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ELRCPartially AllowedNot stated in the judgment as provided· [2025] KEELRC 1082 (KLR)

Dulo v AIG Kenya Insurance Company Limited (Employment and Labour Relations Cause E915 of 2022) [2025] KEELRC 1082 (KLR)

Employment and Labour Relations Court
3 April 2025
6,232 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
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The bottom line

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The Employment Court upheld AIG's redundancy process but ordered it to pay the employee Kshs 315,499 for a salary increment and pension it had short-changed him on.

What this practically means

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Executive summary

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The Claimant, employed by AIG Insurance Company Limited since 2nd August 2004 and last serving as Profit Centre Manager, Financial Lines and Head of Casualty, was terminated on 8th August 2022 on account of redundancy. He sued under Section 87 of the Employment Act, contending the redundancy was a sham, actuated by the CEO's malice, procedurally flawed, and discriminatory, and sought unpaid salary increments, pension contributions, twelve months' compensation for unfair termination, three months' notice pay, ex-gratia payment under an unexecuted mutual separation agreement, an STI award balance, and golf club membership fees, with interest and costs. The Respondent maintained the redundancy arose from a genuine global restructuring splitting the Financial Lines and Liabilities functions, that it complied with Section 40 of the Employment Act by issuing one month's notice, notifying the Labour Office and National Employment Authority, holding consultative meetings, and paying terminal dues exceeding Kshs 10 million. The court framed three issues: whether a redundancy situation existed, whether the redundancy was lawful, and the remedies payable. It found a genuine redundancy situation on the evidence of prior restructuring indications, held the procedure compliant with Section 40, and dismissed the unfair termination claim. However, the court found the claimant was denied a 6% salary increment given to all employees, awarding Kshs 294,735 in arrears plus Kshs 20,764 in unpaid employer pension contributions, totalling Kshs 315,499 less statutory deductions. Costs were not awarded.

Key legal issues

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01

Whether there was a genuine redundancy situation

Holding

Yes - the evidence showed ongoing restructuring of the Financial Lines and Liabilities functions before the claimant's redundancy

Reasoning

The court noted the respondent's global restructuring intention from 2018, a 2011 letter evidencing a prior split of the Liabilities and Financial Lines profit centre, and the claimant's own testimony that in 2019 restructuring into independent heads had been proposed. The court therefore held that indications of restructuring preceded the redundancy, establishing a redundancy situation notwithstanding the claimant's allegation of personal targeting by the CEO.

p. 10
02

Whether the redundancy procedure complied with Section 40 of the Employment Act

Holding

Yes - the notice, labour office notification, consultations and payments met the statutory requirements

Reasoning

The court found the claimant received a one-month notice of intended redundancy dated 7/7/22 which he acknowledged; the notice indicated the labour office and National Employment Authority had been informed; he was invited to consultative meetings on 18/7/22 and 26/7/22; and upon termination he was paid notice pay, severance, leave pay and ex-gratia. These steps satisfied Section 40(1)(a)-(g) of the Employment Act, 2007, rendering the process fair.

p. 11
03

Whether the claimant was entitled to the unpaid 6% salary increment and corresponding pension contributions

Holding

Yes - the increment was applied to all employees but not to the claimant, entitling him to the arrears and the pension balance

Reasoning

The court found it true that there was a 6% salary increment for all employees which the claimant did not receive, a position confirmed by the respondent's CEO. It therefore awarded the arrears for April to August 2022 at Kshs 294,735 as prayed, and further held that had the correct increment been paid, the employer pension contribution would have been higher, entitling the claimant to the unpaid balance of Kshs 20,764.

p. 11

Legal principles established

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  • A redundancy situation exists where there is loss of employment by involuntary means through no fault of the employee, including abolition of office, and prior indications of restructuring by the employer suffice to establish it
  • Compliance with the conditions in Section 40 of the Employment Act - one month's notice, notification of the labour office and national employment authority, and payment of terminal dues - renders a redundancy procedurally fair

Court orders

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  1. 1.Award to the claimant of the unpaid 6% salary increment for April to August 2022 totalling Kshs 294,735.00 as prayed
  2. 2.Award to the claimant of the balance of unpaid employer pension contributions totalling Kshs 20,764/-
  3. 3.Total award of Kshs 315,499/- less statutory deductions
  4. 4.No order as to costs
Jurisdiction invoked
Section 87 of the Employment Act, 2007

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, "Dulo v AIG Kenya Insurance Company Limited (Employment and Labour Relations Cause E915 of 2022) [2025] KEELRC 1082 (KLR)", Case Analysis (2025). Not stated in the judgment as provided. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/1082/eng@2025-04-03

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