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ELRCPartially AllowedMemorandum of Claim dated 24th May 2019 (number not stated in judgment)· [2024] KEELRC 2278 (KLR)

Shah v Vitafoam Products Limited (Employment and Labour Relations Cause 342 of 2019) [2024] KEELRC 2278 (KLR)

Employment and Labour Relations Court
25 September 2024
3,464 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~14 min to read original · ~4 min brief

The bottom line

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A Kenyan court upheld a redundancy but ordered the employer to pay over Kshs 3 million for untaken leave days it had already acknowledged in writing.

What this practically means

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Executive summary

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The Claimant, employed by the Respondent as finance manager from 1st September 2001, brought a claim for unfair termination after the Respondent's premises were destroyed by fire on 27th June 2015. The Respondent issued a redundancy notice dated 21st August 2015, later extended the Claimant's employment, offered re-employment on reduced pay which he declined, and his employment ended on 31st May/2nd June 2016. The Claimant sought certificate of service, itemised pay statement, leave days of Kshs. 3,240,577.00, salary for the last working day, damages for unfair termination of Kshs. 8,220,000.00, exemplary damages for unfair labour practice, costs and interest. The Respondent denied unfair termination, asserting full compliance with section 40 of the Employment Act and payment of all terminal dues. The court framed two issues: whether the redundancy was unfair and unlawful, and whether the Claimant was entitled to the reliefs sought. It held the redundancy complied with section 40: the Claimant and the Labour Officer received the one-month notice. However, on leave, a letter of 26th February 2016 by the Respondent's CEO acknowledged 134 accrued leave days; the court held the later reliance on the contractual forfeiture clause was an afterthought in bad faith, and following Rumba Mnyika Nguta held leave not taken is a monetised accrued benefit. The Claimant was awarded 129 leave days. Judgment was entered for the Claimant on leave days at Kshs. 3,240,577.00, an order for a certificate of service, with costs and interest at court rates. Damages for unfair termination and other heads were refused as the redundancy was lawful.

Key legal issues

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01

Whether the termination of the Claimant's employment by way of redundancy was unfair and unlawful

Holding

The redundancy was lawful and procedural; the Claimant and the Labour Officer were served with the one-month redundancy notice as envisaged by section 40(1)(a) of the Employment Act

Reasoning

The court found the employment was terminated by redundancy following the fire that destroyed the Respondent's premises. The redundancy notice dated 21st August 2015 was issued to both the Claimant and the Labour Officer, and gave one month's notice with severance pay at half a month's pay per completed year of service, in line with section 40 of the Employment Act. The Claimant's contention that the process was a sham was not upheld.

p. 6
02

Whether the Claimant was entitled to payment for accrued but untaken leave days

Holding

The Respondent was bound by its own letter acknowledging 134 accrued leave days; the forfeiture clause relied on was an afterthought in bad faith, and leave not taken is a monetised accrued benefit

Reasoning

A letter dated 26th February 2016 from the Respondent's CEO acknowledged 134 leave days and attempted to negotiate down to 40 then 75 days without success. The court held the Respondent's later reliance on the contractual forfeiture clause was an afterthought in bad faith. Relying on Rumba Mnyika Nguta, the court held leave not taken accrues and must be paid out; the Claimant was awarded 129 remaining days at Kshs. 3,082,500.00.

p. 8

Legal principles established

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  • Leave not taken becomes an accrued benefit which must be monetised and paid out; contractual forfeiture clauses are not supported by the Employment Act
  • Failure to follow the procedure in section 40 of the Employment Act renders a redundancy termination unprocedural and unfair

Court orders

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  1. 1.Judgment entered for the Claimant in the sum of Kshs. 3,240,577.00 for leave days
  2. 2.The Respondent directed to issue a certificate of service to the Claimant
  3. 3.The Claimant awarded costs and interests at court rates

Authorities

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Legislation

  • Employment Actsections 20, 28, 40, 41, 45, 92
  • Employment Act No. 11 of 2007section 2 (definition of redundancy)
  • Employment Act, 2007section 40(1)(a) and (b)
  • Constitution of KenyaArticle 41

Cases cited (3)

  • Joachim Mbithi Mulinge v TransOceanic Projects & Development (K) Limited
    (2017) eKLR
  • Rumba Mnyika Nguta v Southern Hills Development Agency Limited t/a Radio Kaya
    [2020] eKLR
  • Hesbon Ngaruiya Waigi vs Equitorial Commercial Bank Limited
    (2013) eKLR
Jurisdiction invoked
Original jurisdiction of the Employment and Labour Relations Court under Article 41 of the Constitution and the Employment Act (employment and labour relations dispute)

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, "Shah v Vitafoam Products Limited (Employment and Labour Relations Cause 342 of 2019) [2024] KEELRC 2278 (KLR)", Case Analysis (2024). Memorandum of Claim dated 24th May 2019 (number not stated in judgment). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/2278/eng@2024-09-25

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