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ELRCPartially AllowedCause E181 of 2022· [2025] KEELRC 299 (KLR)

Scott Bowerbank Day v Victory Farms Limited (Employment and Labour Relations Cause E181 of 2022) [2025] KEELRC 299 (KLR)

Employment and Labour Relations Court
31 January 2025
6,132 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 farm manager's 'redundancy' dismissal was fake, awarding him over USD 238,000 including his full vested share incentive.

What this practically means

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Executive summary

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The Claimant, employed by the Respondent from 1st September 2017, last as Farm Manager on a monthly salary of USD 7,750, was terminated on account of redundancy by letter dated 25th January 2022. He sued for declarations that the termination was wrongful, unfair and unlawful, and for terminal benefits including 70% of a vested Management Incentive of USD 154,350. The Respondent defended the termination, asserting a restructuring had rendered the Farm Manager role superfluous, and denied that the incentive had crystallised since the 10,000 metric tonnes production milestone had not been met. The Court framed three issues: the fairness of the termination, entitlement to the management incentive, and the reliefs. It found no genuine redundancy: the Respondent produced no documentary proof of a restructuring, the Claimant's duties were merely spread across two newly created roles to which he could have been redeployed on comparable terms, and the redundancy ground appeared camouflaged after the Claimant refused an orchestrated resignation. Procedurally, the consultations never flowed from the redundancy notice, rendering the termination unfair. On the incentive, the Court held it was contractual; the CEO's discretion extended only to fixing the value of accrued shares, which he had fixed at USD 154,350, and the Claimant, being a Good Leaver, was entitled to payment. Judgment was entered for the Claimant: a declaration of unfair termination, USD 77,500 compensation (ten months' gross salary), pro-rated severance of USD 1,614.58, house allowance of USD 3,387.50, the USD 154,350 incentive, USD 1,500 relocation allowance, interest at court rates, and costs of suit. The service pay head was not included in the final orders.

Key legal issues

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01

Substantive justification of the redundancy termination

Holding

The termination lacked substantive justification; the Respondent failed to prove a restructuring or redundancy situation, and the Claimant's services were not rendered superfluous since his duties were absorbed into two new roles.

Reasoning

The Court applied Section 45 of the Employment Act and the Kenya Airways test that the employer must show the termination is attributable to a genuine redundancy. The Respondent's witness admitted the Claimant could have fitted into either of the two newly created roles on comparable terms, meaning his duties were spread across the new departments rather than abolished. No documentary evidence of the restructuring was tendered, and no correspondence mentioned an intended restructure or redundancy. The redundancy ground was camouflaged; on the Respondent's own version the Claimant merely resisted redeployment.

p. 9
02

Procedural fairness of the redundancy

Holding

The termination was procedurally unfair because the consultations that took place did not flow from the redundancy notice and were not about the alleged redundancy, its avoidance or mitigation.

Reasoning

Relying on the German School Society and Kenya Airways authorities, the Court held that a redundancy notice opens a mandatory consultative process which must be a reality, not a charade. The correspondence between the parties originated from the meeting of 25th October 2021, which was an attempt to force the Claimant to resign, and did not concern the intended redundancy. The Court found the Respondent acted in bad faith, suspending the Claimant from the farmhouse after he refused to resign.

p. 10
03

Entitlement to the Management Incentive

Holding

The Management Incentive was contractual and had accrued; as a Good Leaver the Claimant was entitled to the 70% vested value of USD 154,350 fixed by the Respondent's CEO.

Reasoning

The Respondent had no detailed policy document on the incentive program, so the Court relied on the documents and the CEO's admissions under cross-examination. The CEO had discretion only to fix the value of accrued shares, which he did at USD 154,350 in the document dated 25th October 2021; he could not decide that an employee forfeits accrued value where the employee was not a Bad Leaver. The witness admitted the Claimant could not be categorized as a Bad Leaver and that payment would ordinarily follow within six months.

p. 11
04

Severance pay, house allowance, relocation allowance and compensatory damages

Holding

The Claimant was awarded pro-rated severance pay, house allowance for three months, relocation allowance, and ten months' gross salary as compensation under Section 49para 1[c].

Reasoning

On severance, the Court endorsed Radido J's holding in Ann Njambi Ngugi v Medimax that severance is payable pro-rata even for an incomplete year. The Respondent's witness admitted the Claimant was denied accommodation from 25th October 2021 contrary to Section 31 of the Employment Act, and admitted entitlement to a relocation allowance. Compensation of ten months' salary reflected the camouflaged redundancy, the Respondent's bad faith, the length of service and the absence of any proven contribution by the Claimant to the termination.

p. 12

Legal principles established

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  • An employer alleging redundancy must prove a genuine redundancy situation; a restructure that merely redistributes an employee's duties across new roles does not render his services superfluous, and a dismissal disguised as redundancy is camouflaged and unfair.
  • Failure by an employer to initiate and genuinely engage in consultations after a redundancy notice renders the termination procedurally unfair.
  • Where a Management Incentive is contractual, the employer's discretion extends only to fixing the value of accrued shares, not to whether accrued value is payable; a Good Leaver is entitled to the value the CEO computed.
  • Severance pay under Section 40para 1[g] of the Employment Act is payable on a pro-rata basis even for an incomplete final year of service; statutory employment rights are to be interpreted in the manner most favourable to the employee.

Court orders

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  1. 1.A declaration that the termination of the Claimant's employment was unfair
  2. 2.Compensation pursuant to Section 49[1][c] of the Employment Act of USD 77,500 (ten months' gross salary)
  3. 3.Pro-rated severance pay of USD 1,614.58
  4. 4.House allowance for the period 24th October 2021 to 25th January 2022 of USD 3,387.50
  5. 5.70% vested Management Incentive of USD 154,350
  6. 6.Relocation allowance of USD 1,500
  7. 7.Interest on the awarded sums at court rates from the date of judgment till full payment
  8. 8.Costs of the suit to the Claimant

Authorities

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Legislation

  • Employment ActSection 45
  • Employment ActSection 43[2]
  • Employment ActSection 40
  • Employment ActSection 40[1][g]
  • Employment ActSection 49[1][c]
  • Employment ActSection 31

Cases cited (4)

  • Kenya Airways vs Aviation & Allied Workers Union Kenya & 3 Others
    [2014] eKLR
  • The German School Society & Another -vs- Ohany & Another
    (Civil Appeal 325 & 342 of 2018 (consolidated) [2023] KECA 894 (KLR)
  • George K Kangethe vs Ziwa Garments and Apparel Limited
    [2020], ELRC Cause No. 947 of 2015
  • Ann Njambi Ngugi v Medimax Network Limited
    [2020] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (Sections 40, 43, 45, 49) over a claim for unfair termination and contractual benefits

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, "Scott Bowerbank Day v Victory Farms Limited (Employment and Labour Relations Cause E181 of 2022) [2025] KEELRC 299 (KLR)", Case Analysis (2025). Cause E181 of 2022. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/299/eng@2025-01-31

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