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ELRCPartially Allowed· [2023] KEELRC 1753 (KLR)

Kenya Union of Commercial, Food and Allied Workers v Gikanda Farmers Cooperative Society Limited; Ndaroini Coffee Growers PLC (Third party) (Employment and Labour Relations Cause E006 of 2020) [2023] KEELRC 1753 (KLR)

Employment and Labour Relations Court
14 July 2023
3,213 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~13 min to read original · ~4 min brief

The bottom line

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A Kenyan court ruled a coffee factory redundancy unlawful because one month's notice wasn't given to the union and Labour Officer, awarding workers compensation split between two employers.

What this practically means

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Executive summary

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The claimant, a registered trade union, sued on behalf of ten grievants employed by the respondent, a co-operative society, whose employment was terminated on account of redundancy in June and July 2019 following the delinking of the Ndaroini factory, which became the Third Party, Ndaroini Coffee Growers PLC. The claimant alleged breach of Section 40 of the Employment Act, particularly the failure to serve one month's notice on the union and the area Labour Officer, and sought declarations, withdrawal of the redundancy letters, reinstatement, or in the alternative terminal dues jointly against the respondent and the Third Party. The respondent admitted the terminations but claimed compliance with Section 40 and that the Third Party had undertaken by an agreement dated 29th January 2020 to pay gratuities. The Third Party denied privity and alleged the agreement was signed under coercion. The court found the redundancy unlawful: the respondent's own letters admitted the notice fell short of one month, and no notice was served on the union or Labour Officer. Reinstatement was refused as impracticable since the workplace had passed to the Third Party. The court awarded gratuity balances, salary in lieu of notice and compensation under Section 49, apportioning liability: the Third Party to pay gratuity and notice pay under the voluntary agreement, the respondent to pay compensation for unfair termination. The Third Party's procedural objection under Order 1 Rule 22 was rejected as raised too late. Judgment was entered for the claimant with costs and interest, subject to statutory deductions.

Key legal issues

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01

Whether the redundancy was unfair and unlawful

Holding

The redundancy was unlawful because one month's prior notice was not served on the trade union and the area Labour Officer, and the respondent itself admitted the notice fell short of one month

Reasoning

Section 40 of the Employment Act mandates one month's notice before redundancy, served on the employees' union and the area Labour Officer. The termination letters acknowledged the notice period was shorter and offered pay in lieu. That admission per se rendered the redundancy unlawful. No notice was served on the union or Labour Officer, so the statutory procedure was violated.

p. 6
02

Whether reinstatement was an appropriate remedy

Holding

Reinstatement refused as impracticable; damages awarded instead

Reasoning

The factory where the grievants worked had been taken over by the Third Party following the delinking, so the workplace was no longer available. The grievants had also admitted receipt of some terminal dues. The court therefore elected the alternative prayer for damages as the best remedy, awarding gratuity, salary in lieu of notice and compensation under Section 49.

p. 6
03

Apportionment of liability between the respondent and the Third Party

Holding

The Third Party bears gratuity and salary in lieu of notice under the 29th January 2020 agreement; the respondent bears compensation for unfair termination

Reasoning

The agreement of 29th January 2020, signed voluntarily, obligated the Third Party to pay gratuity to employees rendered redundant by the delinking. However it never agreed to compensate the employees for the respondent's procedural wrongs. Gratuity and notice pay are due even on a lawful redundancy, whereas compensation under Section 49 flows from the respondent's breach, so liability is apportioned accordingly.

p. 8
04

Whether the Third Party could raise non-compliance with Order 1 Rule 22 of the Civil Procedure Rules

Holding

Objection rejected as a procedural technicality raised too late; the Third Party was estopped from raising it

Reasoning

The Third Party alleged that directions under Order 1 Rule 22 were not followed after it entered appearance. The court held this was raised too late in the day, was not raised before the predecessor judge or the current judge, and that the ELRC Procedure Rules 2016 are silent on third party rules, leaving the court free to regulate its own procedure. No prejudice arose from apportioning liability as done.

p. 8

Legal principles established

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  • Failure to give one month's prior notice of redundancy to the employees' trade union and the area Labour Officer renders a redundancy unlawful under Section 40 of the Employment Act
  • A party who signs an agreement voluntarily but alleges coercion or undue influence must adduce evidence to dislodge the agreement; absent such evidence the agreement binds
  • A third party undertaking to pay gratuity is liable only for gratuity and salary in lieu of notice, not for compensation for the employer's procedural breach of Section 40

Court orders

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  1. 1.Declaration that the termination of the grievants' employment through the redundancy was unlawful and unfair
  2. 2.Judgment for the claimant against the Third Party for salary in lieu of notice and service gratuity for each grievant (as itemised, e.g. Julius Maina Gichuru Kshs.2,029,479.50 comprising notice Kshs.49,352 and gratuity Kshs.1,980,127.50)
  3. 3.Judgment for the claimant against the respondent for compensation for unfair termination for each grievant (10 months' gross salary for the 2nd, 3rd, 4th, 5th, 6th, 9th and 10th grievants; 5 months for the 7th and 8th grievants; 2 months for the 1st grievant)
  4. 4.Awards subject to statutory deductions
  5. 5.Claimant awarded costs plus interest at court rate from the date of judgment

Authorities

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Legislation

  • Employment ActSection 40
  • Employment ActSection 49
  • Civil Procedure RulesOrder 1 Rule 22
  • ELRC Procedure RulesRule 28(3)
  • ELRC Procedure Rules, 2016Silence on Third Party Rules
  • Collective Bargaining Agreement (CBA)Clause 15

Cases cited (2)

  • Ottoman Bank v Gawami
    [1965] EA 464
  • Kabansora Millers v New Salama Wholesalers & 2 others
    [2001] 1 KLR 451
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under Article 162(2) of the Constitution and the Employment Act (Section 40 and Section 49 invoked)

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, "Kenya Union of Commercial, Food and Allied Workers v Gikanda Farmers Cooperative Society Limited; Ndaroini Coffee Growers PLC (Third party) (Employment and Labour Relations Cause E006 of 2020) [2023] KEELRC 1753 (KLR)", Case Analysis (2023). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/1753/eng@2023-07-14

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