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ELRCPartially AllowedNot stated in the judgment as provided· [2022] KEELRC 4145 (KLR)

Obidi v Alpha Fine Foods Limited (Cause 98 of 2018) [2022] KEELRC 4145 (KLR)

Employment and Labour Relations Court
29 July 2022
2,496 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~10 min to read original · ~4 min brief

The bottom line

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Kenyan employers cannot terminate staff through verbal redundancy announcements; skipping the written notices required by the Employment Act makes the dismissal unfair and costly.

What this practically means

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Executive summary

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In this undefended Employment and Labour Relations Court suit at Nairobi, the claimant, employed by the respondent from 2009 as a truck cleaner and later driver assistant/turn-boy, was verbally terminated on August 15, 2017 on grounds of reduced work attributable to the financial woes of Nakumatt Supermarkets, a principal client. He lodged a complaint at the sub-county labour office; the respondent paid only Ksh 6,320 for 12 days worked in August 2017. The respondent, though represented by counsel for the Federation of Kenya Employers at a mention, never filed a response, and the claim proceeded unopposed. The claimant sought declarations that the redundancy was substantively unjustified and unprocedural, notice pay, severance pay, twelve months' compensation, unpaid leave for eight years, an order for remittance of twenty months of NSSF deductions, and costs. Holding that an employer may terminate for operational reasons but must strictly comply with section 40 of the Employment Act by issuing a general notice and an individual notice, the court found the verbal termination denied the claimant due process, resulting in unfair termination lacking substantive justice and procedural fairness. The court entered judgment for the claimant: a declaration of unfair termination, six months' compensation of Ksh 94,800, severance pay of Ksh 72,923, notice pay of Ksh 15,800, leave pay of Ksh 11,680 (notwithstanding a computation of Ksh 111,680), referral of the NSSF non-remittance to the Labour Officer, and costs of the suit. Twelve months' maximum compensation and conversion of a Ksh 100,000 fine into damages were not granted.

Key legal issues

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01

Compliance with section 40 procedural requirements for redundancy

Holding

The verbal communication of termination without prior general and individual notices breached section 40(1)(b) and rendered the redundancy unfair and unprocedural

Reasoning

The court found the employer summoned the claimant and verbally terminated him on August 15, 2017 citing reduced work attributable to Nakumatt's financial crisis. No general notice or individual notice under section 40 of the Employment Act was issued. Relying on Thomas De La Rue and Barclays Bank, the court held redundancy notices are mandatory and require good faith; their absence denied the claimant due process, resulting in unfair termination.

p. 4
02

Remedies for unfair termination

Holding

The claimant was awarded notice pay of one month, six months' compensation under sections 45 and 49, severance pay at 15 days per completed year for 8 years, and leave pay computed on the applicable basic wage

Reasoning

Given the procedural violation, the court found compensation due under sections 45 and 49 and held six months' salary (Ksh 94,800) appropriate. Severance pay under section 40(1)(g) for eight years was uncontested and awarded at Ksh 72,923. Leave for 8 years was undefended with no work records filed, computed on the 2017 basic wage of a driver assistant. The NSSF claim was referred to the Labour Officer.

p. 5
03

Unopposed claim and unremitted NSSF dues

Holding

The claim was undefended; the NSSF non-remittance issue was referred to the Labour Officer as service pay was not pleaded

Reasoning

The respondent did not enter appearance or file a response, so the claim was unopposed. On the NSSF arrears, the court declined to order direct remittance, instead directing the claimant to the Labour Officer for sanction, holding the pleaded claim was for service pay which was not pleaded before the court.

p. 4

Legal principles established

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  • An employer terminating on account of redundancy must issue both a general notice and an individual notice under section 40 of the Employment Act
  • Failure to follow the due process of section 40 renders a termination unfair for lack of substantive justice and procedural fairness

Court orders

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  1. 1.A declaration that employment terminated unfairly
  2. 2.Compensation Ksh 94,800
  3. 3.Severance pay Ksh 72,923
  4. 4.Notice pay Ksh 15,800
  5. 5.Leave pay Ksh 11,680
  6. 6.The Labour Officer shall address the non-payment of statutory dues accordingly
  7. 7.Costs of the suit to the claimant

Authorities

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Legislation

  • Employment Act, 2007section 40(1)(b)
  • Employment Act, 2007section 40(1)(g)
  • Employment Act, 2007section 45(1), 45(2)
  • Employment Act, 2007section 49(4)
  • Employment Act, 2007section 43
  • Employment Act, 2007section 2
  • Employment Act, 2007section 31(1)
  • National Social Security Fund Actsection 20
  • Employment and Labour Relations Court Actsection 12(4)
  • The Regulation of Wages (General) (Amendment) Order, 2017

Cases cited (8)

  • Gladys Agayo v Somak Travel Ltd
    [2015] eKLR
  • Onesmus Kinyua Magoiya v Prudential Life Assurance Kenya
    [2022] eKLR
  • Mary Nyawira Karimi v Pure Circle (K) Limited
    [2018] eKLR
  • Agnes Ongadi v Kenya Electricity Transmission Company Limited
    [2016] eKLR
  • Kenya Airways Limited v Aviation & Allied Workers Union Kenya & 3 others
    [2014] eKLR
  • Rael Mwiyathi Mutinda v Kenya Commercial Bank Limited
    [2019] eKLR
  • Thomas De La Rue (K) Ltd v David Opondo Omutelema
    [2013] eKLR
  • Barclays Bank of Kenya Ltd & another v Gladys Muthoni & 20 others
    [2018] eKLR
Jurisdiction invoked
Employment and Labour Relations Court Act, section 12(4) (employment and labour relations dispute, first instance)

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, "Obidi v Alpha Fine Foods Limited (Cause 98 of 2018) [2022] KEELRC 4145 (KLR)", Case Analysis (2022). Not stated in the judgment as provided. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2022/4145/eng@2022-07-29

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