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ELRCPartially AllowedMemorandum of Claim dated 6th November 2024 (ELRC, Nairobi)· [2025] KEELRC 2400 (KLR)

Mitsumi v Q-Sourcing Limited & another (Cause E1004 of 2024) [2025] KEELRC 2400 (KLR)

Employment and Labour Relations Court
29 August 2025
4,709 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~19 min to read original · ~4 min brief

The bottom line

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A Kenyan court confirmed redundancy can be genuine yet still unlawful if the employer skips the one-month notice of intention required by the Employment Act.

What this practically means

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Executive summary

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The Claimant, engaged on 1st September 2023 as an Operations Manager on a two-year fixed-term contract with the 1st Respondent and deployed to serve the 2nd Respondent under a labour outsourcing arrangement, was terminated on account of redundancy on 13th March 2024. He sued both Respondents jointly and severally, alleging illegal, discriminatory and racially motivated termination, and sought USD 136,000 in unpaid salary, general damages for unlawful dismissal and breach of contract, costs and interest. The 1st Respondent admitted the employment relationship and justified the redundancy as arising from the 2nd Respondent's restructuring, while the 2nd Respondent denied any employment relationship and challenged the Court's jurisdiction. The Court framed three issues: identity of the employer, fairness of the termination, and entitlement to reliefs. It held that the Claimant was employed by the 1st Respondent only, the arrangement being classic labour outsourcing, so the claim against the 2nd Respondent collapsed. On substance, the partial termination of the subcontract by the 2nd Respondent provided a valid and fair reason for redundancy. Procedurally, however, the 1st Respondent failed to issue a prior notice of intention to declare redundancy under Section 40(1)(a) and (b) of the Employment Act; the final termination notice issued on the day of termination, and payment of one month's wages in lieu of notice, did not cure the defect. Statutory payments under Section 40(1)(e) and (f) were made, and severance did not arise as the Claimant had served under a year. Judgment was entered against the 1st Respondent for compensatory damages of USD 8,000, being one month's gross salary, with interest at court rates from the date of judgment. Claims for the balance of the contract, general damages and consultancy fees of Kshs 12,288,000 were declined, and the 1st Respondent was ordered to bear the costs of the suit.

Key legal issues

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01

Identity of the Claimant's employer

Holding

The Claimant was an employee of the 1st Respondent, not the 2nd Respondent; the arrangement was labour outsourcing and the claim against the 2nd Respondent collapses.

Reasoning

The 1st Respondent admitted the employment relationship, exhibited the 1st September 2023 contract, paid salary and terminal benefits, and issued the termination letter. The 2nd Respondent exhibited a Sub-Contract Agreement with the 1st Respondent for human resources, payroll and employment services, a classic labour outsourcing arrangement. Deployment at the client's premises did not alter the employment relationship, so no employer-employee relationship existed with the 2nd Respondent.

p. 6
02

Substantive justification for the redundancy

Holding

There was a valid and fair reason for termination based on the 1st Respondent's operational requirements following the client's partial termination of the subcontract.

Reasoning

The 2nd Respondent issued a partial termination notice for the subcontract covering the Operations Manager role, which the Claimant held and at whose premises he worked. This had a ripple effect on his continued engagement with the 1st Respondent. No other reason for termination was discerned on the record, satisfying Section 45(2)(b)(ii) of the Employment Act.

p. 7
03

Procedural fairness of the redundancy

Holding

The termination was procedurally flawed because no prior notice of intention to declare redundancy was issued as required by Section 40(1)(a) and (b).

Reasoning

The Claimant was notified of termination on 13th March 2024, the same day it took effect. What was issued was a final termination notice, not a notice of intention to declare redundancy of not less than one month as the statute requires. Payment of one month's salary in lieu of notice under 40(1)(f) could not cure this omission, per Cargill Kenya Limited v Mwaka. Statutory payments under 40(1)(e) and (f) were made and severance did not arise as less than one year of service had been completed.

p. 9
04

Reliefs

Holding

Compensatory damages of one month's gross salary (USD 8,000) awarded; claims for balance of contract, general damages and consultancy fees declined.

Reasoning

Procedural non-compliance attracted compensatory damages, assessed nominally given the short employment duration (about 6 months) and the validity of the reason for termination. The unpaid salary and general damages claims failed on substantive justification, and the consultancy claim failed as unproved special damages.

p. 9

Legal principles established

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  • Termination on grounds of redundancy must be both substantially justified and procedurally fair.
  • In a labour outsourcing arrangement, deployment to a client company does not alter the employee's employment relationship with the labour-supplying employer.
  • Payment of one month's wages in lieu of notice under Section 40(1)(f) does not supplant the requirement of a prior notice of intention to declare redundancy under Section 40(1)(a) and (b).

Court orders

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  1. 1.Judgment entered against the 1st Respondent awarding the Claimant compensatory damages of USD 8,000.00 being equivalent to one month's gross salary
  2. 2.Interest on the award at court rates from the date of Judgment until payment in full
  3. 3.The 1st Respondent to bear the costs of the suit
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act (the 2nd Respondent challenged jurisdiction over the consultancy claim under the Employment Act definition of 'employee')

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, "Mitsumi v Q-Sourcing Limited & another (Cause E1004 of 2024) [2025] KEELRC 2400 (KLR)", Case Analysis (2025). Memorandum of Claim dated 6th November 2024 (ELRC, Nairobi). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/2400/eng@2025-08-29

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