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ELRCPartially AllowedEmployment and Labour Relations Claim, Memorandum of Claim filed 31st May 2021· [2024] KEELRC 2210 (KLR)

Kilonzo v IPAS Africa Alliance (Cause E424 of 2021) [2024] KEELRC 2210 (KLR)

Employment and Labour Relations Court
18 September 2024
8,289 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~33 min to read original · ~4 min brief

The bottom line

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A Kenyan court found an NGO's redundancy of its Program Manager procedurally unfair, awarding her three months' salary despite a genuine funding shortfall.

What this practically means

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Executive summary

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The Claimant, employed by the Respondent NGO as Alliance/Program Manager from 4th March 2019 at a consolidated monthly salary of Kshs.483,333, was terminated on 11th December 2020 on account of redundancy alongside 15 other employees, the Respondent citing reduced funding by its anchor donor. She challenged the redundancy as a sham, pre-meditated and discriminatory, and sought a declaration of unfair termination, reinstatement with back pay, or in the alternative 12 months' gross pay, with interest. The Respondent justified the redundancy on the donor's communicated funding reductions (operating budget falling from about USD 5 million to USD 1.3 million), the abolition of the Program Manager position, and compliance with Section 40 of the Employment Act. The court framed two issues: whether the redundancy was unfair, and whether the Claimant was entitled to the reliefs sought. On substance, the court held the Respondent had reasonable grounds under Section 43(2) to believe a redundancy reason existed, since the donor's funding reduction was communicated, meetings were held and the budget adjusted; the disciplinary complaints of mid-2020 were deemed resolved and the allegation of pre-meditation unsupported. On procedure, however, the notice failed to state the extent of the redundancy and there was no proof of service on the Labour Officer under Section 40(1)(b); further, the selection assessment was not transparently shared with or discussed with the Claimant, vitiating the appraisal. The termination was thus procedurally unfair. Judgment was entered for the Claimant: a declaration that the redundancy was unfair and compensation equivalent to 3 months' gross salary, reinstatement being time-barred under Section 12(3)(vii) of the ELRC Act. Each party was ordered to bear its own costs.

Key legal issues

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01

Whether the Respondent had a valid and fair reason (substantive justification) to declare the Claimant redundant.

Holding

Yes. The anonymous donor's notification of reduced funding was communicated to staff, the budget was adjusted, meetings were held, and the Claimant's position of Program Manager was abolished; the Respondent proved a genuine, reasonably held belief justifying the redundancy under Section 43(2).

Reasoning

The court found the Respondent relied wholly on donor funding and its anchor donor communicated significant funding reductions effective January 2021. The Respondent communicated the gist of the notification to staff, held meetings, adjusted the budget, and abolished the Program Manager position, whose roles were absorbed elsewhere. The Claimant offered no evidence that the Respondent fabricated the funding reduction. Under Section 43(2) and the 'band of reasonable responses' test, an employer need only genuinely and reasonably believe the operational ground exists; the standard is a preponderance of probabilities. Planning ahead of the shortfall was pragmatic, not premature.

p. 14
02

Whether the redundancy was procedurally fair under Section 40(1) of the Employment Act.

Holding

No, in part. The notice complied with the one-month duration requirement but failed to state the extent of the redundancy and there was no proof of service on the Labour Officer; further, the selection criteria involving the assessment was not transparent or participatory. The redundancy was therefore procedurally unfair.

Reasoning

While the notice met the one-month requirement, it was silent on the number of employees, departments or units affected, information essential for the Labour Officer to assess impact. No evidence showed the notice reached the Labour Officer as required by Section 40(1)(b). On selection, the Claimant was ranked 6/7 but was never shown or taken through the assessment results; the court likened this to a student marking their own paper with results disclosed only later. Payment of leave, salary in lieu of notice and severance was admitted, and consultations took place, but the notice and selection criteria defects rendered the termination procedurally unfair.

p. 16
03

Whether the Claimant's termination was pre-meditated or a smoke screen for disciplinary complaints against her.

Holding

No. The July 2020 complaints were discussed at a meeting with HR and, no further action having been taken, were deemed resolved; the redundancy followed over a year later and the Claimant adduced no evidence of pre-determination.

Reasoning

The court found that Dr. Nyamato itemised the complaints, met the Claimant with HR present, and no P.I.P or further action followed, so the issue was resolved. The redundancy occurred some eighteen months after the complaints, and sixteen employees, not only the Claimant, were declared redundant. The Claimant provided no evidence of when, by whom, or why the decision targeted her, so the allegation of pre-meditation lacked credibility.

p. 11
04

Whether the Claimant was discriminated against in the selection for redundancy.

Holding

No. Another manager was also declared redundant, the consultancies had identifiable scopes of work for project closure, and the Claimant proved no arbitrary or unreasonable differentiation.

Reasoning

Sixteen of thirty-five employees were released; one other manager shared the Claimant's fate. The seven retained as consultants were engaged for identifiable project-closure work, not as a discriminatory preference, and only one senior manager remained employed. Applying the Supreme Court's test in Mohammed Abduba Dida, mere inequality of treatment is not discrimination absent unreasonableness or arbitrariness, which the Claimant failed to demonstrate.

p. 13
05

What reliefs flow from the finding of procedural unfairness.

