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ELRCPartially AllowedMemorandum of Claim filed 4th August 2017· [2023] KEELRC 2251 (KLR)

M’Kungu v Presiding Bishop Methodist Church in Kenya & another (Cause 1560 of 2017) [2023] KEELRC 2251 (KLR)

Employment and Labour Relations Court
28 September 2023
6,045 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Employment Court ruled the Church's 'restructuring' was really a redundancy, done unfairly, and awarded the ex-Security Manager over KShs 2.1 million.

What this practically means

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Executive summary

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The Claimant, employed by letter dated 10th June 2014 as Security Manager of the Methodist Ministries Centre on a three-year fixed-term renewable contract with a basic salary of Kshs. 40,000, received a termination letter dated 6th March 2015 citing a 'restructuring measure'. He sued for declarations of wrongful and premature termination, salary for the unexpired contract, alleged underpayments, and 12 months' compensation. The Court framed three issues: how the separation occurred, whether the termination was lawful and fair, and entitlement to reliefs. Holding that the use of 'restructuring' together with RW1's evidence of outsourcing security services showed the termination was on account of redundancy, the Court found section 40 of the Employment Act mandatory: no prior notice of intended redundancy was issued to the Claimant or the Labour Officer, the termination letter was predetermined and afforded no consultation, rendering the termination procedurally unfair. On substance, the Respondent produced no outsourcing agreement or proof of payment, so the claimed redundancy was camouflaged and not substantively justified. Judgment was entered for the Claimant: a declaration of unfair termination; 12 months' gross salary compensation of Kshs. 1,031,088 under section 49(1)(c); Kshs. 1,120,000 being 28 months' salary for the unexpired contract term; interest at court rates; and costs of the suit. Relief on renewal expectation and salary underpayments was refused - the promise of an increment never ripened into a contractual term.

Key legal issues

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01

Characterisation of the manner of termination

Holding

Despite the letter describing the termination as a 'restructuring measure', the evidence showed the position was abolished because security services were outsourced; the termination was on account of redundancy.

Reasoning

The Court examined the termination letter's reference to a 'restructuring measure' and RW1's witness statement that the Church wished to procure a security firm, concluding the termination was redundancy. Because the Employment Act prescribes different conditions and remedies for different modes of termination, the Court first had to characterise the separation correctly before assessing its lawfulness.

p. 6
02

Procedural fairness in redundancy

Holding

The termination was procedurally unfair: no prior notice of intended redundancy was issued to the Claimant or the Labour Officer, and the one-month termination letter was predetermined and afforded no consultation.

Reasoning

Section 40(1) of the Employment Act requires prior notification to the employee and Labour Officer, which births consultation. The letter of 6th March 2015 was the first communication, had a predetermined end, and provided no room for consultation. No notice to the Labour Officer was proved. Consultation is integral to procedural fairness under section 45(2), so the termination was procedurally unfair by operation of law.

p. 9
03

Substantive justification of the redundancy

Holding

The alleged redundancy was not genuine; the Respondent failed to discharge its burden of proving a valid and fair reason.

Reasoning

The employer bore the burden under sections 45(2) and 47(5) of the Employment Act. The asserted outsourcing of security services was of a magnitude requiring documentation - an outsourcing agreement or proof of payment - none of which was produced. The explanation of the lady, Emma, taking over was too casual. The evidence was too sketchy to be believed, so the redundancy was camouflaged and unjustified.

p. 10
04

Remedies - compensation and salary for unexpired contract period

Holding

The Claimant was awarded 12 months' gross salary under section 49(1)(c) plus salary for the 28-month unexpired term of the fixed contract, calculated on the contractual basic salary of Kshs. 40,000.

Reasoning

The Court held it may award damages beyond section 49(1)(c), drawing on section 12 of the ELRC Act, where a constrained approach would occasion a travesty of justice. Having left a prior job on the strength of the appointment, and having lost the position unfairly within eleven months without fault, the circumstances justified the exceptional award of salary for the remainder of the contract.

p. 11

Legal principles established

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  • For a termination of employment to be fair there must be both substantive justification and procedural fairness
  • The statutory redundancy procedure in section 40 of the Employment Act is mandatory and consultation is implicit in it
  • Redundancy is a no-fault termination; lack of fault on the employee is its defining characteristic
  • An employer must do more than assert a 'restructure'; it must produce reasonable details and documentation to prove the redundancy was genuine, especially where disputed
  • The Court may award salary for the unexpired period of a fixed-term contract in addition to the section 49(1)(c) compensatory award where justice so requires

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 12 months' gross salary, Kshs. 1,031,088
  3. 3.Salary for the period up to the end of the fixed term contract, 28 months, KShs. 1,120,000
  4. 4.Interest on the sums awarded at court rates from the date of judgment until full payment
  5. 5.Costs of the suit to the Claimant

Authorities

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Legislation

  • Employment Actsection 2 (definition of redundancy)
  • Employment Actsection 40
  • Employment Actsection 45(2)
  • Employment Actsection 47(5)
  • Employment Actsection 49(1)(c)
  • Employment and Labour Relations Court Actsection 12
  • Labour Relations Actsection 2
  • Fair Administrative Action Actsection 4(3)
  • Constitution of KenyaArticle 47
  • Constitution of KenyaArticle 48
  • Constitution of KenyaArticle 159(2)(d)
  • Civil Procedure ActSection 1B
  • Civil Procedure RulesOrder 21 Rule 1
  • ILO Convention No. 158 - Termination of Employment Convention, 1982

Cases cited (7)

  • Walter Ogal Anuro vs Teachers Service Commission
    (2013) eKLR
  • Chapman v Goonvean & Rostowrack China Clay Ltd
    [1973] 2 ALL ER
  • Kenya Airways Ltd Vs Aviation & Allied Workers Union & 3 others
    Civil Appeal No. 46 of 2013 (KLR); (2014) eKLR
  • Showkat Hussein Badat vs Oshwal Education & Relief Board
    Cause No. ELRC 1332 of 2018
  • Warucu Ngethe Kijuu v Hilcrest Limited
    [2022] KEELRC 4156 (KLR)
  • The Germany School Society v Helga Ohany Consolidated with Civil Appeal No. 342 of 2018, Helga Ohany v The German School Society
    Civil Appeal No. Nai. 325 of 2018
  • Cargill Kenya Limited v Mwaka & Others
Jurisdiction invoked
Article 162(2) of the Constitution and Section 12 of the Employment and Labour Relations Court Act (jurisdiction to grant general damages)

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, "M’Kungu v Presiding Bishop Methodist Church in Kenya & another (Cause 1560 of 2017) [2023] KEELRC 2251 (KLR)", Case Analysis (2023). Memorandum of Claim filed 4th August 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/2251/eng@2023-09-28

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