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ELRCPartially AllowedCause No. 788 of 2018· [2023] KEELRC 757 (KLR)

Inyambukho v Orchid Furnitures Ltd (Cause 788 of 2018) [2023] KEELRC 757 (KLR)

Employment and Labour Relations Court
24 March 2023
AMAnna Ngibuini Mwaure
1,827 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~7 min to read original · ~4 min brief

The bottom line

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A Kenyan employer must strictly follow section 40's notice and selection rules before any redundancy, or pay damages even after settling terminal dues.

What this practically means

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Executive summary

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The claimant, employed by the respondent from 2013 as a machine operator earning Kshs 17,000 (later Kshs 18,500 inclusive of house allowance), was terminated on March 22, 2018 on grounds of workforce reduction/redundancy. He claimed Kshs 373,230/- plus costs, interest and a certificate of service, alleging the redundancy was procedurally and substantively flawed. The respondent denied the claim, asserting that dues were channelled through Shoppers Sacco Society Limited pursuant to a collective bargaining agreement and that the claimant accepted payment. The court framed two issues: whether the redundancy was unfair and unprocedural, and entitlement to the dues prayed. Applying section 40(1)(a)-(g) of the Employment Act, the court found no evidence of the mandatory notice to the union, the labour officer or the claimant; held that a Sacco cannot be equated to a trade union; and found no communicated selection criteria. Relying on Kenya Airways Ltd v Aviation & Allied Workers Union and Jane Khalechi v Oxford University Press, the court held the section 40 conditions precedent mandatory, and found the termination both substantively and procedurally unfair. Since the claimant admitted receiving severance, notice pay and unpaid salary, the court declined 12 months' compensation and instead awarded 5 months' salary as general damages (Kshs 113,100/-), plus costs, interest from judgment, and a certificate of service within 14 days.

Key legal issues

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01

Compliance with section 40 of the Employment Act before declaring redundancy

Holding

The respondent did not comply with section 40(1)(a)-(g): no notice to the union, the labour officer, or the claimant of the intended redundancy; no evidence of selection criteria based on seniority, skill, ability and reliability.

Reasoning

The court reviewed section 40(1)(a)-(g) of the Employment Act and found no evidence of the mandatory one-month notice of intended redundancy to the union and labour officer, nor personal notice to the claimant. The letter to Shoppers Sacco Society Limited merely forwarded payment and could not substitute for union notification. The respondent also failed to communicate the criteria used to select the claimant for redundancy.

p. 3
02

Substantive and procedural fairness in termination for redundancy

Holding

The respondent failed to give valid justification for the redundancy and failed to follow the mandated process; the termination was both substantively and procedurally unfair.

Reasoning

Relying on Kenya Airways Ltd v Aviation & Allied Workers Union and Jane Khalechi v Oxford University Press EA Ltd, the court held that redundancy requires both substantial justification and procedural fairness, and that section 40's conditions precedent are mandatory. The respondent failed on both limbs, entitling the claimant to damages for unfair termination despite having received his terminal dues.

p. 4

Legal principles established

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  • The conditions precedent to declaring an employee redundant under section 40 of the Employment Act are mandatory and not discretionary.
  • A Sacco cannot be equated to a trade union for purposes of section 40 notification requirements.
  • Lawful termination on redundancy must be both substantially justified and procedurally fair.

Court orders

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  1. 1.The court holds the claimant was unfairly and unprocedurally terminated
  2. 2.Award of 5 months' salary as general damages, totalling Kshs 113,100/-
  3. 3.Costs awarded to the claimant
  4. 4.Interest at court rates from date of judgment till full payment
  5. 5.Claimant to be availed certificate of service within 14 days

Authorities

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Legislation

  • Employment Actsection 40(1)(a)-(g)
  • Employment Actsection 41(1)
  • Employment Actsection 43
  • Employment Actsection 45(2)(b)(i)
  • Constitution of KenyaArticle 159(2)(d)
  • Constitution of KenyaArticle 48
  • Civil Procedure RulesOrder 21 Rule 1
  • Civil Procedure ActSection 1B

Cases cited (4)

  • David Gichana Omuya v Mombasa Maize Millers Ltd
    [2014] eKLR
  • Bernard A. Kagasi v For You Chinese Restaurant
    [2014] eKLR
  • Kenya Airways Limited v Aviation & Allied Workers Union Kenya & 3 Others
    [2014] e KLR
  • Jane Khalechi v Oxford University Press EA Limited
    [2013] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over employment disputes; references to Article 159(2)(d) and Article 48 of the Constitution

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, "Inyambukho v Orchid Furnitures Ltd (Cause 788 of 2018) [2023] KEELRC 757 (KLR)", Case Analysis (2023). Cause No. 788 of 2018. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/757/eng@2023-03-24

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