Holding

A declaration of unfairness was merited; reinstatement was time-barred; compensation of 3 months' gross salary was awarded in lieu of the 12 months sought.

Reasoning

Procedural impropriety entitled the Claimant to a declaration and compensation under Section 49(1)(c). Reinstatement was barred by Section 12(3)(vii) of the ELRC Act since three years had elapsed. In assessing compensation the court weighed the Claimant's blamelessness against her short nine-month tenure, payment of all redundancy dues plus an ex gratia sum, her wish to remain employed and the absence of an appeal, settling on three months' gross salary.

p. 17

Legal principles established

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  • For a redundancy to pass muster, the employer must demonstrate both a substantive justification for the redundancy and compliance with the procedure prescribed by Section 40 of the Employment Act; Section 45 applies to redundancies.
  • The notice of intention to declare redundancy must set out the reasons for and the extent of the redundancy, including the number of employees likely to be affected, and the notice must be shown to have been served on the Labour Officer; failure on both counts renders the notice ineffectual and the redundancy procedurally unfair.
  • Where an assessment forms part of the selection criteria for redundancy, the employer must involve the affected employee in the rating process and share the results for discussion; a unilateral ranking conducted without transparency vitiated the appraisal.
  • An employer need not wait for the actual materialisation of a funding shortfall; planning for an anticipated reduction in funding on reasonable grounds is a legitimate basis for redundancy under Section 43(2) of the Employment Act.
  • Mere differentiation in treatment does not amount to discrimination unless the differentiation is unreasonable, arbitrary or lacking a rational basis.

Court orders

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  1. 1.Declaration that termination of the Claimant's employment on account of redundancy was unfair.
  2. 2.Award of the equivalent of 3 months gross salary to the Claimant.
  3. 3.Each party to bear their own costs.

Authorities

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Legislation

  • Employment ActSection 2 (definition of redundancy)
  • Employment ActSection 40(1)
  • Employment ActSection 43(2)
  • Employment ActSection 45
  • Employment ActSection 49(1) and 49(1)(c)
  • Employment and Labour Relations ActSection 12(3)(vii)
  • Constitution of KenyaArticle 159(2)(d)
  • Constitution of KenyaArticle 48
  • Civil Procedure ActSection 1B
  • Civil Procedure RulesOrder 21 Rule 1

Cases cited (24)

  • Jane Khalechi V Oxford University Press (EA) Ltd
    (2013) eKLR
  • Goonvean & Rostowrack China Clay Ltd
    (1973) 2 All ER
  • Daniel Mburu V Hygrotech East Africa Ltd
    (2021) eKLR
  • Onesmus Kinyua Magoiya V Prudential Life Assurance Kenya
    (2022) eKLR
  • National Bank of Kenya v Samuel Nguru Mutonya
    [2019] eKLR
  • Jane Samba Mukala V Ol Tukai Lodge
    (2016) eKLR
  • Kenya Airways Ltd V Tobias Oganya & 5 others
    (2007) eKLR
  • Mohammed Abduba Dida v Debate Media Ltd & another
    [2018] eKLR
  • Cargill Kenya Ltd V Mwaka & 3 others
    (2021) KECA 115 KLR
  • Makokha V Deloitte Ltd
    (2023) eKLR 723 (KLR)
  • Ronald Kipngeno Bii V Unilever Tea Kenya Ltd
    (2022) eKLR
  • Joshua Rodney Marimbah v Kenya Revenue Authority
    (2021) eKLR
  • Kenya Revenue Authority v Kihara
    [2023] KECA 275 (KLR)
  • Mary Nyawira Karimi v Pure Circle (K) Ltd
    [2018] eKLR
  • Keya Hotels & Allied Workers Union V Desert Rose Resort
    [2022] eKLR
  • Judy Gakii Njeru v Wananchi Group (K) Ltd
  • Adera V Central Organization of Trade Union
    [2024] KEELRC 1058 (KLR)
  • Kenya Airways Ltd V Aviation & Allied Workers Union (K) & 2 others
    (2014) eKLR
  • Freight In Time Ltd V Rosebell Wambui Munene
    (2018) eKLR
  • Barclays Bank of Kenya Ltd & another V Gladys Muthoni & 20 others
    (2018) eKLR
  • Galgalo Jarso Jillo v Agricultural Finance Corporation
    [2021] eKLR
  • British Leyland (UK) Ltd v Swift
    [1981] I.R.L.R 91
  • Kenya Revenue Authority v Reuwel Waithaka Gitahi & 2 others
    [2019] eKLR
  • Chapman & others V Goonvean Rostowrack China Clay Ltd
Jurisdiction invoked
Employment and Labour Relations Court established under the Employment and Labour Relations Act; jurisdiction over employment disputes and reliefs under Sections 12(3)(vii), 40, 43, 45 and 49 of the Employment Act, 2007

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Kilonzo v IPAS Africa Alliance (Cause E424 of 2021) [2024] KEELRC 2210 (KLR)", Case Analysis (2024). Employment and Labour Relations Claim, Memorandum of Claim filed 31st May 2021. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/2210/eng@2024-09-18

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