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ELRCPartially AllowedMilimani CMEL 1869 of 2019 (appeal therefrom)· [2023] KEELRC 2785 (KLR)

Odoyo & 5 others v General Conference of Seventh Day Adventist Church East-Central Africa Division (ECD) (Cause E063 of 2020) [2023] KEELRC 2785 (KLR)

Employment and Labour Relations Court
31 October 2023
3,673 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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What this practically means

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Executive summary

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This is a first appeal to the Employment and Labour Relations Court at Eldoret against the judgment of Hon. L.B. Koech, Principal Magistrate, in Milimani CMEL 1869 of 2019. Six former cafeteria employees claimed they were dismissed when their employer outsourced its restaurant business; the trial court awarded them one month's salary in lieu of notice, severance pay at 15 days' salary per year worked, and unpaid leave. On appeal, the appellants sought compensatory damages (12 months' salary) for an allegedly unfair redundancy and house allowance. The court framed two issues: entitlement to compensatory damages and to house allowance. On the first, it found the employer had a valid reason for the redundancy (consistent losses in the cafeteria) and substantially complied with section 40(1) of the Employment Act, save for the failure to give one month's notification to the employees and the labour officer under section 40(1)(b). It held that this deficiency did not render the redundancy unfair under section 45(2) so as to justify compensatory damages; instead each appellant was awarded one month's pay in lieu of the missed notification. On house allowance, the court held that an employee paid above the consolidated gazetted minimum wage (minimum wage plus 15% house allowance) cannot claim a further 15%; the appellants' payslips showed basic pay equal to gross pay and no underpayment was alleged. The trial court's judgment was otherwise upheld, the respondent was ordered to bear the costs of the appeal, and interest on the new award runs from the date of judgment.

Key legal issues

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01

Whether the failure to notify the employees and the labour officer one month before redundancy rendered the redundancy an unfair termination attracting compensatory damages

Holding

No. The redundancy had a valid reason and the employer substantially complied with section 40(1); only the one-month notification was missed, which is compensated by an award of one month's pay, not compensatory damages.

Reasoning

The court found that the Appellants did not challenge the validity of the reasons for the redundancy, only the notification. The Respondent's cafeteria had suffered consistent losses, justifying the leasing out of the business. Substantial compliance with section 40(1) existed apart from notice. The court held the deficiency did not meet section 45(2) unfairness and awarded one month's pay in lieu of the missed notification instead of 12 months' compensation.

p. 8
02

Whether the Appellants were entitled to house allowance over and above their gross pay

Holding

No. Their gross pay was not below the consolidated gazetted minimum wage, so the salary was consolidated and included house allowance.

Reasoning

Reading section 31(2)(a) with Rule 4 of the Regulation of Wages (General) Order, the court reasoned that only an employee paid below the gazetted minimum wage plus 15% house allowance can demand the additional 15%. The payslips showed basic pay equal to gross pay, and the Appellants never claimed underpayment below the consolidated minimum wage.

p. 9

Legal principles established

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  • An employee whose wage or salary is above the minimum consolidated wage (gazetted minimum wage plus 15% house allowance) cannot claim an additional 15% house allowance on the basis that their salary is not consolidated.
  • Failure to give the one-month notification under section 40(1)(b) of the Employment Act, where the employer substantially complies with section 40(1) and has valid reasons for redundancy, does not render the redundancy unfair under section 45(2); the remedy is an award of one month's pay in lieu of notification.

Court orders

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  1. 1.Judgment of Hon. L.B. Koech delivered on 22nd September 2020 upheld except that each Appellant is awarded one month's pay in lieu of notification of redundancy under Section 40(1)(b) of the Employment Act
  2. 2.Respondent to bear the costs of the appeal
  3. 3.Interest to accrue on the award of one month's pay from the date of judgment

Authorities

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Legislation

  • Employment Act, 2007Section 51
  • Employment Act, 2007Section 40(1) and (1)(a)-(g), 40(1)(b), 40(1)(f)
  • Employment Act, 2007Section 45(2)
  • Employment Act, 2007Section 49(1)(c)
  • Employment Act, 2007Section 31, 31(2)(a)
  • Regulation of Wages (General) Order (under the Labour Institutions Act)Rule 4
  • Labour Institutions Actgeneral reference

Cases cited (9)

  • Joseph Sani Orina v Hiprora Business solutions (E.A) Limited
    [2017] eKLR
  • Stephen Keyo Olus v Intrahealth International
    [2019] eKLR
  • Mumias Sugar Company Limited & Another v Beatrice Akinyi Omondi
    Kakamega High Court Civil Appeal No. 38 of 2015
  • Walker v Wilsher
    (1989) 23 QBD 337
  • Rush and Tomkins Ltd v Greater London Council
    [1989] AC 1280
  • Scott Paper Co. v Drayton Paper Works Ltd
    [1927] 44 RPC 151
  • Millicent Wambui v Nairobi Botanical Gardening Limited
    Nairobi Cause No. 2512 of 2012
  • Cuossens v Attorney General
    [1999] EA 40
  • Postal Corporation of Kenya v Andrew K. Tanui
    [2019] eKLR
On appeal from
Chief Magistrate's Court, Milimani
CMEL 1869 of 2019
Jurisdiction invoked
First appellate jurisdiction over the subordinate court in employment and labour relations matters

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, "Odoyo & 5 others v General Conference of Seventh Day Adventist Church East-Central Africa Division (ECD) (Cause E063 of 2020) [2023] KEELRC 2785 (KLR)", Case Analysis (2023). Milimani CMEL 1869 of 2019 (appeal therefrom). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/2785/eng@2023-10-31

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