Njiri & 3 others v Insteel Limited (Cause E647 of 2020) [2023] KEELRC 733 (KLR)

Employment and Labour Relations Court

23 March 2023

LNLINNET NDOLO

2,599 words in judgment

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The bottom line

Kenya's Employment Court ruled Insteel's redundancy unlawful because the company skipped the required notices and underpaid non-union staff their severance.

What this practically means

Executive summary

Four former management employees of Insteel Limited challenged the termination of their employment on account of redundancy in October 2019. They alleged that no consultations or notice preceded the redundancy, that no selection criteria were communicated, that new recruits replaced them, and that they were discriminated against for being non-unionised, receiving severance computed at 17 days per year of service while unionised colleagues received one month per year under a Collective Bargaining Agreement. They sought notice pay, balances of severance pay, 12 months' salary as compensation for unfair termination and general damages. The respondent admitted the employment and the redundancy but denied illegality, asserting that employees were briefed on an impending restructuring, that the claimants signed against computed terminal dues, and that the CBA did not apply to non-unionised management staff. The court framed two issues: whether the termination was unlawful and whether remedies were due. Applying section 40 of the Employment Act and the Court of Appeal authorities on the two distinct statutory notices and the requirement of consultation, the court found the respondent had failed to prove issuance of the redundancy notice required under section 40(1)(b); a failed voluntary early retirement programme and a disputed attendance list did not amount to notice. It further held that paying non-unionised employees at a lower factor than the CBA factor offended section 40(1)(d). The redundancy was therefore unprocedural. Each claimant was awarded one month's salary in compensation and the balance of severance pay, with interest at court rates from judgment and costs. Claims for general damages were not awarded.

Key legal issues

Whether the redundancy was executed in compliance with section 40(1)(b) of the Employment Act

Holding

The redundancy was unprocedural for want of due notification; the respondent failed to prove issuance of the statutory redundancy notice.

Reasoning

The court found the respondent's evidence of notice wanting. The HR Manager's attempt to pass off a failed voluntary early retirement programme as redundancy notice had no legal basis. An attendance list of an April 2, 2019 meeting was disputed, the claimants' witness said its title was superimposed after signing, and no minutes of the meeting were kept. The respondent therefore failed to discharge the burden of proving notice to the employees and the Labour Officer.

p. 6

Whether the claimants were disadvantaged for being non-unionised in the computation of severance pay

Holding

Yes; computing dues at 17 days per year while unionised colleagues received one month per the CBA violated section 40(1)(d).

Reasoning

The court held that where a CBA fixes the factor for redundancy dues, management employees cannot be denied that benefit merely because they are not union members. The respondent's justification that the claimants earned higher salaries did not cure the disparity. The claimants were entitled to the balance of severance computed on the more favourable basis.

p. 6

What remedies flow from the unprocedural redundancy

Holding

Each claimant awarded one month's salary in compensation plus balance of severance pay, with interest and costs.

Reasoning

Having found the redundancy unprocedural for want of notification and disparity in dues tabulation, the court awarded each claimant one month's salary in compensation and the balance of severance pay, interest at court rates from judgment, and costs of the case. The claims for general damages and 12 months' compensation were not awarded as such.

p. 7

Legal principles established

Section 40(1)(a) and (b) of the Employment Act require two distinct one-month notices in redundancy: a redundancy notification and a termination notice, which may be satisfied by pay in lieu.
An employer cannot place employees at a disadvantage in redundancy dues for not being union members; where a CBA fixes a more generous redundancy factor, non-unionised employees are entitled to it.

Court orders

1.1st Claimant awarded Kshs. 114,014 being one month's salary in compensation and Kshs. 1,432,776 balance of severance pay, total Kshs. 1,546,790
2.2nd Claimant awarded Kshs. 54,993 in compensation and Kshs. 555,430 balance of severance pay, total Kshs. 610,423
3.3rd Claimant awarded Kshs. 101,743 in compensation and Kshs. 1,209,539 balance of severance pay, total Kshs. 1,311,282
4.4th Claimant awarded Kshs. 77,099 in compensation and Kshs. 873,789 balance of severance pay, total Kshs. 950,888
5.Awards to attract interest at court rates from the date of judgment until payment in full
6.Claimants awarded costs of the case

Authorities

Legislation

Employment Actsection 2
Employment Actsection 40
Labour Relations Actcorresponding section defining redundancy

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)

Key timeline

Practical implications

Frequently asked questions

Cite this brief

Caselaw, "Njiri & 3 others v Insteel Limited (Cause E647 of 2020) [2023] KEELRC 733 (KLR)", Case Analysis (2023). Cause No E647 of 2020. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/733/eng@2023-03-23

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