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ELRCPartially AllowedMemorandum of claim dated 2nd June 2016 (ELRC)· [2021] KEELRC 119 (KLR)

Lucy Woldu v African Development Solution (ADESCO) [2021] KEELRC 119 (KLR)

Employment and Labour Relations Court
9 December 2021
8,051 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~32 min to read original · ~4 min brief

The bottom line

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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

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Executive summary

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The Claimant, employed as Director, Human Resources by the Respondent (a donor-funded non-profit) from 22nd April 2015, sued over her termination on grounds of redundancy on 5th February 2016, claiming unpaid house allowance, twelve months' salary as damages for unfair termination and unpaid acting allowance totalling about Kshs. 10.9 million. The Respondent contended that the redundancy was genuine, driven by financial challenges and done with due process, that the gross salary was inclusive of house allowance, and that the Claimant's oversight of the Operations Department fell within her job description. The Court framed three issues: whether the Claimant was declared redundant, her entitlement to acting allowance and to the reliefs sought. It held that the redundancy was substantively and procedurally flawed: the Respondent adduced no evidence (such as audited accounts) of the financial difficulties it pleaded, no evidence of a selection criteria under Section 40(c), and the notices to the Claimant and the Labour Officer were issued only two days before the effective date, contrary to the one-month requirement of Section 40(b), with no meaningful consultations. The termination was therefore unfair. On acting allowance, the Court found the Claimant was not appointed to act in any higher position and declined that head. On house allowance, the contract of 4th September 2015, with an entire-agreement clause, superseded the offer letter, and since the salary was not consolidated to include housing, the Respondent was liable; the Court applied 15% of monthly salary for 9.5 months (Kshs. 982,463.40). For unfair termination the Court awarded three months' salary (Kshs. 2,068,344) under Section 49(1)(c). Judgment was entered for the Claimant for Kshs. 3,050,807.40 with costs and interest at court rates from the date of judgment.

Key legal issues

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01

Whether the declaration of redundancy was substantively and procedurally fair

Holding

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)

Reasoning

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.

p. 7
02

Whether the Claimant was entitled to acting allowance

Holding

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

Reasoning

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.

p. 8
03

Whether the Claimant was entitled to house allowance

Holding

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%

Reasoning

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.

p. 10
04

Quantum of compensation for unfair termination

Holding

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

Reasoning

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.

p. 10

Legal principles established

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  • 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

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  1. 1.Judgment entered for the Claimant in the sum of Kshs. 3,050,807.40 with costs
  2. 2.Award of Kshs. 982,463.40 as house allowance (15% of monthly salary for 9.5 months)
  3. 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. 4.Interest at court rates from the date of judgment till payment in full
  5. 5.Declining the claim for acting allowance

Authorities

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Legislation

  • Employment ActSection 2 (definition of redundancy)
  • Employment Act, 2007Section 40(1)(b), 40(a)-(g)
  • Employment ActSections 43(b) and 45
  • Employment ActSection 47(5)
  • Employment ActSection 31 and 31(2)
  • Employment ActSection 37
  • Employment ActSections 49(1)(c) and 49(4)
  • Constitution of KenyaArticle 41 (fair labour practices)
  • Constitution of KenyaArticle 2(6)
  • Constitution of KenyaArticle 159(2)(d) and Article 48
  • Civil Procedure RulesOrder 21 Rule 1
  • Civil Procedure ActSection 1B
  • ILO Convention No. 158 – Termination of Employment; Recommendation No. L66Article 13

Cases cited (11)

  • Francis Kiplagat Kirui v Jade Petroleum Ltd (Jade Retail Ltd
    2014) eKLR
  • Kenya Airways Limited v Aviation & Allied Worker Union of Kenya & 3 Others
    [2014] eKLR
  • Thomas De La Rue Ltd v David Opondo Omutelema
    (2013) eKLR
  • Pius Kimaiyo Langat v Co-operative Bank of Kenya Ltd
    (2017) eKLR
  • Omar Ndaro Zuma v Modern Coast Express
    (2019) eKLR
  • Aoraki Corporation Limited v Collin Keith McGavin
    CA 2 of 1997 [1998] 2 NZLR 278
  • Barclays Bank of Kenya Ltd v Gladys Muthoni & 20 Others
    [2018] eKLR
  • Kenya Union of Sugar Plantation & Allied Workers v Butali Sugar Mills Ltd
    [2021] eKLR
  • Grain Pro Kenya Inc. Ltd v Andrew Waithaka Karagu
    [2019] eKLR
  • Anna Yonemura v Luwa Kenya Trust
    [2014] eKLR
  • KUDHEIHA Workers v B.O.G. Maseno School for the Deaf
    [2013] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (employment and labour relations dispute)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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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.