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Court of AppealPartially AllowedNot stated in the judgment

Thomas De La Rue (K) Ltd v Omutelema (Civil Appeal 65 of 2012) [2013] KECA 492 (KLR)

Court of Appeal of Kenya
5 July 2013
WKW. KaranjaPKP. O. KiageKMK. M'Inoti
4,326 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~17 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal confirmed that notifying a trade union satisfies redundancy notice for union members—employers don't owe extra individual notice.

What this practically means

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Executive summary

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This was an appeal to the Court of Appeal from a decision of the Industrial Court at Nairobi (Rika, J, with two members) dated 19th April 2011, which had found that although the respondent faced a genuine redundancy situation following the closure of one of De La Rue's two Nairobi passport production lines, the appellant had not followed the procedure prescribed by the Employment Act and the Collective Bargaining Agreement, and had awarded the respondent compensation of KShs 529,720 being 10 months' gross salary. The appeal was brought under section 27 of the Labour Institutions Act on matters of law. The Court of Appeal allowed the appeal in full. It held that sections 40(a) and 40(b) of the Employment Act provide alternative notification routes depending on union membership: for a unionisable employee such as the respondent, a member of KUPRIPUPA covered by a collective agreement, notification of the union and labour officer with the required two months' notice under the CBA sufficed, and the trial court erred in demanding direct consultations with the individual employee. The Court further found the selection criteria under section 40(c) had been objectively applied through a 14-criteria evaluation, and that the trial court gave undue weight to a single night's commendation. On the discharge voucher, the Court agreed it cannot per se absolve an employer from statutory obligation, but held the Industrial Court erred in rigidly presuming unequal bargaining power in all cases without considering rebuttal evidence. Finally, the Court held the trial judge erred in drawing inferences of bad faith from the paid leave, which had not been pleaded as a particular of malice. The award was set aside and the respondent's claim dismissed, with each party bearing its own costs in both courts.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the appellant complied with the notification requirements of section 40(a) of the Employment Act in declaring the respondent, a union member, redundant, or whether direct consultations with the respondent were additionally required
  2. 2.Whether the appellant complied with the selection criteria under section 40(c) of the Employment Act in selecting the respondent for redundancy
  3. 3.What weight, if any, a redundancy discharge/clearance form signed by an employee carries in an enquiry into the fairness of a termination
  4. 4.Whether the trial court erred by pronouncing on and drawing adverse inferences of bad faith from facts (the paid leave) that had not been pleaded by the parties

Key legal issues

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01

Redundancy notification for unionisable employees

Holding

Compliance with section 40(a) by notifying the union and labour officer at least one month (here two months under the CBA) before the effective date discharged the appellant's notification obligations; direct consultation with the individual union-member employee was neither required nor permitted.

Reasoning

Sections 40(a) and 40(b) provide for two different kinds of redundancy notification depending on union membership. Where the employee is a union member, the law contemplates that the employer will deal with the employee through the union, as underpinned by Article 41(2)(c) of the Constitution and the Labour Relations Act. The trial court erred by treating the respondent as a non-union employee entitled to individual notice and by imposing consultation obligations that could only arise in the latter case.

p. 5
02

Selection criteria under section 40(c)

Holding

The appellant complied with section 40(c): the 12 Kugler operators, including the respondent, were evaluated on 14 objective criteria and the trial court erred in attaching undue weight to a single night's commendation and in finding the selection unfair.

Reasoning

Exhibits Resp 4 and 5 showed evaluation on skill levels, ability, performance appraisal record, attendance, reliability, length of service and disciplinary record; the respondent scored 16.5 out of 35 and those retained had better scores. The performance review described the respondent as an average performer with consistency issues. Nothing suggested malice or ulterior motive in the selection.

p. 6
03

Effect of redundancy discharge/clearance form

Holding

A discharge voucher cannot absolve an employer from statutory obligations or preclude enquiry into fairness of termination, but its validity must be determined on evidence in each case; a blanket presumption of invalidity based on unequal bargaining strength is erroneous.

