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ELRCDismissedCause No 322 of 2017· [2022] KEELRC 1606 (KLR)

Ndiege v M.J Awale and Crown Bus Services Ltd (Cause 322 of 2017) [2022] KEELRC 1606 (KLR)

Employment and Labour Relations Court of Kenya
29 July 2022
3,413 words in judgment
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The bottom line

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Kenya's Employment Court upheld a bus company's retrenchment of a security officer, ruling the employer proved genuine financial hardship and followed the required redundancy procedure.

What this practically means

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Executive summary

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This first-instance Employment and Labour Relations Court judgment at Nairobi, delivered by Stella Rutto J on 29th July 2022, concerned a security officer employed in 2012 at a monthly salary of Kshs 19,000, who claimed he was wrongfully and unlawfully retrenched on 19th January 2017. He sought Kshs 312,233.00 comprising notice pay balance, annual leave, salary for January 2017, 60 days' severance pay and compensatory damages, contending the respondent was financially sound as it was expanding its fleet of buses. The respondent justified the retrenchment under section 40 of the Employment Act, citing financial difficulties attributed to the economy, high operational costs and obstruction of access to its head office. The Court framed three issues: substantive reason, procedural fairness, and entitlement to reliefs. On substance, correspondence to Lloyd Masika Limited and the Traffic Police established genuine financial challenges from road obstruction, loss of customers and high rent; the expansion allegation was unsubstantiated. Following the Court of Appeal decision in Kenya Airways Limited v Aviation & Allied Workers Union, the Court held it cannot substitute its economic judgment for the employer's. On procedure, the Court found the one-month notice to the employee and county labour office, and tabulated payment of notice pay and severance, satisfied section 40(1)(b), (f) and (g), with clause (e) inapplicable since no leave was outstanding. The termination was held substantively and procedurally fair, the claim was dismissed in its entirety, each party was to bear its own costs, and the claimant remained at liberty to collect the tabulated terminal dues.

Key legal issues

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01

Whether there was a valid and fair substantive reason for the redundancy

Holding

Yes - the respondent proved financial difficulties through correspondence showing loss of customers, loss of income and high rent, justifying the retrenchment

Reasoning

The Court examined letters to Lloyd Masika Limited and the Traffic Police showing the business was severely hampered by road obstruction, loss of customers and high rental costs, and that the respondent had issued notice to vacate premises. The claimant's assertion that the respondent was expanding its fleet was unsubstantiated. Following Kenya Airways, the employer's genuine belief in a redundancy situation suffices; the court has no supervisory role over business decisions. Ten co-workers were also declared redundant.

p. 5
02

Whether the termination complied with the procedural requirements of section 40(1) of the Employment Act

Holding

Yes - the respondent complied with sections 40(1)(b), (f) and (g); clause (e) was inapplicable as no leave was outstanding

Reasoning

The respondent issued a one-month notice of redundancy dated 6th January 2017, notified the county labour office, and exhibited a tabulation of dues including notice pay, salary for January days worked and severance pay. The 30-day notice period was intact despite not starting on the first of the month. The claimant had taken leave in December 2015, so no leave was due under clause (e). Substantial compliance was found, echoing Githinji JA in Kenya Airways.

p. 7
03

Whether the claimant is entitled to the reliefs sought

Holding

No - having found the termination fair and lawful, the claimant is entitled to none of the reliefs sought

Reasoning

Because both substantive reason and procedure were found fair and lawful, the unfair termination claim failed in its entirety. The claimant was left only with the right to collect the terminal dues tabulated by the respondent, which he had refused to collect. Costs were ordered on the basis that each party bears its own.

p. 7

Legal principles established

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  • An employer must prove a valid and fair reason based on operational requirements and fair procedure to justify termination on redundancy
  • The court will not substitute its own economic reasoning for that of the employer in redundancy decisions
  • It is lawful even in apparently successful enterprises to reduce staff as a cost-saving measure
  • A 30-day redundancy notice need not begin on the first day of the month so long as the full 30-day period is not reduced

Court orders

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  1. 1.The claim is dismissed in its entirety
  2. 2.Each party shall bear its own costs
  3. 3.The claimant is at liberty to collect the terminal dues tabulated by the respondent

Authorities

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Legislation

  • Employment Actsection 40(1)
  • Employment Actsection 40(1)(c)
  • Employment Actsection 40(1)(e), (f), (g)
  • Employment Actsection 43, 43(2), 45(2)(b)(ii), 45, 47(5)
  • Civil Procedure RulesOrder 21 Rule 1
  • Civil Procedure ActSection 1B
  • Constitution of KenyaArticle 159(2)(d)
  • Constitution of KenyaArticle 48

Cases cited (3)

  • Aviation & Allied Workers Union v Kenya Airways Limited & 3 others
    (2012) eKLR
  • Kenya Airways Limited v Aviation & Allied Workers Union of Kenya & 3 others
    (2014) eKLR
  • Monarch Insurance Co. Ltd v Industrial Court & another
    [2015] eKLR
Jurisdiction invoked
First-instance employment claim under the Employment Act; Article 159(2)(d) and Article 48 of the Constitution referenced on mode of delivery

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, "Ndiege v M.J Awale and Crown Bus Services Ltd (Cause 322 of 2017) [2022] KEELRC 1606 (KLR)", Case Analysis (2022). Cause No 322 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2022/1606/eng@2022-07-29

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