Anne Waceke Makori & 2 others v Faulu Microfinance Bank Limited [2021] KEELRC 916 (KLR)

The court accepted that the claimants' roles were abolished following restructuring aligned to the Old Mutual operating models. However, the employer bore the burden under sections 43 and 45 of the Employment Act to prove the redundancy was inevitable. The claimants were never invited to formal consultations, alternative junior positions were filled before they could be considered, and a memo announcing their redundancy circulated before the termination letters. The failure to consult rendered the redundancy unnecessary and the reason invalid.

Section 40(1) prescribes mandatory steps: at least one month prior written notice to the employee and the Labour Officer, fair selection criteria, payment of accrued leave, salary in lieu of notice and severance pay. The respondent admitted no written notice was served, and RW1 admitted the claimants received one day's verbal notice instead of 30 days' written notice. Consequently no consultations with the claimants or the labour officer occurred to avert or mitigate the redundancy. Terminal dues were computed and paid less deductions and loans, which the claimants did not claim.

Having found the termination substantively and procedurally unfair, the court declared the claimants suffered unfair and unlawful redundancy. Reinstatement was impossible because the positions were abolished and three years had lapsed under section 12(3)(vii) of the ELRC Act. Considering their about 7 years of service, absence of contributory fault, continued lack of alternative employment and the employer's harsh conduct, each claimant received the maximum 12 months' gross salary. Violations of Articles 41 and 47 were compensated through the section 49 award, with separate general damages of Kshs. 1,000,000 each for the Article 28 dignity violation.

The loans were payable by instalments over agreed periods at agreed staff interest rates and were secured by collateral. The set-off and check-off clauses had to be read in the context of the whole contract. Because the claimants were discharged through no fault of their own and there was no default, there was no justification for premature recall. The court declared the respondent not entitled to prematurely recall the credit facilities plus accrued interest.

The Staff Loan Operational Guidelines and HR Manual, incorporated into the contract through the appointment letters, gave the employer discretion to convert the interest rate to commercial rates on exit. The court's mandate is to enforce, not rewrite, contracts. However, because the respondent's unlawful redundancy caused the dispute, commercial rates were ordered to take effect only from the judgment date, following Mbaru J's approach in protecting an employee from the consequences of unfair dismissal.