Amalgamated Union of Kenya Metal Workers v Kenya Coach Industries Limited (Employment and Labour Relations Cause E506 of 2021) [2023] KEELRC 2915 (KLR)
The bottom line
#Kenya's Employment Court upheld a Covid-19-driven redundancy of 120 workers, ruling the employer followed the law and settlement vouchers ended compensation claims.
What this practically means
#Executive summary
#Key legal issues
#Whether the Respondent had a valid reason to declare the redundancy
Yes - the Covid-19 pandemic and resulting business cancellations and raw material price hikes constituted valid operational requirements under section 45 of the Employment Act
The court took judicial notice of the pandemic's economic effects and found the 20% salary step-down agreement between the parties confirmed the impact on the Respondent's business. Cancellation letters from customers and evidence of steel price increases, shared with the Claimant, established on a balance of probabilities that the closure of the body building department was driven by genuine operational requirements. Pre-Covid audited accounts would not have assisted since the downturn was a post-Covid phenomenon.
Whether the Respondent complied with the procedural requirements for redundancy under section 40 of the Employment Act
Yes - the notice of 29th June 2021 met the threshold of section 40(1)(a), stated the reason and extent of the redundancy, was copied to the Labour Commissioner, and the entire department's closure rendered selection criteria irrelevant
The notice cited the reasons (Covid-19 effects and inability to sustain the body building department), affected all 110 employees in the department, crystallized upon the lapse of thirty days, set out terminal benefits, and was copied to the Labour Commissioner. Since the whole department was closing, employee selection was irrelevant. All affected employees consented to their terminal dues, and those exiting under voluntary retirement were not subject to the strict redundancy rules of section 40.
Whether the employees could re-open the matter for further compensation despite full and final settlement vouchers
No - the executed full and final settlement vouchers renounced the employees' right to pursue further claims, and the court would decline to re-open compensation even if the redundancy analysis were wrong
The 125 employees signed vouchers on 30th July 2021 confirming receipt of their terminal dues as full and final settlement. By these instruments they renounced any right to pursue further claims. Following Ronald Kipngeno Bii v Unilever Tea Kenya Limited, the court must give effect to the parties' executed instruments and refuse to re-open the question of compensation.
Legal principles established
#- The court must not unduly interfere with the employer's managerial prerogative; it only assesses whether the employer acted lawfully and reasonably within the band of decisions a reasonable employer would make.
- Where employees have executed instruments confirming full and final settlement of their terminal dues, the court should not re-open the question of compensation.
- An employer need only prove its justification for redundancy on a balance of probabilities.
Court orders
#- 1.The Claimant's case is dismissed with costs to the Respondent
- Jurisdiction invoked
- Original employment and labour relations jurisdiction of the Employment and Labour Relations Court; related prior matter ELRC Cause No. E450 of 2020 between the parties
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Amalgamated Union of Kenya Metal Workers v Kenya Coach Industries Limited (Employment and Labour Relations Cause E506 of 2021) [2023] KEELRC 2915 (KLR)", Case Analysis (2023). not_stated_in_judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/2915/eng@2023-11-16
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.