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. 451 of 2016 (consolidated Claims)· [2020] KEELRC 1889 (KLR)

Michael Juma Chinjo & 116 others v Diamond Industries Ltd [2020] KEELRC 1889 (KLR)

Employment and Labour Relations Court
20 January 2020
2,371 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~9 min to read original · ~4 min brief

The bottom line

#

Kenya's Employment Court ruled Diamond Industries' redundancy was a disguise for firing striking workers, ordering tiered compensation of one to three months' salary.

What this practically means

#

Executive summary

#
117 former employees of Diamond Industries Limited filed consolidated claims (heard under Cause No. 451 of 2016, Mombasa) seeking one month's salary in lieu of notice, unpaid annual leave, severance pay, damages for unfair termination, costs and interest. The Respondent, facing alleged financial difficulties caused by cheap smuggled goods, issued notices of redundancy on 28 August 2015 to the Kenya Chemical and Allied Workers Union, the Federation of Kenya Employers and the County Labour Office. Following wildcat strikes and a return-to-work formula agreed on 22 September 2015, redundancy dues were computed in consultation with the Labour Office and paid through it. The court found terminal benefits - severance, notice and leave pay - were paid and uncontroverted. The sole issue was whether the redundancy termination was fair. On substantive justification, the Respondent produced no financial records to prove the pleaded economic constraints, work remained available, positions were advertised afresh, and the return-to-work formula allowed terminated employees to reapply. The court held the redundancy was a colourable exercise adopted to counter incessant wildcat strikes, applying Aviation & Allied Workers Union Kenya v Kenya Airways Limited. Procedure under Section 40 would have been fair, but termination was unfair under Sections 43 and 45 of the Employment Act. Granting judgment, the court ordered tiered compensation for unfair termination (three months' salary for employees engaged before or between 2007 and 2011, two months' for 2012-2014, one month's for 2015), issuance of Certificates of Service, and made no order on costs.

Key legal issues

#
01

Whether there was a genuine redundancy situation

Holding

There was no genuine redundancy; the declaration was a colourable exercise to rid the employer of striking employees.

Reasoning

The Respondent pleaded financial constraints caused by cheap smuggled goods but produced no financial records or wage bill evidence. The return-to-work formula allowed terminated workers to reapply, and the Respondent advertised the very positions held by the Claimants, showing work was still available. Redundancy was invoked to counter illegal strikes rather than for demonstrable economic reasons, rendering the termination a colourable exercise and lacking substantive justification under Sections 43 and 45 of the Employment Act.

p. 7
02

Whether the redundancy procedure was fair

Holding

Procedure would have been fair had the termination been genuinely based on redundancy.

Reasoning

Notices of redundancy issued to the Claimants' Union, the Federation of Kenya Employers and the County Labour Office, and the Labour Office advised compliance with redundancy law. Basic redundancy dues under Section 40 of the Employment Act were computed, scrutinised by the Labour Office, and paid. The court therefore found the procedural requirements were met, and unfairness arose solely from the absence of substantive justification.

p. 7
03

Whether termination was unfair and what remedy applies

Holding

Termination was unfair under Sections 43 and 45 of the Employment Act; compensation awarded on a tiered basis.

Reasoning

Having failed completely on substantive justification, the termination was unfair. In assessing compensation, the court considered that most Claimants had long service from as early as 2007, but were not model employees, having engaged in wildcat strikes and disregarded the industrial relations machinery, and had already received terminal benefits including severance and notice pay. Tiered compensation of one to three months' salary was granted based on year of engagement.

p. 7

Legal principles established

#
  • An employer invoking redundancy must demonstrate a genuine redundancy situation; using redundancy as a guise to shed employees for other reasons is a colourable exercise and not a valid termination.
  • Under Section 43 of the Employment Act, the employer bears the burden of proving the reasons for termination, which must be supported by evidence such as financial records where economic reasons are pleaded.

Court orders

#
  1. 1.The Respondent shall pay compensation for unfair termination based on last monthly salaries: Employees engaged before or between 2007 and 2011 – 3 months' salary; Employees engaged between 2012 and 2014 – 2 months' salary; Employees engaged in 2015 – 1 month salary
  2. 2.Certificates of Service to issue
  3. 3.No order on costs

Authorities

#

Legislation

  • Employment ActSection 40
  • Employment ActSection 43
  • Employment ActSection 45

Cases cited (1)

  • Aviation & Allied Workers Union Kenya v Kenya Airways Limited & 3 Others
    Industrial Court (Nairobi) Cause No. 1616 of 2012
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over employment and labour relations claims (Employment Act 2007; Labour Relations Act)

Key timeline

#

Practical implications

#

Frequently asked questions

#

Cite this brief

#

Cite this brief

Caselaw, "Michael Juma Chinjo & 116 others v Diamond Industries Ltd [2020] KEELRC 1889 (KLR)", Case Analysis (2020). Cause No. 451 of 2016 (consolidated Claims). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2020/1889/eng@2020-01-20

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