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ELRCPartially AllowedNot stated in judgment· [2024] KEELRC 2125 (KLR)

Prafulbhai v ISS Global Forwarding [Kenya] Limited (Cause E6523 of 2020) [2024] KEELRC 2125 (KLR)

Employment and Labour Relations Court of Kenya
9 August 2024
4,017 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~16 min to read original · ~4 min brief

The bottom line

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A Kenyan court awarded an ex-employee nearly Kshs 5 million because his employer's genuine Covid-19 redundancy skipped mandatory legal procedures.

What this practically means

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Executive summary

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The Claimant, an Indian national, was employed by the Respondent as Finance Controller, East Africa, on a permanent and pensionable contract dated 12th December 2019, commencing 2nd March 2020 subject to work permits, and serving a six-month probation ending 31st August 2020. On 31st August 2020 he received notice of termination effective 15th September 2020, stated to arise from poor business performance and restructuring amid the Covid-19 downturn. He claimed unfair and unlawful termination, notice pay, twelve months' compensation, reimbursement of a Covid-19 salary cut, loss of rent deposit and loss on sale of household goods. The Respondent maintained he exited on genuine redundancy with full dues paid, and that PAYE could not be remitted for want of his tax PIN. The Court found probation was successfully completed by implication, since the Respondent retained the Claimant after its expiry and its termination letter disclaimed any performance basis. A genuine redundancy situation existed, conceded by both sides, but the Respondent failed to comply with Section 40 of the Employment Act: no evidence of notices to the Claimant or the Labour Office, no minutes of consultation, no exploration of alternatives, and no redundancy benefits. The Respondent's vacillation between redundancy and performance amounted to an unlawful termination-at-will mindset. Termination was declared unfair and unlawful. The Court awarded two months' notice pay (Kshs 1,540,000), three months' salary as compensation (Kshs 2,310,000), and salary arrears of Kshs 1,095,589 for the temporary Covid-19 pay cut which the Respondent wrongly retained. Claims for damages for unlawful termination, rent deposit and household goods loss were declined, and the PAYE issue left to the tax authorities. Costs and interest were granted to the Claimant.

Key legal issues

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01

Whether termination was on account of poor performance or redundancy

Holding

The Claimant successfully completed probation; the genuine reason was redundancy arising from business downturn caused by Covid-19, which the Respondent itself did not dispute.

Reasoning

The Respondent did not advise the Claimant of any probation outcome and the termination letter expressly stated it was not a reflection of his performance. Both parties' witnesses acknowledged financial difficulties and redundancy. Since the Respondent retained the Claimant for 15 days after probation expired, performance could not justify termination; a genuine redundancy situation was established on the common evidence without production of financial records.

p. 5
02

Whether the redundancy procedure was fair and lawful

Holding

Although the redundancy was genuine, the procedure was unfair and unlawful for non-compliance with Section 40 of the Employment Act.

Reasoning

There was no evidence of notice to the Claimant or the Labour Office, no minutes of consultation, no evidence that alternatives to redundancy were discussed for an expatriate recruited from India, and no evidence of payment of redundancy benefits under Section 40. The Respondent vacillated between redundancy and poor performance, with a witness stating termination would occur regardless of redundancy, indicating an intention to terminate at will.

p. 6
03

Whether the Covid-19 salary deduction could be retained permanently

Holding

The deduction was expressly temporary; the Respondent acted in breach of good faith and fair dealing by retaining the withheld salary and the arrears were recoverable.

Reasoning

The Respondent's own communications of April and June 2020 and Magesh's witness statement described the pay cut as temporary. September 2020 salary was paid in full, confirming restoration. It was not fair dealing between capital and labour to make the temporary deduction effectively permanent and withhold the arrears at exit, especially as the Claimant left unemployed after being lured from India.

p. 7
04

What remedies the Claimant merits

Holding

Two months' notice pay and three months' salary compensation awarded, taking into account the short service, the lure of a permanent and pensionable contract, the Claimant's age and losses on relocation.

Reasoning

The Claimant worked 6 months and 15 days but resigned a senior job in India on promises of permanent employment. Though neither party caused Covid-19, the Respondent's unfair procedure and failure to mitigate warranted compensation beyond mere facilitation of travel, assessed at three months' salary given the short tenure.

p. 7

Legal principles established

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  • Where an employer retains an employee after expiry of probation without confirmation or notice of non-confirmation, it is presumed probation was successfully completed and the employee becomes a regular employee.
  • An employer relying on redundancy must comply strictly with the procedural demands of Section 40 of the Employment Act, including notices, consultation and payment of redundancy benefits.
  • Termination at will is no longer a permissible mode of termination under the Employment Act.

Court orders

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  1. 1.Termination declared unfair and unlawful
  2. 2.Respondent to pay notice at Kshs 1,540,000
  3. 3.Respondent to pay the equivalent of 3 months' salary in compensation for unfair termination at Kshs 2,310,000
  4. 4.Respondent to pay salary arrears of 4 months at Kshs 1,095,589 (total award Kshs 4,945,589)
  5. 5.Costs to the Claimant
  6. 6.Interest allowed at court rate from the date of Judgment till payment is satisfied in full
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (Sections 40, 42, 43 and 45 invoked) over a claim of unfair and unlawful termination

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, "Prafulbhai v ISS Global Forwarding [Kenya] Limited (Cause E6523 of 2020) [2024] KEELRC 2125 (KLR)", Case Analysis (2024). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/2125/eng@2024-08-09

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