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ELRCPartially AllowedMemorandum of claim dated 16.11.2018

Shikuku v Corporate Insurance Company Limited (Cause 1535 of 2018) [2024] KEELRC 1303 (KLR)

Employment and Labour Relations Court
29 May 2024
1,154 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court ruled a Chief Legal Officer's redundancy unlawful because her employer skipped the required one-month notice and consultation, awarding her 8 months' pay.

What this practically means

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Executive summary

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The claimant, employed by the respondent from about 1st August 2001 and risen to the position of Chief Legal Officer, was served with a letter of termination of employment due to redundancy. She sought a declaration that the termination letter was invalid ab initio, reinstatement without loss of benefits, a bar on recruitment to her position, and compensatory general damages for unfair, unlawful and wrongful termination, alleging the redundancy was premeditated and a disguised unlawful termination. The respondent confirmed the employment relationship but justified the redundancy as a reorganisation of the legal and claims departments to create a Legal and Compliance Officer position required by Insurance Regulatory Authority requirements, asserting that the claimant was notified, her terminal dues under section 40 of the Employment Act were calculated and paid, and that the redundancy was lawful, just and fair. The court found the existence of the contract of service undisputed and the termination effected by a redundancy letter under which terminal dues were paid. However, it held the redundancy was not procedural under section 40 of the Employment Act because the claimant was not consulted, prepared, or given a month's notice to her and the area labour officer. Considering the 17 years of service, the claimant's desire to remain in service, her non-contribution to the termination, and the terminal package paid, the court awarded 8 months' compensation at gross monthly salary under section 49, totalling Kshs 2,749,600, payable by 01.08.2024 with interest at court rates on default. Other reliefs were treated as abandoned in submissions. The respondent was ordered to pay the costs of the suit.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the claimant's position was declared redundant
  2. 2.Whether the redundancy was procedural and lawful under section 40 of the Employment Act, 2007
  3. 3.What compensation, if any, is payable under section 49 of the Employment Act

Key legal issues

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01

Procedural fairness of the redundancy under section 40 of the Employment Act, 2007

Holding

The redundancy was not procedural because the claimant was not given a month's notice or notified with the labour officer and was not consulted.

Reasoning

The court found the contract of service existed and was terminated by a redundancy letter. Although the respondent claimed the position was abolished per Insurance Regulatory Authority requirements to create a Legal and Compliance Officer position, the claimant was not consulted, prepared, or given the statutory one month's notice to her and the area labour officer as required by section 40. The redundancy therefore failed the statutory procedure despite terminal dues being computed and paid.

p. 3
02

Appropriate remedy under section 49 of the Employment Act

Holding

Eight months' compensation at last gross monthly salary (Kshs 343,700 x 8 = Kshs 2,749,600) meets the ends of justice.

Reasoning

The court weighed the long period of service (17 years), the claimant's desire to continue in service, the fact that she did not contribute to the termination, and the terminal package already paid. Balancing these factors under section 49, it fixed compensation at eight months' gross salary, the other claimed reliefs having been abandoned in submissions.

p. 3

Legal principles established

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  • Redundancy must be procedurally effected with a month's notice to the employee and the area labour officer per section 40 of the Employment Act, and consultation with the employee.
  • Where termination by redundancy is not procedural, the court may award compensation under section 49 of the Employment Act taking into account length of service, conduct and the terminal package paid.

Court orders

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  1. 1.Payment of Kshs 2,749,600.00 by 01.08.2024 failing which interest to be payable at Court rates from the date of judgment until full payment
  2. 2.The respondent to pay costs of the suit

The bench

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One judgment of the whole court — no separate or dissenting opinions.

majority

Wrote the judgment

Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (sections 40 and 49)

Relief refused

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Declaration that the termination letter dated 16th/17th August 2018 is invalid ab initio and permanent stay/withdrawal of the letter

Claimant abandoned the other reliefs in submissions; court awarded only compensation under section 49

p. 3

Order allowing claimant to continue serving in her position and barring recruitment for her position

Abandoned in submissions

p. 3

Compensatory general damages for violation of rights, loss of office, injury to reputation and loss of future income

Abandoned; court instead awarded 8 months' compensation under section 49

p. 3

Costs

The respondent to pay the claimant's costs of the suit.

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

In particular it appears the claimant was not consulted and prepared for the redundancy through a month's notice to her and the area labour oficer per section 40 of the Act.
p. 3Procedural requirements for redundancy under section 40 Employment Act
The Court returns that 8 months’ compensation at last gross monthly salary will meet ends of justice thus, 343,700 x 8 = Kshs 2, 749, 600.00.
p. 3Section 49 compensation award
Payment of Kshs 2, 749, 600.00 by 01.08.2024 failing interest to be payable at Court rates from the date of this judgment until full payment.
p. 3Final orders - payment and interest
The respondent to pay costs of the suit.
p. 3Final orders - costs

Issues in the judgment

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material

Internal inconsistency on the date of the redundancy termination letter - the claim pleaded a termination letter dated 17.08.2018 while the findings refer to a redundancy letter dated 27.11.2019 (the same date as the respondent's memorandum of response).

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, "Shikuku v Corporate Insurance Company Limited (Cause 1535 of 2018) [2024] KEELRC 1303 (KLR)", Case Analysis (2024). Memorandum of claim dated 16.11.2018. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/1303/eng@2024-05-29

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