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ELRCPartially AllowedCause No E953 of 2023· [2025] KEELRC 2167 (KLR)

Nyakwara v Housing Finance Company of Kenya Limited & another (Cause E953 of 2023) [2025] KEELRC 2167 (KLR)

Employment and Labour Relations Court
24 July 2025
LNLINNET NDOLO
2,604 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 awarded an employee six months' salary because his employer skipped key steps when making his position redundant.

What this practically means

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Executive summary

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The Claimant, employed in 2017 as a Property Manager earning Kshs. 150,000 monthly, had his employment terminated on 23rd November 2020 on grounds of redundancy following a restructuring in which the 2nd Respondent's Project Finance Unit was wound down. He sued, contending that the redundancy procedure was flawed, that no redundancy notice was issued to him or the Labour Office, that no consultation occurred, that the selection criterion was not disclosed, and that Central Bank of Kenya approval was not obtained. He sought declarations, general and punitive damages, a certificate of service, and costs. The Respondents maintained that they complied with Section 40 of the Employment Act, having notified the County Labour Office by letter dated 14th August 2020, issued one month's notice, and paid severance at 30 days per completed year of service, exceeding the statutory minimum, plus additional benefits. The Court framed two issues: the lawfulness and fairness of the termination, and entitlement to remedies. It accepted the Respondents' evidence on the notice to the Labour Office at face value but found no evidence of service of a redundancy notice on the Claimant or consultation prior to the final decision, and no disclosed selection criterion. The termination was held substantively and procedurally unfair. The Court awarded six months' salary (Kshs. 900,000) as compensation, with interest at court rates from the date of judgment, and costs to the Claimant. Punitive damages were disallowed as no case was made for them. Judgment delivered virtually at Nairobi on 24th July 2025 by Linnet Ndolo, Judge.

Key legal issues

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01

Whether the termination on grounds of redundancy was lawful and fair under Section 40 of the Employment Act

Holding

The termination was substantively and procedurally unfair because the Respondents failed to prove service of a redundancy notice on the Claimant and consultation, and did not disclose the selection criterion used.

Reasoning

The Court accepted the Respondents' witness testimony that a letter was sent to the County Labour Office on 14th August 2020, taking that evidence at face value. However, the Respondents adduced no evidence of service of a redundancy notice on the Claimant or consultation prior to the final decision. The selection criterion was also not disclosed, despite the Respondents themselves citing authority requiring disclosure of an objective criterion. Missing these threshold steps rendered the process irregular.

p. 6
02

Whether the Claimant is entitled to remedies

Holding

The Claimant was awarded six months' salary in compensation; punitive damages were disallowed; certificate of service was already issued per the Respondents.

Reasoning

In awarding compensation, the Court considered the Claimant's length of service (3.1 years) and the Respondents' failure to observe due process. The claim for punitive damages failed as no case was made for it. Judgment was entered at Kshs. 900,000, being six months' salary at Kshs. 150,000 per month, with interest and costs to the Claimant.

p. 7

Legal principles established

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  • The redundancy notice under Section 40(1)(a) and (b) is separate and distinct from the termination notice under Section 40(1)(f).
  • Consultation with affected parties is a critical ingredient of the redundancy process.
  • An employer declaring redundancy must disclose the selection criterion applied and demonstrate that it was reasonable and objective.
  • Missing one step of the Section 40 procedure taints the entire redundancy process with irregularity.

Court orders

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  1. 1.Judgment entered in favour of the Claimant in the sum of Kshs. 900,000 being six (6) months' salary in compensation for unlawful and unfair termination of employment
  2. 2.The award to attract interest at court rates from the date of judgment until payment in full
  3. 3.The Claimant to have the costs of the case

Authorities

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Legislation

  • Employment ActSection 2
  • Employment ActSection 40(1)
  • Labour Relations Actdefinition of redundancy (corresponding to Section 2 Employment Act)
  • ILO Convention No. 158 - Termination of Employment Convention, 1982Article 13

Cases cited (5)

  • Thomas De La Rue (K) Ltd v David Opondo Omutelema
    [2013] eKLR
  • Kenya Airways Limited v Aviation & Allied Workers Union Kenya & 3 others
    [2014] eKLR
  • The German School Society & another v Ohany & another
    [2023] KECA 894 (KLR)
  • Williams v Compare Maxam Ltd
    (1982) IRLR 63
  • Fredrick Mulwa Mutiso v Kenya Commercial Bank Limited
    [2017] KEELRC 1664 (KLR)
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act (judgment does not cite a specific constitutional provision)

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, "Nyakwara v Housing Finance Company of Kenya Limited & another (Cause E953 of 2023) [2025] KEELRC 2167 (KLR)", Case Analysis (2025). Cause No E953 of 2023. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/2167/eng@2025-07-24

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