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IndustrialPartially AllowedCause 112 of 1999

Kenya Engineering Workers’ Union v Kaluworks Ltd (Cause 112 of 1999) (Employment and Labour) [2003] KEIC 31 (KLR)

Industrial Court of Kenya
25 April 2003
CCCharles P. Chemmuttut
3,433 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Workers paid daily but employed continuously for over three months are permanent employees in Kenya, and employers must follow legal redundancy procedures before laying them off.

What this practically means

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Executive summary

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The Kenya Engineering Workers' Union reported a trade dispute on behalf of 72 employees of Kaluworks Ltd laid off between January and May 1997 during a reorganisation attributed to poor business performance. The Union contended that the grievants were permanent employees who had served continuously for periods of one to eight years, deemed confirmed under Clause 19 of the collective agreement, and that their termination by redundancy was unprocedural and an unfair labour practice, claiming notice pay, leave, overtime, house allowance, underpayments and twelve months' compensation. The Company maintained that the grievants were casual workers who could not be declared redundant and who had declined new work arrangements, for whom all dues had been paid. An investigation commissioned by the Minister for Labour had found the redundancy wrongful and recommended permanent treatment for the re-employed and terminal dues with 15 days' pay per year of service for the rest; the Company rejected the findings. The court framed two issues: whether the grievants were casuals and, if not, their entitlement to relief. Applying the statutory definition of a casual employee and the doctrine of continuous employment, and noting the Company's failure to deny long service or state daily wages, the court held the grievants were permanent employees unlawfully declared redundant. While management enjoys a conditional discretion to reorganise, the Company failed to follow the mandatory redundancy procedure in sections 71 and 72 of the Finance Act, 1994. The court allowed the demand, awarded redundancy benefits under Clause 24(f) of the collective agreement, excluded the re-employed grievants from relief, and directed the Company to compute and deposit the dues with the Labour Officer within thirty days.

Key legal issues

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01

Whether the 72 grievants were casual employees or permanent employees

Holding

They were permanent employees in continuous service, deemed confirmed under Clause 19 of the collective agreement, and their lay-off was an unlawful redundancy.

Reasoning

Under section 2 of the Employment Act a casual employee is paid at the end of each day and engaged for not more than 24 hours. The grievants worked continuously for periods of one to eight years, an assertion the Company did not specifically deny, and the Company never stated their daily wages. Clause 19 of the collective agreement deems casuals who complete three continuous months permanent. The Minister's findings showed the Company had promised reinstatement and re-employed 13 of them, demonstrating they had been declared redundant rather than casually engaged.

p. 6
02

Whether the redundancy procedure was lawful

Holding

The reorganisation was bona fide but the Company failed to follow the procedure laid down in sections 71 and 72 of the Finance Act, 1994 (sections 4 and 16A of the Employment Act), rendering the redundancy unlawful.

Reasoning

The court accepts that the decision whether redundancy is necessary is purely an administrative matter for management and will not be interfered with if honestly made and free of bad faith, discrimination or victimisation. However, the law prescribes mandatory conditions: notification of the union and labour officer, regard to seniority, skill, ability and reliability, payment of leave, one month's notice and severance pay of not less than 15 days per completed year. The Company did not adhere to this procedure.

p. 8

Legal principles established

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  • An employee paid daily but working continuously for more than three months is deemed a permanent employee under the parties' collective agreement and cannot be treated as a casual.
  • The management has a conditional power to declare redundancy for bona fide reorganisation, which the court will not interfere with unless vitiated by bad faith, but the statutory redundancy procedure must be adhered to.
  • Redundancy termination is valid only if the conditions in section 16A of the Employment Act (notification of union and labour officer, seniority, notice and severance pay of not less than 15 days per completed year) are complied with.
  • Continuous employment is uninterrupted service, tolerating interruptions such as sickness, authorised leave, accident, lawful strike, lock-out or cessation of work not due to the employee's fault.

Court orders

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  1. 1.The grievants declared redundant be paid their redundancy benefits in accordance with Clause 24(f) of the parties' collective agreement (including one month's notice or pay in lieu for employees with up to 10 years continuous service, payment of wages, overtime and other remuneration due up to cessation of employment, pro-rata leave, and provident fund or gratuity benefit whichever is more advantageous)
  2. 2.The grievants who were re-employed are not subject of this dispute and are not entitled to any relief
  3. 3.The management of the Company to calculate the amounts due to the redundant grievants and deposit the same with the Labour Officer, Industrial Area Labour Office, to the credit of the grievants within thirty (30) days from the date of the award
Jurisdiction invoked
Trade Disputes Act, Cap. 234 - dispute reported under Section 4 and notified under Section 14(7) and (9)(e) and (f) with statutory certificate of the Labour Commissioner and Minister for Labour

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, "Kenya Engineering Workers’ Union v Kaluworks Ltd (Cause 112 of 1999)  (Employment and Labour) [2003] KEIC 31 (KLR)", Case Analysis (2003). Cause 112 of 1999. Source: https://new.kenyalaw.org/akn/ke/judgment/keic/2003/31/eng@2003-04-25

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