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ELRCPartially AllowedMemorandum of Claim dated 7th September 2017· [2023] KEELRC 2087 (KLR)

Shula v Blue Waves Enterprises Limited (Formerly Crown Sea Enterprises Limited) (Cause 1814 of 2017) [2023] KEELRC 2087 (KLR)

Employment and Labour Relations Court
27 July 2023
4,041 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 an employee was unfairly made redundant without notice, awarding him severance, compensation, and leave pay totalling over KShs. 200,000.

What this practically means

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Executive summary

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The Claimant sued the Respondent, alleging he was employed in 2004 by Crown Sea Enterprises Limited, which he said later changed its name to Blue Waves Enterprises Limited, and that on 31st December 2016 his employment was verbally terminated on the ground that the Respondent could no longer continue doing business - in effect a redundancy - without notice or payment of terminal dues. The Respondent denied the claim in toto but closed its case without calling any witness. The Court, reformulating the agreed issues, first held that an employer-employee relationship existed, reasoning that NSSF statements showed the Respondent as the employer under the same membership number, and that a letter from the Federation of Kenya Employers admitted continued NSSF remittances after the alleged dissolution of Crown Sea Enterprises. The Court then found the termination was a redundancy that failed both substantive and procedural fairness: no notices were issued to the Claimant or the Labour officer under section 40 of the Employment Act, no consultations occurred, and the Respondent failed to discharge its burden under sections 43 and 45. Remedies were awarded selectively: severance pay of Kshs. 72,000 for twelve completed years of service, compensation of Kshs. 16,800 for untaken leave limited to the three years preceding suit by virtue of section 90, ten months' gross salary (Kshs. 120,000) as compensation under section 49(1)(c), and a certificate of service to be issued within 30 days. Claims for public holidays and overtime failed for want of proof. Interest at court rates and costs of the suit were granted.

Key legal issues

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01

Whether an employer-employee relationship existed between the Claimant and the Respondent

Holding

The Court found that Crown Sea Enterprises Limited changed its name to Blue Waves Enterprises Limited and the Claimant continued in employment.

Reasoning

The NSSF statements bore the Respondent's name as employer with the same membership number appearing on the employer registration notification. The Federation of Kenya Employers' letter admitted the Respondent continued making NSSF remittances after the alleged dissolution of Crown Sea Enterprises, which the Court held was inexplicable absent an employment relationship. The Respondent adduced no evidence to the contrary.

p. 6
02

Whether the termination was a fair redundancy

Holding

The termination was both procedurally and substantively unfair.

Reasoning

The relevant notices under section 40 of the Employment Act were not issued to the Claimant or the Labour officer, and there were no consultations. The Respondent, having closed its case without calling a witness, failed to discharge its statutory burden under sections 43 and 45 to prove a valid reason and fairness of the termination.

p. 7
03

Remedies for the unfair redundancy

Holding

Severance pay for 12 completed years, leave compensation limited to three years, ten months' salary compensation and a certificate of service were awarded; overtime and public holiday claims failed for want of proof.

Reasoning

The Court applied section 40(g) for severance pay, section 90 to limit leave claims to three years before filing, and exercised its discretion under section 49(1)(c) to award ten months' gross salary, considering the manner of termination, length of service and the Claimant's non-contribution to the termination.

p. 9

Legal principles established

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  • A burden of proof imposed on a party by statute is dischargeable only by adducing sufficient evidence on the matters to be proved, unless there is an admission.
  • The employer bears the onus of establishing a genuine redundancy situation and a fair and valid reason for termination under sections 43 and 45 of the Employment Act.
  • Annual leave is a statutory right that cannot be contracted out or denied.
  • The employee claiming overtime bears the burden of establishing hours or days served in excess of the legal maximum.

Court orders

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  1. 1.Compensation for unutilized leave days, KShs. 16,800.
  2. 2.Severance pay, Kshs. 72,000.
  3. 3.Certificate of service be issued to him within 30 days of this Judgement.
  4. 4.Compensation pursuant to the provisions of section 49(1)(c) of the Employment Act, KShs. 120,000.
  5. 5.Interest on the sums awarded above at court rates from the date of this judgment till full payment.
  6. 6.Costs of the suit.

Authorities

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Legislation

  • NSSF Actsection 20(1)
  • Employment Act 2007section 2
  • Labour Relations Actsection 2
  • Employment Act 2007sections 40, 43, 45
  • Employment Act 2007section 40(g)
  • Employment Act 2007section 49(1)(c)
  • Employment Act 2007section 51
  • Employment Act 2007section 90

Cases cited (5)

  • Kenya Airways vs Kenya Aviation Workers Union (K) (2014) eKLR
    (2014) eKLR
  • Jerusha Nyambura Maingi vs Sen-Tech Ltd (2013) eKLR
    (2013) eKLR
  • Francis Kiragu vs Rivers Cross Technologies Ltd (2013) eKLR
    (2013) eKLR
  • Kenya Airways Limited vs Kenya Aviation & Allied Workers Union (2014) eKLR
    (2014) eKLR
  • Rogoli Ole Manadiengi vs General Cargo Services Ltd (2016) eKLR
    (2016) eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act 2007

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, "Shula v Blue Waves Enterprises Limited (Formerly Crown Sea Enterprises Limited) (Cause 1814 of 2017) [2023] KEELRC 2087 (KLR)", Case Analysis (2023). Memorandum of Claim dated 7th September 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/2087/eng@2023-07-27

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