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ELRCPartially AllowedNot stated in the judgment· [2025] KEELRC 1891 (KLR)

Chohan v XML Technologies & another (Cause E409 of 2024) [2025] KEELRC 1891 (KLR)

Employment and Labour Relations Court
27 June 2025
3,902 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~16 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court ruled that paying salary in lieu of notice does not replace the mandatory redundancy notice under Section 40 of the Employment Act.

What this practically means

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Executive summary

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The Claimant, employed as a Senior Channel Account Manager by the 1st Respondent under an outsourcing arrangement serving the 2nd Respondent (Zebra Technologies Europe Limited), was terminated on 30th November 2023, the same day the service agreement between the 1st and 2nd Respondents ended. He claimed the termination lacked fair hearing and procedural fairness, seeking a declaration of unlawfulness, twelve months' compensation, service pay, gratuity, reinstatement, a certificate of service, costs and interest. The 1st Respondent asserted a mutual separation with compensation agreed by the Claimant, and that termination of the service agreement was a valid contractual ground. The 2nd Respondent did not participate. The Court framed three issues: whether there was a mutual separation; whether the termination was unfair and unlawful; and entitlement to reliefs. It found no mutuality in the separation or compensation, as the Claimant merely followed up terminal dues which the 1st Respondent declined to revise. It held the reason for termination - loss of the client's service agreement - was valid and fair, falling within operational requirements under Section 45(2)(b)(ii) of the Employment Act, given the contractual termination clause tying his employment to the service agreement. However, the redundancy was procedurally flawed: no notice of intention to declare redundancy was issued as required by Section 40(1)(a) and (b), and the labour office was not notified; payment in lieu of notice could not substitute for the statutory notice. Statutory payments were made, and selection criteria were inapplicable. The Court awarded compensatory damages of Kshs 1,029,600.00 (two months' gross salary) plus interest and costs, declining service pay (NSSF contribution exclusion under Section 35(6)) and gratuity (no contractual or pleaded basis).

Key legal issues

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01

Whether there was a mutual separation between the parties

Holding

No mutual separation; the Claimant had no say in the terminal dues paid

Reasoning

The email correspondence showed the Claimant merely following up on final dues and requesting a revision of compensation, which the 1st Respondent declined, stating it was covering only what Kenyan legislation required. Payment was made unilaterally, so the alleged mutual separation agreement and estoppel defence failed.

p. 5
02

Substantive justification for the termination

Holding

Valid and fair reason existed - termination of the service agreement between the 1st and 2nd Respondents, tied to the employment contract's termination clause

Reasoning

The termination letter cited termination of the service agreement with Zebra Technologies Europe Limited. The employment contract expressly acknowledged that termination of the client agreement was acceptable grounds for termination. The reason fell within operational requirements under Section 45(2)(b)(ii) and the statutory definition of redundancy.

p. 6
03

Procedural fairness of the redundancy

Holding

Procedurally flawed - no notice of intention to declare redundancy as required by Section 40(1)(a) and (b), and no notification of the labour office

Reasoning

The Claimant was notified of the termination on the same day it took effect, with a final notice rather than notice of an intention to declare redundancy, and no evidence existed that the labour office was notified. However, the selection criteria were inapplicable as he was the sole Senior Channel Account Manager, and the statutory payments under Section 40(1)(e),(f),(g) were made.

p. 8
04

Entitlement to reliefs

Holding

Only two months' gross salary as compensatory damages awarded; service pay and gratuity declined

Reasoning

Since there was a valid reason but flawed procedure, the award was nominal at two months' gross salary. Service pay was barred by Section 35(6) as the Claimant contributed to NSSF, and gratuity had no contractual or pleaded basis. Reinstatement was not granted.

p. 8

Legal principles established

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  • Termination on grounds of redundancy must be both substantively justified and procedurally fair
  • Payment of salary in lieu of notice does not supplant the statutory notice requirement under Section 40(1)(a) and (b) of the Employment Act
  • An employer must prove that the reason for termination is valid, fair and based on operational requirements, failing which the termination is unfair under Section 45(2)(b)(ii)

Court orders

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  1. 1.Judgment entered against the 1st Respondent awarding the Claimant compensatory damages of Kshs 1,029,600.00, equivalent to two months' gross salary
  2. 2.Interest on the award at court rates from the date of Judgment until payment in full
  3. 3.Costs of the suit awarded to the Claimant
Jurisdiction invoked
Original employment and labour relations jurisdiction of the Employment and Labour Relations Court (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, "Chohan v XML Technologies & another (Cause E409 of 2024) [2025] KEELRC 1891 (KLR)", Case Analysis (2025). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/1891/eng@2025-06-27

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