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ELRCPartially AllowedNot stated in judgment (ELRC cause filed 8.3.2016)· [2021] KEELRC 1061 (KLR)

Washington Onyango Awino v Reliable Electrical Engineers (Nbi) Ltd [2021] KEELRC 1061 (KLR)

Employment and Labour Relations Court
18 August 2021
2,598 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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An employer who skips the mandatory one-month redundancy notice and severance payments must pay months of extra compensation, even if the redundancy itself was justified.

What this practically means

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Executive summary

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The Claimant, a welder fitter employed by the Respondent from September 1996, was laid off effective 31.12.2015 on grounds of redundancy after the Respondent handed its business to Reliable Fabricators Limited. He claimed notice pay, damages for unfair termination under sections 49 and 50 of the Employment Act, and severance pay of 20 days per year under clause 24 of the CBA. The Respondent admitted the employment but maintained the redundancy followed the CBA, was agreed with the Claimant's union (KETAWU), and that terminal dues were paid. The court framed three issues: justification of the redundancy, compliance with section 40 of the Employment Act, and entitlement to reliefs. It found the business takeover was a valid reason for redundancy under section 2 of the Act. However, the Respondent failed to prove compliance with the mandatory section 40 procedure: the letter of 4.12.2015, served 7.12.2015, fell short of one month's notice, and no proof of severance payment existed for the years before 2009 of the Claimant's 19-year service. The termination was therefore wrongful and unlawful under section 45. The court rejected the Respondent's argument that the union correspondence constituted a binding settlement, distinguishing Coast Bottlers Ltd v Kimathi Mithika and holding parties cannot consent to circumvent express statutory provisions. Compensation of 10 months' salary (Kshs. 281,930) was awarded considering long service and absence of fault; the notice claim was declined as paid, and the severance claim was subsumed in the award. Judgment was entered for the Claimant with costs and interest, subject to statutory deductions.

Key legal issues

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01

Whether the takeover of the Respondent's business constituted a valid reason for redundancy

Holding

Yes - the takeover by Reliable Fabricators Ltd rendered the Claimant's position superfluous and was a valid reason.

Reasoning

Section 2 of the Employment Act defines redundancy as loss of employment where the employee's services are superfluous, including abolition of office or job. The Claimant did not deny the takeover and even applied unsuccessfully for a job with the new company. The court therefore found the reason valid and justified.

p. 3
02

Whether the section 40 redundancy procedure was complied with

Holding

No - no sufficient one month written notice was served on the union and labour officer, and severance pay under the CBA and the law was not paid.

Reasoning

Section 40(1) mandates at least one month's prior written notice to the employees' union and area labour officer, fair selection, payment of accrued leave, notice pay and severance pay of at least 15 days per completed year. The only letter produced was dated 4.12.2015 but served 7.12.2015, insufficient notice for the 31.12.2015 effective date. Payslips for 2009-2015 only evidenced service/severance pay; nothing proved for the earlier years of the 19-year service.

p. 3
03

Whether the alleged settlement with the union barred the claim

Holding

No - the correspondence of 4.12.2015 and 8.12.2015 did not amount to an enforceable settlement agreement.

Reasoning

Unlike Coast Bottlers Ltd v Kimathi Mithika where a signed settlement recorded full and final settlement and discharge, the exchange of letters here fell short of a binding settlement capable of denying the Claimant a remedy. Further, parties cannot contract out of express statutory provisions such as section 40.

p. 4
04

What relief flows from the unlawful termination

Holding

Compensation of 10 months' salary (Kshs. 281,930) under sections 49(1) and 50 of the Employment Act; notice and severance claims folded into or declined.

Reasoning

In exercising discretion under section 49(1) read with section 50, the court considered the Claimant's long service of 19 years and that he contributed no fault to the termination. The compensation award also settled the severance claim, and the notice claim failed as the notice pay was admitted paid.

p. 3

Legal principles established

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  • Compliance with the mandatory redundancy procedure in section 40 of the Employment Act, including one month's notice to the union and labour officer and payment of severance pay, is required; failure renders the termination unlawful.
  • Parties cannot by consent or settlement circumvent an express provision of the law.

Court orders

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  1. 1.Judgment entered for the Claimant in the sum of Kshs. 281,930.00
  2. 2.Costs of the cause to the Claimant
  3. 3.Interest at court rate from the date of judgment
  4. 4.Award to be paid subject to statutory deductions

Authorities

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Legislation

  • Employment Actsection 2
  • Employment Actsections 49 and 50
  • Employment Actsection 40(1)(a)
  • Employment Actsection 45
  • Employment Actsection 49(1)
  • ELRC Procedure RulesRule 28(3)
  • Collective Bargaining Agreement dated 17th February 2015clauses 12 and 24

Cases cited (3)

  • Walter Ogal Aruero v Teachers Service Commission
    [2013] eKLR
  • Transport Workers Union v. Console base Ltd
    [2015] eKLR
  • Coast Bottlers Ltd v. Kimathi Mithika
    [2018] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act (sections 2, 40, 45, 49 and 50) and the ELRC 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, "Washington Onyango Awino v Reliable Electrical Engineers (Nbi) Ltd [2021] KEELRC 1061 (KLR)", Case Analysis (2021). Not stated in judgment (ELRC cause filed 8.3.2016). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2021/1061/eng@2021-08-18

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