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ELRCDismissedNot stated in judgment

Ayieko & 3 others v Samaritan Purse (Employment and Labour Relations Cause 312 of 2017) [2023] KEELRC 1411 (KLR)

Employment and Labour Relations Court
9 June 2023
ANAbuodha J. N.
2,838 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~11 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court ruled that an employer who properly notifies the labour officer and consults employees can lawfully declare redundancies, even recovering staff loans from terminal dues.

What this practically means

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Executive summary

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Four claimants, formerly employed by the respondent in various positions at its Eldoret office, were issued with notification of redundancy on March 1, 2017 and declared redundant on April 19, 2017. They sued for maximum compensation of 12 months' gross salary (Kshs 7,112,844 in total), alleging the redundancy lacked valid and justifiable reasons, that there were no bona fide consultations, that the Eldoret labour officer was not notified as required by Section 40(1)(b) of the Employment Act, that selection criteria breached Section 40(1)(c) (two allegedly recalled employees), and that the notices were signed by a foreigner working without a permit, rendering them void. The respondent admitted the redundancy but maintained it complied fully with Section 40, that consultations were held, that the labour office was notified, and that all dues were paid. At hearing, the 1st claimant testified for the claimants and the respondent's Human Resource Officer, Janet Wahu Kinyua, testified for the respondent. The court, applying Section 40 and the authorities in Aoraki Corporation Ltd v McGavin and Kenya Airways Corporation Ltd v Tobias Oganga Auma, held that the burden lay on the employer to justify the redundancy and substantially comply with Section 40, and found the claimants had not satisfactorily contested the notification, discussions and declaration. Their real complaint was the lumpsum deduction of loans from terminal dues, which the court held was a legitimate obligation of the respondent. The claim was dismissed with costs on June 9, 2023.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the respondent had valid and justifiable reasons for declaring the claimants redundant
  2. 2.Whether the respondent complied with the procedural requirements of Section 40 of the Employment Act, 2007, including notification of the labour officer and fair selection criteria
  3. 3.Whether the claimants were entitled to compensation of 12 months' gross salary for unfair termination
  4. 4.Whether the deduction of loan repayments from terminal dues rendered the redundancy unlawful

Key legal issues

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01

Compliance with Section 40 of the Employment Act in declaring redundancy

Holding

The respondent complied with Section 40; the claimants did not satisfactorily contest the notification, consultation or declaration process

Reasoning

The court noted that the claimants' principal grievance concerned loan deductions from their terminal dues rather than the redundancy process itself. They did not satisfactorily contest the notification of intent, the ensuing discussions, or the declaration. The respondent had notified the labour officer and engaged the claimants, and the burden of proving non-compliance was not discharged.

02

Recovery of employee loans from terminal dues

Holding

Loan recovery was a legitimate obligation of the respondent which it had exercised even during employment

Reasoning

The claimants' complaint that lumpsum loan deductions left them with little redundancy pay did not render the termination unfair. The loan forms permitted deduction on exit, the respondent had deducted monthly repayments during employment, and the court held recovery was an obligation on the respondent.

p. 7

Legal principles established

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  • The burden is on the employer to show substantive justification for redundancy and substantial compliance with Section 40 of the Employment Act
  • The court has no jurisdiction to prevent an employer from restructuring so long as it observes relevant regulations; the decision to declare redundancy is that of the employer

Court orders

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  1. 1.The claim is dismissed with costs

The bench

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One judgment of the whole court — no separate or dissenting opinions.

AN
majority

Wrote the judgment

Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (Section 40)

Relief refused

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Maximum compensation for unfair termination equivalent to 12 months' gross salary (Kshs 7,112,844 for the four claimants)

The court found the respondent followed the law in declaring the claimants redundant and substantially complied with Section 40 of the Employment Act

p. 7

Costs

The claim is dismissed with costs to the respondent

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

In conclusion the court finds the claim without merit and hereby dismisses the same with costs. It is so ordered
p. 7Final orders - dismissal of claim
To this extent the court is satisfied that the respondent followed the law in declaring the claimants redundant.
p. 7Finding of compliance with Section 40
The burden on the employer therefore is to show that there was substantive justification for the employees redundancy and that the employer substantially complied with Section 40 of the Employment Act.
p. 6Burden of proof in redundancy

Issues in the judgment

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minor

Multiple typographical/OCR errors in the judgment text (e.g. 'in contention of Section 40' apparently meaning 'contravention', garbled passages in the statement of response)

minor

The claimants' witness is referred to as Mr Patrick Omondi and Mr Ayieko interchangeably without clarification

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, "Ayieko & 3 others v Samaritan Purse (Employment and Labour Relations Cause 312 of 2017) [2023] KEELRC 1411 (KLR)", Case Analysis (2023). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/1411/eng@2023-06-09

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