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ELRCDismissedNot stated in the judgment (memorandum of claim dated 8th July 2019)· [2023] KEELRC 2434 (KLR)

Njeru v Nampak Kenya Limited (Employment and Labour Relations Cause 501 of 2019) [2023] KEELRC 2434 (KLR)

Employment and Labour Relations Court
6 October 2023
5,803 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~23 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court upheld a senior executive's redundancy, ruling the employer genuinely restructured and paid above-contractual severance.

What this practically means

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Executive summary

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The claimant, employed by the respondent from October 2000 and rising to finance director Kenya and Tanzania, was declared redundant by a letter dated 1st March 2019 with effect from 30th April 2019. He sued, alleging the redundancy was a sham because the respondent appointed Mr Shaun Du Plessis as regional finance director effective 1st June 2019, that the redundancy was discriminatory, and that he was underpaid severance (computed at 23 days per year) and notice pay. The respondent defended the redundancy as a genuine restructuring following heavy losses from 2016, evidenced by extensive consultative meetings, notices to the labour office and affected employees, a phased restructure affecting some 40-48 roles, and payment of a package in excess of contractual entitlements. The court framed two issues: whether the redundancy was unfair or unlawful, and entitlement to reliefs. Applying sections 40 and 45 of the Employment Act and the Court of Appeal decisions in Cargill Kenya v Mwaka and Kenya Airways v Aviation & Allied Workers Union, the court held the respondent had a valid, commercially driven reason, consulted the claimant extensively, abolished rather than refilled his role, and complied with section 40; the claimant was not discriminated against and the Du Plessis appointment covered a broader divisional role. Severance at 23 days per year was already paid, and section 40(1)(f) concerns payment in lieu, not a second notice. The claim was dismissed with each party bearing its own costs.

Key legal issues

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01

Whether the termination on account of redundancy was unfair and/or unlawful

Holding

The termination was lawful: the respondent had a valid reason based on operational requirements and complied with section 40 of the Employment Act

Reasoning

The respondent proved heavy losses from 2016 and a genuine restructuring that abolished the claimant's role, downgrading finance to manager level. Although formal notice to the labour office reached it after the claimant's termination letter, the claimant was consulted throughout, knew of the impending redundancy, applied for voluntary early retirement, and was not discriminated against as other roles were also abolished. The court held the statutory requirements were substantially met and the claimant was not unlawfully terminated.

p. 11
02

Whether the claimant was entitled to additional severance pay at 23 days per year

Holding

Not entitled; the contract provided 21 days per year and the payout already enhanced this to 23 days

Reasoning

The claimant sought severance at 23 days per year over 18 years, claiming Kshs 3,061,196 was owed. The court found the contractual entitlement under clause 15 was 21 days per completed year of service, and that the amount actually paid (Kshs 24,490,917) already reflected an enhancement to 23 days, so the claimant was well compensated and the claim for more severance was unmerited.

p. 11
03

Whether the claimant was entitled to two months' pay in lieu of notice

Holding

The prayer was unmerited; the claimant served two months' notice and was paid one month's wages in lieu

Reasoning

Relying on Cargill Kenya Limited v Mwaka and Africa Nazarene University v David Mutevu, the court held section 40(1)(f) relates to payment in lieu of notice, not a second termination notice. The claimant received his letter on 1st March 2019 and worked until 30th April 2019, effectively serving two months' notice, and was paid one month's wages in lieu for the month he was released early.

p. 12

Legal principles established

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  • A fair and lawful termination must be both procedurally fair and substantively justified under sections 40(1) and 45(2) of the Employment Act
  • An employer must prove the redundancy selection criteria under section 40(1)(c) was objectively, uniformly and fairly applied
  • Section 40(1)(f) concerns payment in lieu of notice, not a separate second notice of termination before redundancy
  • Where the employer genuinely believes a redundancy situation exists, the court has no supervisory role to substitute its own business judgment on commercial necessity

Court orders

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  1. 1.The claimant's claim is dismissed
  2. 2.The claim for two months' salary in lieu of notice is unmerited and refused
  3. 3.The claim for compensation for unlawful termination is refused as the termination was lawful
  4. 4.Each party to meet the costs of their own suit

Authorities

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Legislation

  • Employment ActSection 40(1)(a)-(g)
  • Employment ActSection 45(2)
  • Employment ActSections 43 and 47(5)
  • Constitution of KenyaArticle 159(2)(d)
  • Constitution of KenyaArticle 48
  • Civil Procedure RulesOrder 21 Rule 1
  • Civil Procedure ActSection 1B

Cases cited (6)

  • Tibbs Vincent Robert vs SGS Kenya Ltd
    (2022) eKLR
  • Cargill Kenya Limited v Mwaka & 3 others
    (Civil Appeal 54 of 2019) [2021] KECA 115 (KLR)
  • Kenya Airways Limited v Aviation & Allied Workers Union Kenya & 3 others
    [2014] eKLR
  • Aoraki Corporations Limited V. Collin Keith McGavin
    CA 2 of 1997 [1998] 2 NZLR 278
  • Fasap v Philippine Airlines
    GR No. 178083
  • Africa Nazarene University v David Mutevu & 103 others
    (2017) eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment and Labour Relations Court Act over employment claims under the Employment Act

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, "Njeru v Nampak Kenya Limited (Employment and Labour Relations Cause 501 of 2019) [2023] KEELRC 2434 (KLR)", Case Analysis (2023). Not stated in the judgment (memorandum of claim dated 8th July 2019). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/2434/eng@2023-10-06

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