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ELRCPartially AllowedNot stated in judgment· [2023] KEELRC 695 (KLR)

Musili & 7 others v Insteel Limited (Cause E670 of 2020) [2023] KEELRC 695 (KLR)

Employment and Labour Relations Court
23 March 2023
2,696 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court ruled that an employer must give written redundancy notice and cannot pay non-unionised staff lower severance than unionised colleagues.

What this practically means

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Executive summary

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Eight former management employees of Insteel Limited claimed that their May 2019 termination on account of redundancy was unprocedural and unlawful. They alleged absence of prior consultation or notice, no communication of reasons, extent or selection criteria, and discrimination as non-unionised staff whose severance was computed at 17 days per year of service whereas unionised colleagues received the CBA factor of one month. Each claimed the balance of severance pay on the 28-day CBA basis and 12 months' salary in compensation, plus general damages for discrimination under Section 40(1)(d) of the Employment Act. The Respondent admitted the employment and redundancy but denied illegality, asserting a transparent restructuring, no replacement hires, and that the Claimants, being better-paid management staff, received higher terminal benefits and acknowledged the computations. The Court identified two issues: whether the termination was unlawful and whether remedies were due. Relying on Thomas De La Rue and Kenya Airways, it held that Section 40(1)(b) requires written notice of at least one month to the employee and the Labour Officer, which the Respondent failed to prove; a failed voluntary early retirement programme and a disputed staff briefing could not substitute for the statutory notice. It further held that having negotiated a CBA fixing the dues factor, the Respondent could not disadvantage non-unionised management staff. The Court awarded each Claimant one month's salary in compensation plus the balance of severance pay, with interest at court rates from the date of judgment, and costs to the Claimants.

Key legal issues

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01

Whether the redundancy was procedurally carried out under Section 40 of the Employment Act

Holding

The redundancy was unprocedural for want of notification to the employees and Labour Officer and for disparity in redundancy dues tabulation

Reasoning

The Court found the employer failed to prove issuance of the one-month redundancy notice required by Section 40(1)(b). The claimed staff briefing of April 2, 2019 was disputed, its title allegedly superimposed, and proceedings were not recorded. Further, the Claimants' dues were computed at 17 days per year while unionised colleagues received the CBA factor, placing them at a disadvantage contrary to Section 40(1)(d).

p. 7
02

Whether non-unionised employees may be paid lower redundancy dues than the CBA factor

Holding

No - Section 40(1)(d) prohibits disadvantaging an employee for not being a union member; the CBA factor applies

Reasoning

Although the Claimants were management staff earning higher salaries, the employer had negotiated a CBA fixing the redundancy dues factor and could not withhold this benefit from management employees on the basis of non-union membership, per Section 40(1)(d) of the Employment Act.

p. 7
03

Whether a failed voluntary early retirement program can constitute redundancy notice

Holding

No legal basis for treating a failed voluntary early retirement programme as a redundancy notice

Reasoning

The Respondent's HR Manager sought to rely on a voluntary early retirement programme as satisfying the notice requirement. The Court found no legal basis for this proposition; the statutory notice under Section 40(1)(b) must be a written notification to the employee and the Labour Officer of reasons for and extent of the redundancy.

p. 6

Legal principles established

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  • An employer executing a redundancy where a CBA fixes the redundancy dues factor cannot deny management/non-unionised employees that benefit for being non-unionised
  • Section 40(1)(b) of the Employment Act requires written notice of redundancy to the employee personally and to the Labour Officer, and the employer bears the burden of proving such notice

Court orders

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  1. 1.Award of one month's salary in compensation to each of the 8 Claimants (336,893; 215,209; 121,433; 96,410; 118,188; 209,562; 91,099; 89,646 respectively)
  2. 2.Award of balance of severance pay to each Claimant (393,042; 2,367,301; 1,068,611; 629,840; 871,445; 1,229,431; 808,269; 493,053 respectively)
  3. 3.Interest at court rates on the awards from the date of judgment until payment in full
  4. 4.Costs of the case to the Claimants

Authorities

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Legislation

  • Employment ActSection 2
  • Employment ActSection 40
  • Employment ActSection 40(1)(a)-(g)
  • Employment ActSection 40(1)(b)
  • Employment ActSection 40(1)(d)
  • Labour Relations ActDefinition of redundancy (corresponding to Section 2 of the Employment Act)
  • ILO Convention No 158 - Termination of Employment Convention, 1982Notice provisions (referenced)

Cases cited (2)

  • Thomas De La Rue v David Opondo Omutelema
    [2013] eKLR
  • Kenya Airways Limited v Aviation & Allied Workers Union of Kenya & 3 others
    [2014] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act (first-instance employment claim; specific enabling provision not cited in the judgment)

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, "Musili & 7 others v Insteel Limited (Cause E670 of 2020) [2023] KEELRC 695 (KLR)", Case Analysis (2023). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/695/eng@2023-03-23

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