Reasoning

Section 119 of the Evidence Act creates only a rebuttable presumption of fact, not law. The trial court's rigid presumption that there is no equality of bargaining strength after termination, applied in all cases without considering rebuttal, suggested a closed mind-set unbefitting a court of law. Further, the respondent's trade union's collective bargaining power undermined the assumption that he was a helpless party.

p. 7
04

Unpleaded facts and findings of bad faith

Holding

The trial court erred in reading bad faith from the respondent's paid leave, which had not been pleaded as a particular of malice; parties are bound by their pleadings and malice must be specifically pleaded with particulars.

Reasoning

Although the respondent pleaded malice generally, the paid leave was not among the pleaded particulars. The appellant had explained the leave's basis and paid the respondent for those two months. Relying on Captain Harry Gandy v Caspar Air Charters Ltd, cases must be decided on the issues on the record; a judge may not decide issues raised by himself without amending the pleadings.

p. 7

Legal principles established

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  • Where an employee is a member of a trade union, notification of the union under section 40(a) of the Employment Act satisfies the redundancy notice requirement; the employer is not additionally obliged to give personal notice or hold direct consultations with the employee under section 40(b), the two provisions being alternatives.
  • A purposive reading of section 40(b) requires the same notice period as section 40(a) for non-union employees.
  • A discharge voucher cannot per se absolve an employer from statutory obligation or preclude the Industrial Court from enquiring into the fairness of a termination, but the court must determine on evidence whether the voucher was freely and willingly executed; it may not apply a rigid general presumption of unequal bargaining in every case.
  • A court may not find malice, ill-will or bad faith on the basis of facts that were not pleaded; parties must specifically plead malice and give particulars thereof.
  • More favourable terms agreed in a collective agreement apply and take precedence over statutory minimum redundancy terms.

Court orders

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  1. 1.Appeal allowed
  2. 2.Award of the Industrial Court dated 19th April, 2011 set aside
  3. 3.An order substituted dismissing the respondent's amended statement of claim dated 26th August, 2010
  4. 4.Each party to bear its own costs both in the High Court and in the Court of Appeal

The bench

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One judgment of the whole court — no separate or dissenting opinions.

WK
majority
PK
majority
KM
majority
On appeal from
Industrial Court of Kenya at Nairobi
Not stated in the judgment
Jurisdiction invoked
Section 27 of the Labour Institutions Act, No. 14 of 2007 (appeals on matters of law from final judgment, award or order of the Industrial Court)

Relief refused

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Respondent's claim for declaration of unlawful redundancy, reinstatement, salary arrears, damages and 12 months' compensation

The appeal was allowed in its entirety and the claim dismissed

p. 8

Costs

Each party shall bear its own costs both in the High Court and in this Court.

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

Having given the two months notice required under section 40 (a) to the Union, the appellant was not obliged to give another notice to the respondent personally under section 40 (b) because these notices are alternatives.
p. 5Redundancy notification - union vs individual employee
We would agree with the trial court that a discharge voucher per se cannot absolve an employer from statutory obligation and that it cannot preclude the Industrial Court from enquiring into the fairness of a termination. That is however, as far as we are prepared to go.
p. 7Discharge vouchers and statutory obligations
The court cannot abdicate its responsibility by adopting a general presumption and applying it rigidly in each and every case without considering whether the presumption has been rebutted or not.
p. 7Presumption of unequal bargaining power
Parties are required to specifically plead malice and to give particulars thereof to enable the opposite party know the specific case it has to meet and to respond appropriately.
p. 7Pleading malice with particulars
We accordingly allow this appeal, set aside the award of the Industrial Court dated 19th April, 2011 and substitute therefor an order dismissing the respondent's amended statement of claim dated 26th August, 2010. Each party shall bear its own costs both in the High Court and in this Court.
p. 8Final orders / disposition

Issues in the judgment

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minor

The name of the respondent (and hence a full case title) is not stated anywhere in the judgment text supplied; the parties are referred to only as 'the appellant' and 'the respondent'.

minor

The appeal number and any citation for this appeal are not stated in the judgment text supplied.

minor

Typographical confusion in paragraph 19 where the appellant appears to write to itself: 'On 6th April, the appellant wrote to the appellant a letter'

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (11)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Thomas De La Rue (K) Ltd v Omutelema (Civil Appeal 65 of 2012) [2013] KECA 492 (KLR)", Case Analysis (2013). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2013/492/eng@2013-07-05

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