Roberts & 3 others v Equity Bank Kenya Ltd (Cause 652 of 2017) [2023] KEELRC 12 (KLR)
The bottom line
#Equity Bank's redundancy of three senior employees was ruled unlawful because it skipped mandatory consultation, notice, and redeployment steps under Kenyan law.
What this practically means
#Executive summary
#Key legal issues
#Compliance with section 40(1)(b) of the Employment Act - notice of redundancy
The Respondent failed to notify the 1st to 3rd Claimants personally of the intended redundancy as required; the notice to the labour officer was not copied to them, so a mandatory legal prerequisite was breached.
The court perused the documents and found no due notification to the claimants as required by section 40(1)(b). The notice sent to the labour officer was never copied to the claimants, failing the statutory prerequisite. The court stressed that compliance with section 40 is mandatory, not optional for the employer.
Objective selection criteria and participation of employees
There was no evidence of how the Respondent selected the 1st to 3rd Claimants for redundancy, and the claimants had no input; the criteria must be transparent.
Although a valid reason (unprofitability of positions) may have existed, the employer did not show concrete evidence of it to the claimants nor involve them in selecting those to be declared redundant from the employee pool. Relying on Agnes Ongandi, the court held there must be a rationale, justification and participation of employees upon clear criteria being set out.
Consultation before redundancy decision
The Respondent merely communicated a board decision already taken; genuine consultation must occur at the initial stages to minimise the effects of redundancy.
Both the termination letters and the notice to the labour office conveyed a fait accompli - a board decision already arrived at. The claimants and labour officials had no opportunity to engage with a view to minimising the effects of the redundancy. Following Kenya Airways and Cargill, consultations must be meaningful and precede the final decision.
Redeployment as a last option
A large employer must demonstrate it had no other possible placement before laying off employees.
If the organisation has other suitable positions, the employer must demonstrate the employee cannot be redeployed and that layoff is the last option. The Respondent, a big employer, failed to demonstrate it had no other possible placement for the three claimants; RW1 admitted no positions were offered because the claimants were specialists.
The 4th Claimant's claim of breach and coerced resignation
The 4th Claimant resigned voluntarily; no evidence of coercion, misrepresentation or termination; his claim was dismissed.
No evidence showed the 4th Claimant was induced or duped into the contract dated 30th January 2015, whose terms did not include the benefits he claimed. His resignation was acknowledged and accepted by the Respondent by letter dated 8th April 2016. Applying Edwin Kipchumba, resignation is a unilateral act ending the employment relationship. His claim was unproved.
Legal principles established
#- Termination on account of redundancy must comply mandatorily with the conditions in section 40 of the Employment Act, including notice to the employee and the labour officer, a transparent selection criteria, consideration of redeployment and meaningful consultation before the decision.
- For a redundancy to be lawful it must be both substantially justified and procedurally fair, and consultation must be genuine and undertaken at the initial stages, not to communicate a fait accompli.
- Resignation is a unilateral act of the employee whose efficacy does not depend on any action of the employer.
Court orders
#- 1.1st Claimant awarded damages for wrongful and unlawful termination equivalent to three months' salary (US$11,000 x 3 = US$33,000)
- 2.Any unpaid pension of the 1st Claimant to be paid
- 3.2nd Claimant awarded damages equivalent to three months' salary (US$13,500 x 3 = US$40,500)
- 4.Any unpaid pension dues of the 2nd Claimant to be settled forthwith
- 5.3rd Claimant awarded damages equivalent to three months' salary (US$12,500 x 3 = US$37,500)
- 6.Any unpaid pension owing to the 3rd Claimant to be paid forthwith
- 7.4th Claimant's suit dismissed with each party to pay their own costs
- 8.Respondent to pay costs of the suit to the 1st, 2nd and 3rd Claimants
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction under the Employment Act and Employment and Labour Relations Court Act (not expressly cited in judgment)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Roberts & 3 others v Equity Bank Kenya Ltd (Cause 652 of 2017) [2023] KEELRC 12 (KLR)", Case Analysis (2023). Cause 191 of 2017 (memorandum of claim dated March 6, 2017, filed April 3, 2017). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/12/eng@2023-01-12
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.