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ELRCPartially AllowedCause No. 384 of 2016· [2020] KEELRC 1480 (KLR)

Sammy Gitau Ndiiro & 2 others v Golden Cara Investment Limited [2020] KEELRC 1480 (KLR)

Employment and Labour Relations Court of Kenya at Nakuru
27 February 2020
1,498 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 ruled that a redundancy is unlawful unless the employer issues both a general notice and individual notices under section 40 of the Employment Act.

What this practically means

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Executive summary

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Three claimants sued Golden Cara Investment Limited for unfair termination on grounds of redundancy, notice pay, leave pay, gratuity, house allowance, unpaid wages and refunds of statutory deductions. The respondent entered appearance but filed no defence and no work records; its advocates unsuccessfully sought to cease acting, and the claimants' case proceeded undefended. The court found the claimants were employees whose employment was terminated by letter dated 7th June 2016 on account of downsizing with immediate effect. Applying section 40 of the Employment Act, 2007 and the Court of Appeal's decision in Kenya Airways Limited v Aviation & Allied Workers Union Kenya & 3 others, the court held that a valid redundancy requires both a general notice and individual notices, and that it is not sufficient to give reasons without due process. With only an individual notice taking effect instantly and no defence or work records, the claimants' evidence stood uncontroverted and the termination was unfair. Each claimant received notice pay and compensation equivalent to one month's gross wage, plus leave pay assessed under section 28; the 3rd claimant also received pay for work on public holidays. Claims for April and May 2016 wages, gratuity and refunds of NSSF deductions were refused, the court holding that gratuity requires a private treaty or agreement and that unremitted statutory dues are recoverable only through a service pay claim. Judgment was entered for the claimants with costs.

Key legal issues

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01

Whether termination on grounds of redundancy complied with section 40 of the Employment Act

Holding

The termination was unfair; only individual notices with immediate effect were issued, with no general notice or due process under section 40

Reasoning

Section 40 allows termination on redundancy but its mandatory provisions must be followed. Relying on Kenya Airways Ltd v Aviation & Allied Workers Union, the court held that an employer must issue a general notice and individual notices. The respondent gave only an individual letter taking effect instantly, filed no defence or work records, and therefore failed to justify the termination.

p. 3
02

Remedies for the unfair termination

Holding

Notice pay equivalent to one month's gross wage and compensation equivalent to one month's gross wage awarded to each claimant

Reasoning

The claimants were entitled to notice pay and compensation for the unfair termination. The court exercised discretion to award one month's gross wage as appropriate compensation in the circumstances, assessed on the payment statements the claimants produced since the respondent filed no work records.

p. 3
03

Entitlement to leave pay, gratuity, house allowance and refunds of statutory deductions

Holding

Leave pay awarded to be assessed under section 28; house allowance to be assessed in absence of work records; gratuity and refund of statutory deductions refused

Reasoning

Under section 40 untaken leave must be paid in cash and, absent work records showing payment, leave is assessed per section 28. Gratuity is only due under a private treaty or agreement; NSSF deductions not remitted are not recoverable by the employee, whose remedy is a service pay claim. Unpaid house allowance is to be assessed for each claimant.

p. 3

Legal principles established

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  • A valid defence to a claim for unfair termination based on redundancy requires the employer to prove the reasons for termination, that the reason is valid, and to issue both the general notice and individual notices under section 40 of the Employment Act.
  • Where an employer files no defence or work records, the claimant's uncontroverted evidence stands.

Court orders

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  1. 1.Judgment entered for the claimants against the respondent
  2. 2.1st claimant awarded: Notice pay Ksh.21,811; Compensation Ksh.21,811; Leave pay due Ksh.29,080
  3. 3.2nd claimant awarded: Compensation Ksh.23,000; Notice pay Ksh.23,000; Leave pay Ksh.29,000
  4. 4.3rd claimant awarded: Compensation Ksh.19,200; Notice pay Ksh.19,200; Work on public holidays Ksh.9,846
  5. 5.Claimants awarded costs of the suit
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (unfair termination and employment benefits claims)

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, "Sammy Gitau Ndiiro & 2 others v Golden Cara Investment Limited [2020] KEELRC 1480 (KLR)", Case Analysis (2020). Cause No. 384 of 2016. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2020/1480/eng@2020-02-27

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