Lucy Woldu v African Development Solution (ADESCO) [2021] KEELRC 119 (KLR)
The bottom line
#Kenya's Employment Court ruled Adeso unfairly made its HR Director redundant, awarding her Kshs. 3,050,807 because the employer gave notice only two days early.
What this practically means
#Executive summary
#Key legal issues
#Whether the declaration of redundancy was substantively and procedurally fair
The redundancy was substantively and procedurally flawed and the termination unfair: no proof of financial challenges, no evidence of selection criteria, and notices issued only two days before the effective date contrary to Section 40(b)
Section 40 prescribes mandatory conditions for redundancy including notification of the employee and Labour Officer at least one month in advance and consideration of seniority, skill, ability and reliability. The Respondent notified the Labour Officer only two days before the effective date, concealed the decision until then, held no meaningful consultations, adduced no audited financial statements to prove financial distress, and led no evidence on how the Claimant was selected. Both substantive justification and procedural fairness failed.
Whether the Claimant was entitled to acting allowance
Claim declined; the Claimant was not appointed to act in any higher position and the email of 12th May 2015 did not satisfy Clause 7.5 of the Human Resource Manual
Acting requires holding an interim, senior position with prior written approval per Clause 7.5 of the Manual. The email from the CFO referred to 'overall management' of the Operations Department without defining duties or remuneration, and the substantive Director of Operations remained in office. Payment of acting allowance to Kondwani and Zulekha was distinguishable as they acted in genuinely higher positions.
Whether the Claimant was entitled to house allowance
Entitled; the later contract omitted the clause making salary inclusive of house allowance, so under Section 31 of the Employment Act the employer had to pay house allowance computed at 15%
The contract of 4th September 2015, containing an entire-agreement clause, superseded the offer letter which stated the gross salary included house allowance, food and water. Since the contract did not provide a consolidated salary including a housing element and the Respondent did not provide housing, Section 31 obliged it to pay house allowance, which the Court quantified at 15% of monthly salary following binding Court of Authority authority for 9.5 months of service.
Quantum of compensation for unfair termination
Equivalent of 3 months' gross salary awarded under Section 49(1)(c) considering length of service, the renewable contract and the concealment and haste of the redundancy
Having found the redundancy unlawful, the Claimant became entitled to compensation under Section 49(1)(c). The Court considered her 9.5 months of blemish-free service under a two-year renewable contract, the offer of a lower position conditional on abolishing her directorship, and the Executive Director's concealment of the redundancy decision until two days before the effective date with no consultation.
Legal principles established
#- A redundancy notice under Section 40(b) of the Employment Act must be given to the employee personally and the Labour Officer at least one month before the effective date of redundancy; notices issued only days before the effective date are invalid.
- An employer bears a heavy burden to justify redundancy, including proof of the financial or operational grounds relied upon; mere assertions without documentary proof such as audited accounts are insufficient.
- A subsequent contract containing an entire-agreement clause supersedes and discharges a prior offer/agreement between the same parties on the same subject.
- Where the contract does not provide a consolidated salary inclusive of housing and the employer does not provide accommodation, the employer is liable to pay house allowance, computed at 15% of monthly salary.
Court orders
#- 1.Judgment entered for the Claimant in the sum of Kshs. 3,050,807.40 with costs
- 2.Award of Kshs. 982,463.40 as house allowance (15% of monthly salary for 9.5 months)
- 3.Award of Kshs. 2,068,344 being the equivalent of 3 months' salary as compensation for unfair termination under Section 49(1)(c) of the Employment Act
- 4.Interest at court rates from the date of judgment till payment in full
- 5.Declining the claim for acting allowance
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (employment and labour relations dispute)
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (1)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Otieno v Ison Technologies Kenya Limited (Cause E509 of 2022) [2023] KEELRC 2924 (KLR)[2023] KEELRC 2924 (KLR)16 Nov 2023
Cite this brief
#Cite this brief
Caselaw, "Lucy Woldu v African Development Solution (ADESCO) [2021] KEELRC 119 (KLR)", Case Analysis (2021). Memorandum of claim dated 2nd June 2016 (ELRC). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2021/119/eng@2021-12-09
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.