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ELRCDismissedNot stated in the judgment (Statement of Claim dated 29th March 2018)· [2022] KEELRC 17 (KLR)

Omwenga & 8 others v Kcb Bank Kenya Limited (Cause 443 of 2018) [2022] KEELRC 17 (KLR)

Employment and Labour Relations Court
26 April 2022
NMNzioki Wa Makau
2,240 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Employment Court ruled KCB followed the legal redundancy process, so nine dismissed staff got no compensation despite losing their jobs.

What this practically means

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Executive summary

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Nine former clerical employees of the Respondent bank, all unionisable members of BIFU, sued over their redundancy following the bank's full outsourcing of its Shares Registry services function to an external vendor. They claimed the redundancy was unfair, unlawful, unprocedural and discriminatory, asserting that the Respondent failed to apply the LIFO selection criterion under Section 40(1)(c) of the Employment Act and Clause A7 of the CBA, failed to consider redeployment, engaged Sheer Logic consultants and fixed-term contract staff to perform their core functions, and ignored their proposed staff swaps. They sought a declaration that the termination was null and void, reinstatement or re-engagement, and compensation of 12 months' salary as recommended by a Conciliator appointed by the Cabinet Secretary Labour. The Respondent countered that it complied with Section 40 and the CBA, gave all requisite notices, paid severance at 1.5 months per year and three months' notice pay (exceeding CBA entitlements), and that the Claimants' specialised skills left no redeployment opportunities; it also noted a pending appeal against the Conciliator's recommendations. The Court found the Claimants were duly notified in compliance with Section 40 and the CBA, received better terms than the CBA provided, and that since the entire section was wound up and their skills were unique to the Shares Registry office, they had nowhere to be deployed. The suit was dismissed with each party bearing its own costs. The judgment is dated 26th April 2022, Nairobi, delivered by Nzioki Wa Makau, Judge.

Key legal issues

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01

Compliance with Section 40 of the Employment Act and the CBA in the redundancy

Holding

The Respondent complied with both Section 40 and Clause A7 of the CBA; the Claimants received better terms than the CBA provided

Reasoning

The Court found the Claimants were duly notified of the intended redundancy in compliance with Section 40 and the CBA. The package paid (1.5 months per completed year, 3 months' notice pay) exceeded the CBA entitlements of one month's severance per year and one month's notice. The notices to the Union and employees were properly issued.

p. 4
02

Application of the LIFO selection criterion under Section 40(1)(c) and Clause A7 of the CBA

Holding

LIFO was not determinative because the entire Shares Registry section was wound up and the Claimants' skills were unique to that office, leaving no deployment options

Reasoning

The Court accepted the Respondent's evidence that the whole section was outsourced and the skills were unique to the Shares Registry office. The CBA itself made LIFO subject to other factors such as skill, relative merit, ability and reliability. Accordingly, failure to redeploy the Claimants was justified.

p. 4
03

Discrimination and remedies for unfair termination

Holding

No discrimination was established and the termination being lawful, remedies for unfair termination under Sections 45, 49 and 50 were unavailable

Reasoning

The Court found the Respondent acted within the law throughout the redundancy process. Having taken a lawful termination process, the Respondent could not be held to account for doing what the law permitted, and the suit therefore lacked merit.

p. 4

Legal principles established

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  • Where an employer complies with the requirements of Section 40 of the Employment Act and the applicable CBA in a redundancy, the termination is lawful and the employer cannot be held to account
  • Where the entire section in which the employees worked is wound up and their skills are unique and not offered elsewhere in the enterprise, LIFO becomes immaterial as the employees have nowhere else to be deployed

Court orders

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  1. 1.The suit is dismissed
  2. 2.Each party to bear their own costs

Authorities

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Legislation

  • Employment ActSection 40(1)(a)
  • Employment ActSection 40(1)(c)
  • Employment ActSection 26
  • Employment ActSection 45
  • Employment ActSections 49 and 50

Cases cited (4)

  • Jane I. Khalechi v Oxford University Press EA Ltd
    [2013]
  • Javan Were Mbango v H. Young & Co. (EA) Ltd
    [2012] eKLR
  • Mukiria Farmers Co-operative Society Limited v Jacob Rukaria & 5 others
    [2017] eKLR (Civil Appeal No. 37 of 2016)
  • KUCFAW v Tusker Mattresses Limited
    [2021] eKLR (ELRC No. 249 of 2020)
Jurisdiction invoked
Original jurisdiction of the Employment and Labour Relations Court over employment and labour relations disputes (not expressly cited in the judgment excerpt)

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, "Omwenga & 8 others v Kcb Bank Kenya Limited (Cause 443 of 2018) [2022] KEELRC 17 (KLR)", Case Analysis (2022). Not stated in the judgment (Statement of Claim dated 29th March 2018). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2022/17/eng@2022-04-26

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