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ELRCPartially AllowedCause No 2376 of 2017· [2024] KEELRC 2104 (KLR)

Nyanga v Afrilog Limited (Cause 2376 of 2017) [2024] KEELRC 2104 (KLR)

Employment and Labour Relations Court
2 August 2024
NMNzioki Wa Makau
1,701 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenyan employers must follow section 40's redundancy steps—written notice, leave cash, severance—even when a genuine business pivot abolishes a role, or they'll pay damages.

What this practically means

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Executive summary

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The Claimant, formerly personal assistant to the late initial CEO of the Respondent company, sued after her employment ended when the company, under new military-linked ownership, pivoted from general trade to peace and security consultancy. She claimed salary arrears of Kshs. 150,000/-, one month's pay in lieu of notice, compensation for unfair termination of Kshs. 1,800,000/-, severance pay of Kshs. 1,385,000/-, a certificate of service, costs and interest. The Respondent, through Brig. (Ret.) David Baburam and Brig. (Ret.) Andrew Nyandong, maintained that her office was abolished on redundancy, that she was aware of the negotiations, and that it had already paid the salary arrears. The court framed four issues: discrimination, unfair termination, entitlement to relief, and costs. On the evidence, the court found the Claimant's role became obsolete when the Respondent deliberately re-engineered its business, amounting to redundancy under section 2 of the Employment Act, but that the Respondent failed to follow the mandatory parameters of section 40, including one month's written notice, cash payment of leave and severance pay. Compensation was capped at one month's pay because the Claimant was granted service pay. The court awarded notice pay of Kshs. 150,000/-, severance of Kshs. 1,200,000/- at 15 days per year over 16 years, one month's compensation of Kshs. 150,000/-, costs of the suit, and interest at court rates on those sums from the date of judgment. The suit therefore partially succeeded.

Key legal issues

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01

Whether the termination of the Claimant was an unfair termination or a lawful redundancy

Holding

The Claimant's position became redundant upon the Respondent's re-engineering from trading to military consultancy, but the Respondent failed to comply with the procedural requirements of section 40 of the Employment Act.

Reasoning

The court applied the statutory definition of redundancy in section 2 of the Employment Act and found the loss of employment to be involuntary and through no fault of the employee, amounting to abolition of office. Having deliberately caused the abolition, the Respondent was bound to comply with section 40's parameters, which it did not. The court therefore treated the separation as falling short of a lawful redundancy and awarded notice pay and severance.

02

Quantum of compensation and severance

Holding

The Claimant was awarded one month's salary as notice (Kshs. 150,000/-), one month's pay as compensation (Kshs. 150,000/-), and severance at 15 days' pay per year of completed service (Kshs. 1,200,000/-).

Reasoning

Compensation was capped at one month because the court took into account that the Claimant had been granted service pay. Severance was computed at the statutory rate of 15 days for each completed year of service, applying Kshs. 75,000/- (half the monthly salary) to the 16 years served, rather than the Kshs. 1,385,000/- pleaded.

p. 3

Legal principles established

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  • Where an employer deliberately abolishes an employee's office, the redundancy process under section 40 of the Employment Act must be followed, including written notice of one month, payment of leave in cash and payment of severance pay.

Court orders

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  1. 1.One month's salary as notice – Kshs. 150,000/-
  2. 2.Severance pay at the rate of 15 days for every year of completed service being Kshs. 75,000/- multiplied by 16 years – Kshs. 1,200,000/-
  3. 3.One month's pay as compensation – Kshs. 150,000/-
  4. 4.Costs of the suit
  5. 5.Interest at court rates on the sums in (a), (b) and (c) above from date of judgment till payment in full

Authorities

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Legislation

  • Evidence Actsections 107(1), (2) and 108
  • Employment Actsection 2 (definition of redundancy)
  • Employment Actsection 40
  • Employment Actsections 35(6) and (7)

Cases cited (7)

  • Samson Gwer & 5 others v Kenya Medical Research Institute & 3 others
    [2020] eKLR
  • SWM v Hardware Trading Store Limited & another
    [2021] eKLR
  • G M V v Bank of Africa Ltd
    [2013] eKLR
  • Mung'oni v Rama Homes Limited t/a Rama Group of Companies & another
    (Cause E6500 of 2020) [2024] KEELRC 839 (KLR) (16 April 2024)
  • Nyalingu v Ali
    (Cause 1328 of 2017) [2024] KEELRC 390 (KLR) (27 February 2024)
  • Polkey v Dayton Services Ltd
    [1988] AC 344, [1987] All ER 974, [1987] IRLR 503
  • Okumu v Prime Power Batteries E.A. Limited
    (Cause E176 of 2021) [2024] KEELRC 1229 (KLR) (9 May 2024)
Jurisdiction invoked
Original employment and labour relations jurisdiction of the Employment and Labour Relations Court (Employment Act, sections 2, 35, 40)

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, "Nyanga v Afrilog Limited (Cause 2376 of 2017) [2024] KEELRC 2104 (KLR)", Case Analysis (2024). Cause No 2376 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/2104/eng@2024-08-02

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