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ELRCPartially AllowedCause No 1524 of 2017· [2022] KEELRC 1486 (KLR)

Kienjeku v UAP Old Mutual Group (Cause 1524 of 2017) [2022] KEELRC 1486 (KLR)

Employment and Labour Relations Court
10 June 2022
SRStella Rutto
5,394 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~22 min to read original · ~4 min brief

The bottom line

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A Kenyan court ruled an employer's redundancy unfair because it proved neither that the job was truly surplus nor that consultation was genuine, awarding over Kshs 3 million.

What this practically means

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Executive summary

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The claimant, formerly Group Procurement and Contract Administration Manager with the respondent following the merger of UAP Holdings Limited and Old Mutual Holdings Limited, was issued a notice of intended redundancy on 3rd February 2017 and terminated on 22nd March 2017. He challenged the redundancy as disregarding his role, violating his legitimate expectation arising from a successful job evaluation and role design process, and contravening section 40 of the Employment Act and Articles 10, 27 and 41 of the Constitution. He sought reinstatement or, alternatively, declarations, the 2016 short term incentive of Kshs 337,774.23, damages of Kshs 5,577,504.00, maximum compensation, general damages, costs and interest. The respondent defended the redundancy as a genuine consequence of restructuring following the merger, asserting compliance with section 40 and claiming Mr. Njenga, who filled the successor role, was more suitable. The court framed two issues: the fairness and legality of the redundancy and entitlement to reliefs. It found the redundancy substantively unfair because the respondent failed to exhibit the new organogram or prove the position was genuinely superfluous, particularly given Mr. Njenga assumed the claimant's role. Procedurally, consultations amounted to coping-skills forums rather than meaningful engagement to avert or minimise terminations, and the selection criteria were unproven as no comparative assessment or appraisal of Mr. Njenga was produced. The court declared the termination unfair and unlawful, awarded six months' gross salary as compensatory damages (Kshs 2,720,994.00) and the 2016 short term incentive (Kshs 337,774.23), with interest and costs to the claimant. Reinstatement, 12 months' compensation and general damages were not granted.

Key legal issues

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01

Whether the redundancy was substantively justified

Holding

Not substantively fair; the respondent failed to prove the claimant's position was rendered superfluous, and evidence suggested Mr. Njenga took over the same role

Reasoning

The employer relied on organisational restructuring following a merger. To succeed under section 45(2)(b)(ii) it had to prove the position became superfluous. It did not exhibit the new organogram or show that Mr. Njenga's role was a different, newly-created position. Gaps in the evidence lent credence to the claimant's assertion that his role was filled by his former junior.

p. 6
02

Whether the redundancy complied procedurally with section 40(1) of the Employment Act

Holding

Requirements on notice, labour officer notification, notice pay, severance and leave were met, but consultations were deficient and the selection criteria unfair

Reasoning

Notices, payment of three months' salary in lieu of notice, severance and leave pay and notification of the labour officer satisfied limbs (a), (b), (e), (f) and (g). However, the town hall forums covered career coping skills rather than measures to avert or minimise terminations as required by ILO Recommendation 166, and no fresh suitability assessment or comparative appraisal of Mr. Njenga was produced to justify the selection.

p. 9
03

Whether the claimant was entitled to the 2016 short term incentive payment

Holding

Yes; the respondent's letter communicated the incentive unconditionally and never withdrew it, creating a legitimate expectation

Reasoning

The incentive for 2016 was communicated in a letter dated the same day as termination. There was no evidence of withdrawal and no rider making payment discretionary. Since it related to 2016, the claimant was presumed to have earned it; the unqualified offer gave rise to a legitimate expectation of payment.

p. 10

Legal principles established

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  • Termination by redundancy must be both substantively justified and procedurally fair
  • Consultation is an implicit requirement in a redundancy under Kenyan law via Article 2(6) of the Constitution and ILO Convention No. 158/Recommendation No. 166
  • Consultations in redundancy must be substantive and meaningful, aimed at averting or minimising terminations
  • All conditions in section 40(1) of the Employment Act are mandatory and cannot be selectively applied
  • An employer bears the burden of proving that the position declared redundant was genuinely rendered superfluous, including by exhibiting the new organisational structure

Court orders

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  1. 1.A declaration that the claimant's termination was unfair and unlawful.
  2. 2.Award of compensatory damages of Kshs 2,720,994.00 (equivalent to 6 months' gross salary).
  3. 3.Award of Kshs 337,774.23 being the Short term incentive payment for 2016.
  4. 4.Total award of Kshs 3,058,768.23.
  5. 5.Interest on the total award at court rates from the date of judgment until payment in full.
  6. 6.Respondent to bear the costs of the suit.

Authorities

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Legislation

  • Constitution of Kenya, 2010Articles 10, 27(1) and (5), 41(1) and (2)(b), 2(6), 159(2)(d), 48
  • Employment Act, 2007Sections 2, 5, 5(3)(b), 40(1), 40(c), 45(2)(b)(ii)
  • Civil Procedure RulesOrder 21 Rule 1
  • Civil Procedure ActSection 1B
  • Labour Relations Act, 2007Section 62(4)
  • ILO Convention No. 158 Termination of Employment Convention, 1982 / Recommendation No. 166Article 13

Cases cited (7)

  • Kenya Airways v Aviation & Allied Workers Union of Kenya & 3 others
    (2014) eKLR
  • Luke Kinyua Kamunti v Amigos Nuts and Commodities Limited
    (2019) eKLR
  • Kenya Plantation & Agricultural Workers Union v James Finlay (K) Ltd
    Civil Appeal No. 86A of 2016
  • Pure Circle (K) Limited v Paul K. Koech & 12 others
    (2018) eKLR
  • Nairobi Civil Appeal No. 65 of 2012 (unnamed in judgment)
    Nairobi Civil Appeal No. 65 of 2012
  • Thomas De Larue v David Opondo Omutelema
    (2013) eKLR
  • Kenya Chemicals & Allied Workers Union vs Bamburi Cement Ltd
    (2013) eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over employment claims under the Employment Act, 2007

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, "Kienjeku v UAP Old Mutual Group (Cause 1524 of 2017) [2022] KEELRC 1486 (KLR)", Case Analysis (2022). Cause No 1524 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2022/1486/eng@2022-06-10

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