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ELRCPartially AllowedNot stated in the judgment excerpt· [2023] KEELRC 3384 (KLR)

Athman v Fairfax Company Limited (Cause E421 of 2021) [2023] KEELRC 3384 (KLR)

Employment and Labour Relations Court
20 December 2023
BOByram Ongaya
1,223 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~5 min to read original · ~4 min brief

The bottom line

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A Kenyan court upheld a Covid-19 redundancy as fair but still ordered the employer to pay Kshs.513,000 in untaken leave plus a service certificate.

What this practically means

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Executive summary

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The claimant, employed as an operations manager/clerk of works from 15.04.2019, sued the respondent alleging that his termination on grounds of downsizing by letter dated 16.10.2020, effective 30.11.2020, was an unlawful redundancy contrary to sections 41, 44 and 45 of the Employment Act, 2007. He sought a declaration of unfair termination, maximum compensation, one month's pay in lieu of notice, untaken leave, house allowance, interest, a certificate of service and costs. The respondent admitted the engagement but maintained it was contractual on a project-by-project basis, that the redundancy was necessitated by financial constraints and Covid-19 effects, that one month's notice was given as required under section 35(1), and that all dues were paid. The respondent closed its case without calling witnesses. The court held that a contract of service existed and that the termination letter of 16.10.2020 ended it. Taking judicial notice of the ruinous effect of Covid-19 on enterprises, and noting the claimant's own evidence that construction works had collapsed, the court found the respondent had a valid reason under section 43 and a fair procedure under section 45, with the one-month notice permissible under section 35. Compensation and pay in lieu of notice were therefore unjustified, as was the house allowance claim, since the consolidated salary of Kshs.114,520 included reasonable housing provision. The claim for untaken leave under section 28 succeeded at Kshs.513,000, and the claimant was held entitled to a certificate of service under section 51. Judgment was entered for the claimant for Kshs.513,000 with interest, delivery of the certificate of service within 30 days, and costs of the suit.

Key legal issues

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01

Whether the termination by redundancy was fair in substance and procedure

Holding

The termination was fair both substantively and procedurally; there was a valid reason (downsizing during Covid-19) and one month's notice was given.

Reasoning

The court took judicial notice of the devastating effect of Covid-19 on enterprises and noted the claimant's own evidence that construction works he was deployed on had collapsed. The reason satisfied section 43 and the process section 45 of the Employment Act. A one-month notice was permissible under section 35, so compensation and notice pay were unjustified.

p. 3
02

Whether the claimant was entitled to house allowance

Holding

Not entitled; the consolidated monthly pay of Kshs.114,520 already included reasonable provision for housing.

Reasoning

The respondent submitted and the court accepted that the agreed consolidated payment contained reasonable provision for housing as Clerk of Works under section 31 of the Employment Act, and exceeded the minimum wage under the Regulation of Wages (General) (Amendment) Order, 2018. The house allowance claim therefore failed.

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03

Whether untaken leave was payable

Holding

Yes; leave accrued and was not taken, awarded at Kshs.513,000 as prayed.

Reasoning

Both parties were in agreement that leave had accrued and was not taken as provided under section 28 of the Employment Act. The court therefore awarded the full claimed amount of Kshs.513,000 with interest at court rates from filing if not paid by 01.03.2024.

p. 3

Legal principles established

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  • A termination by redundancy on account of downsizing can be fair in substance and procedure where the employer gives one month's notice as required under section 35 of the Employment Act
  • Accrued untaken leave is payable even where termination itself is fair

Court orders

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  1. 1.Payment of Kshs. 513,000.00 by 01.03.2024 failing interest at Court rates from the date of filing of the suit till full payment
  2. 2.The respondent to deliver the certificate of service within 30 days
  3. 3.The respondent to pay costs of the suit
Jurisdiction invoked
Employment and labour relations jurisdiction of the Employment and Labour Relations Court (Employment Act, 2007)

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, "Athman v Fairfax Company Limited (Cause E421 of 2021) [2023] KEELRC 3384 (KLR)", Case Analysis (2023). Not stated in the judgment excerpt. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/3384/eng@2023-12-20

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