying the Kenya Airways and Thomas De La Rue authorities, the court found the claimants had not proved racial discrimination, as their positions were abolished and the expatriates held different roles. Although the court found the Respondent did not apply LIFO or the skills/reliability criteria under Section 40(1), it held consultations occurred and the exercise overall complied with the law. Claimants' dues had been paid; certificates of service were already issued. The entire claims were dismissed with no order for costs.

Key legal issues

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01

Validity of the reason for redundancy

Holding

The reason for redundancy was valid, being business deterioration and restructuring, as evidenced by KPMG audited financial statements showing losses

Reasoning

RW1 testified the Respondent's performance was poor. The Respondent produced KPMG independent auditors' reports for 2010, 2011, 2012 and 2014 showing losses. The court therefore found the reason for the intended redundancy was valid and was communicated in the 15th January 2015 letter. The Claimants' argument that no evidence of reduced business was produced did not prevail against the audited accounts.

p. 6
02

Compliance with Section 40(1)(b) notification requirements

Holding

The notices to the Claimants and the Labour Officer complied with Section 40(1)(b) as they were issued at least a month before the effective date

Reasoning

The Labour Officer was notified on 8th January 2015 and the Claimants received letters on 15th January 2015, with redundancy effective 15th February 2015. Relying on Thomas De La Rue (K) Limited v David Opondo Omutelema, the court held that for non-union members, written notice to the employee and the labour officer a month in advance suffices.

p. 6
03

Racial discrimination in selection criteria

Holding

The Claimants failed to prove racial discrimination; the affected positions were abolished and the expatriate peers held different roles

Reasoning

CW1 alleged a white colleague with less experience was retained, but the dairy restructuring criteria showed she held a different position from Philippe. CW2's role was Project Engineer, abolished, with no expatriates in that role. CW3's DC Coordinator position was abolished. None of the claimants applied for the vacant positions available.

p. 7
04

Selection criteria and consultations

Holding

The Respondent did not apply LIFO or skills/reliability criteria under Section 40(1), but the redundancy overall complied with the law

Reasoning

The court found the Respondent's focus was on roles rather than individual skills, reliability or LIFO against remaining roles. However, consultations were held with each claimant, who admitted meeting HR to discuss packages, and the Respondent considered the claimants' skills against vacant positions which they declined to apply for. The court nonetheless concluded the exercise was lawful.

p. 7

Legal principles established

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  • Under Section 40(1)(b) of the Employment Act, an employer must notify the non-unionised employee personally in writing and the labour officer at least one month before the effective redundancy date
  • LIFO is not the sole mandatory selection criterion in redundancy; the employer must apply the criteria under section 40(1)(c) with due regard to seniority, skill, ability and reliability

Court orders

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  1. 1.The entire claims of the three claimants are dismissed
  2. 2.No orders as to costs

Authorities

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Legislation

  • Constitution of Kenya, 2010Article 27(5)
  • Constitution of Kenya, 2010Article 159(2)(d)
  • Constitution of Kenya, 2010Article 48
  • Employment Act, 2007Section 40(1)(a)-(g), Section 40(e-g)
  • Employment Act, 2007Section 45(4)(a)
  • Employment Act, 2007Section 46(g)
  • Employment Act, 2007Section 47(5)
  • Employment Act, 2007Section 51
  • Civil Procedure Act (Chapter 21, Laws of Kenya)Section 1B
  • Civil Procedure RulesOrder 21 Rule 1

Cases cited (8)

  • Koki Muia v Samsung Electronics East Africa Limited
    [2015] eKLR
  • Kenya Airways Limited v Aviation & Allied Workers Union Kenya & 3 others
    [2014] eKLR
  • KUDHEIHA v Agha Khan University Hospital Nairobi
    [2015] eKLR
  • Caroline Atieno Osweta v Kenya Yungheng Plate Making Limited
    [2013] eKLR
  • Josphat Koli Nanok & another v Ethics and Anti-Corruption Commission
    [2018] eKLR
  • Jesca Kiplagat v Director of Criminal Investigations & 2 Others
    [2017] eKLR
  • Kiambaa Dairy Farmers Co-operative Society Limited v Rhoda Njeri & 3 others
    [2018] eKLR
  • Thomas De La Rue (K) Limited v David Opondo Omutelema
    [2013] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (Article 162(2) Constitution, though not expressly quoted; causes brought under Sections 40, 45, 46, 47(5) and 51 of the Employment Act and Article 27(5) of the Constitution)

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, "Diana Wambui Irungu & 2 others v Nestle Kenya Limited [2020] KEELRC 1039 (KLR)", Case Analysis (2020). Cause 185 of 2015 (consolidating Causes 185, 186 and 187 of 2015). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2020/1039/eng@2020-05-22

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