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ELRCPartially AllowedNot stated in the judgment as provided (memorandum of claim filed 4th May 2021)· [2021] KEELRC 174 (KLR)

Bakery, Confectionery, Food Manufacturing & allied Workers Union (K) v Bakers Oven Limited [2021] KEELRC 174 (KLR)

Employment and Labour Relations Court
10 December 2021
MOMaureen Onyango
3,860 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~15 min to read original · ~4 min brief

The bottom line

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Closing your business doesn't exempt you from Kenya's redundancy rules—Kencon was ordered to pay nearly Kshs.5 million for skipping legally required consultation and notice.

What this practically means

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Executive summary

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The Claimant, a registered trade union, sued the Respondent, a confectionery manufacturer, on behalf of 18 grievant employees terminated by a Notice of Business Closure dated 21st December 2020. The Claimant alleged the closure was an unlawful redundancy effected without the 30-day notice to the union and labour office, without consultation, and without payment of terminal dues under Section 40 of the Employment Act and Clauses 8 and 9 of the CBA, claiming Kshs.26,674,666.37. The Respondent contended the suit was premature under Section 73 of the Labour Relations Act and that it merely closed business due to COVID-19 and financial collapse, had filed for bankruptcy, and could not comply with court orders. The court framed four issues: prematurity, legality of the redundancy, remedies, and costs. It held the suit was properly filed under Section 73(1) after the dispute was reported and a conciliator appointed. On legality, the court found the closure was a redundancy in law; the employer had ample time to consult but failed to comply with Section 40 and Clause 9 of the CBA, rendering the termination unlawful and unfair, and it would be unfair even as ordinary termination for want of Section 41 compliance. Terminal dues were awarded as tabulated, save that compensation was assessed under Section 49(4) at 10 months' salary for grievants with 10 or more years' service and 6 months' for the rest, totalling Kshs.4,956,980/-. The Respondent was ordered to pay the Claimant's costs, with interest from the date of judgment.

Key legal issues

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01

Prematurity of suit under Section 73 of the Labour Relations Act

Holding

The suit was properly filed under Section 73(1) as the dispute had been reported to the Minister and a conciliator appointed but had not been resolved; the suit was regular

Reasoning

The Claimant reported the dispute to the Minister on 23rd February 2021 and a conciliator was appointed on 30th March 2021; the suit was filed on 4th May 2021 without the conciliator having resolved the dispute, in compliance with Section 69(b). Section 74(b) also permits urgent referral in redundancy matters. Filing a motion under certificate of urgency does not convert the reference into one under Section 74.

p. 4
02

Lawfulness of the redundancy / business closure

Holding

The closure was a redundancy; the Respondent failed to comply with Section 40 of the Employment Act and Clause 9 of the CBA, rendering the termination unlawful and unfair

Reasoning

The closure arose from a prolonged process, not a sudden event, and the employer had ample time to notify the union and labour office 30 days in advance and consult on the reasons and extent. The Labour Relations Act definition of redundancy covers loss of employment at the employer's initiative. Even viewed as ordinary termination, it would fail for want of Section 41 procedure. Cited authorities confirm the mandatory and consultative nature of Section 40 and the employer's heavy burden of justification.

p. 6
03

Remedies

Holding

Terminal dues as tabulated (less compensation) were payable per the CBA; compensation awarded at 10 months' or 6 months' salary depending on length of service, totalling Kshs.4,956,980/-

Reasoning

The Respondent did not contest the tabulation of terminal benefits; the court found it consistent with the law and Clause 8 of the CBA except the compensation head. For compensation, the court considered the circumstances of loss of employment, length of service and Section 49(4) factors, adopting 10 months' salary for grievants with over 10 years' service and 6 months' for the rest.

p. 7

Legal principles established

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  • The statutory conditions for redundancy under Section 40 of the Employment Act are mandatory and the process must be participatory, consultative and informative
  • The employer bears a heavy burden of proof to justify termination of employment on account of redundancy
  • Consultation with employees or their union is implicit in the principle of fair play under Section 40(1) of the Employment Act before effecting redundancy
  • A closure of business entailing loss of employment at the employer's initiative constitutes redundancy under Section 3 of the Labour Relations Act even if not formally declared as such

Court orders

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  1. 1.Declaration that the redundancy meted out on the 18 grievants was unlawful and unfair
  2. 2.Payment of terminal dues (notice pay, severance pay, service pay, unpaid salary) per the tabulation in Appendix A, which the court found in accordance with the law and the CBA
  3. 3.Compensation for unlawful termination awarded at 10 months' salary for grievants with 10 or more years' service and 6 months' salary for those with less than 10 years, totalling Kshs.4,956,980/-
  4. 4.Respondent to pay the Claimant's costs of the suit
  5. 5.Interest to accrue from the date of judgment

Authorities

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Legislation

  • Labour Relations ActSections 3, 19, 62, 62(4), 69(b), 73(1), 74(b)
  • Employment Act, 2007Sections 3, 35, 40, 40(1)(a), 40(g), 41, 49(4)
  • Companies ActCap 486
  • Civil Procedure RulesOrder 21 Rule 1
  • Civil Procedure ActSection 1B
  • Constitution of Kenya, 2010Articles 159(2)(d), 48
  • ILO Convention No. 158 - Termination of Employment Convention, 1982Recommendation No. 166, Article 13
  • Employment and Labour Relations Court (Procedure) RulesNot specified

Cases cited (3)

  • Hesbon Ngaruiya Waigi v Equatorial Commercial Bank Limited
    [2013] eKLR
  • Barclays Bank of Kenya Ltd & Another v Gladys Muthoni & 20 Others
    (2018) eKLR
  • Kenya Airways Limited v Aviation & Allied Workers Union Kenya & 3 others
    [2014] eKLR
Jurisdiction invoked
Sections 73(1) and 74(b) of the Labour Relations Act, 2007 and the Employment and Labour Relations Court (Procedure) Rules

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, "Bakery, Confectionery, Food Manufacturing & allied Workers Union (K) v Bakers Oven Limited [2021] KEELRC 174 (KLR)", Case Analysis (2021). Not stated in the judgment as provided (memorandum of claim filed 4th May 2021). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2021/174/eng@2021-12-10

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