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ELRCPartially AllowedELRC Cause (Statement of Claim dated 27th September 2016; references ELRC 1332 of 2018 precedent)

Mbage v Hillcrest Investment Limited (Employment and Labour Relations Cause 2007 of 2016) [2023] KEELRC 2096 (KLR)

Employment and Labour Relations Court
27 July 2023
OKOcharo Kebira
9,078 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~36 min to read original · ~4 min brief

The bottom line

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A Kenyan court ruled a school's 'redundancy' was fake, awarding the employee nearly KShs 2 million for unfair, disguised termination.

What this practically means

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Executive summary

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The Claimant, employed as Manager, Public Relations and Communication at Hillcrest International Schools on a two-year fixed-term contract effective 1st September 2015, was terminated on the ground of redundancy by a letter dated 26th August 2016, after a disciplinary process over allegedly unauthorised leave had been commenced and abandoned. She claimed declarations of unfair labour practice, salary for the unexpired contract term (Kshs. 2,187,350), twelve months' compensation (Kshs. 2,386,200), constitutional damages and costs. The Respondent defended the redundancy as genuine, driven by declining student enrolment and financial capacity, and asserted compliance with section 40 of the Employment Act. The Court framed three issues: fairness and lawfulness of the termination, entitlement to reliefs, and costs. It held that section 40 contemplates notice that births consultation, and the 26th August 2016 letter, announcing a predetermined outcome, did not satisfy the provision; no evidence of consultation existed, rendering the termination procedurally unfair. On substance, the Respondent failed to produce minutes of the alleged 16th June 2016 board decision and its own accounts showed a profit of KShs. 78,983,000 with a 22% increase, while it advertised new teacher vacancies immediately after; the redundancy was camouflaged. The Court also found a violation of the right to fair labour practices under Article 41, given the abandoned disciplinary process. Judgment was entered for the Claimant: a declaration of unfair termination, 8 months' gross salary (Kshs. 1,590,800) under section 49(1)(c), KShs. 400,000 general damages for the constitutional violation, interest, and costs to the Claimant. The claim for salary to the contract's end was refused for lack of proof and to avoid double compensation.

Questions the Court framed

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

  1. 1.Whether the termination of the Claimant's employment was fair and lawful.
  2. 2.Whether the Claimant is entitled to the reliefs sought or any of them.
  3. 3.Who should bear the costs of this suit?

Key legal issues

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01

Procedural fairness of the redundancy under section 40 of the Employment Act

Holding

Termination was procedurally unfair because no genuine prior notice or consultation preceded the 26th August 2016 letter

Reasoning

Section 40 requires notice to the employee and labour officer which births consultation. The single letter of 26th August 2016 announced a fait accompli and left no room for consultation. The Court of Appeal in Kenya Airways holds consultation imperative under Kenyan law, and Article 47 and the Fair Administrative Action Act reinforce it. No evidence of consultation was placed before the Court, so the termination was procedurally unfair.

p. 14
02

Substantive justification of the redundancy

Holding

The alleged redundancy was not genuine; the employer failed to discharge its burden of proving operational requirements

Reasoning

The employer was expected to produce evidence of when rationalization was conceived, deliberated and decided, but produced no minutes of the alleged 16th June 2016 board meeting, inviting an adverse inference. Its own profit and loss account showed a 22% increase and profit of KShs. 78,983,000 in the first quarter of 2016, and the Respondent immediately advertised for new teachers. The redundancy was camouflaged.

p. 15
03

Violation of the right to fair labour practices under Article 41

Holding

A camouflaged redundancy following an abandoned disciplinary process violated the Claimant's right to fair labour practices

Reasoning

The Respondent commenced a disciplinary process via a show-cause letter, then abandoned it without explanation and declared the position redundant - conduct incompatible with good faith and fair labour practices. The Court awarded general damages of KShs. 400,000, signalling that terminating employment for non-genuine reasons carries a price.

p. 17
04

Remedies: compensation under section 49(1)(c) and contractual salary claim

Holding

8 months' gross salary awarded as compensation; claim for salary to end of fixed-term contract refused

Reasoning

Maximum 12-month compensation is discretionary. Given the procedural and substantive unfairness, the camouflaged redundancy, no contribution by the Claimant, and the constitutional violation, 8 months' gross salary was appropriate. The claim for salary to contract end failed for want of proof and to avoid double compensation.

p. 15

Legal principles established

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  • Termination on account of redundancy must be both substantively justified and procedurally fair
  • Consultation between employer and employee is implied and mandatory under section 40(1)(a) and (b) of the Employment Act
  • The employer bears the burden of proving the validity and fairness of a redundancy, particularly where it is disputed
  • A redundancy notice that announces a predetermined outcome does not satisfy section 40 of the Employment Act

Court orders

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  1. 1.A declaration that the termination of the Claimant's employment on the ground of redundancy was procedurally and substantively unfair.
  2. 2.Compensation pursuant to section 49(1)(c) of the Employment Act of 8 months' gross salary, Ksh. 1,590,800.
  3. 3.General damages for violation of the right to fair labour practices, KShs. 400,000/-.
  4. 4.Interest on the sums awarded at court rates from the date of judgment till full payment.
  5. 5.Costs of the suit to the Claimant.

The bench

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

OK
majority

Wrote the judgment

Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 and Article 41 of the Constitution (first-instance labour claim)

Relief refused

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Payment of salary from October 2016 to the end of the contract (Kshs. 2,187,350)

No evidence of entitlement or legitimate expectation; an award under the constitutional violation head would amount to double compensation

p. 16

Damages of 12 months' pay (Ksh. 2,386,200) for unfair termination

Court exercised discretion under section 49(1)(c) and awarded only 8 months' gross salary

p. 16

Costs

The costs of this suit to be borne by 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.

A declaration that the termination of the Claimant’s employment on the ground of redundancy was procedurally and substantively unfair.
p. 17Final orders - declaration of unfair termination
Compensation pursuant to the provision of section 49 (1) (c) of the Employment Act, 8 (eight) months’ gross salary, Ksh. 1, 590, 800.
p. 17Final orders - compensation award
General damages for violation of the right to fair labour practices, KShs.400,000/-.
p. 17Final orders - constitutional damages
Consultations have to be a reality not a charade
p. 13Nature of consultation in redundancy
Rationalization of staff and declaration of redundancy is a process it is not a thing that just happens.
Evidential burden on employer in redundancy
I trust that this award will help make the Respondent and other employers learn that there is a price to pay for terminating an employee’s employment for reasons that are not genuine.
p. 17Deterrent purpose of constitutional damages
The costs of this suit to be borne by the Respondent.
p. 17Costs order

Issues in the judgment

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minor

Judgment states the decision to declare the Claimant redundant was made by the Board in June 2016 in places, but in one passage refers to June 2018 while describing the same period of continued employment (June–August)

minor

Case number of the instant Cause is not expressly stated in the judgment text; only a precedent Cause number (ELRC 1332 of 2018) appears

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (5)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Mbage v Hillcrest Investment Limited (Employment and Labour Relations Cause 2007 of 2016) [2023] KEELRC 2096 (KLR)", Case Analysis (2023). ELRC Cause (Statement of Claim dated 27th September 2016; references ELRC 1332 of 2018 precedent). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/2096/eng@2023-07-27

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