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ELRCPartially Allowednot stated in extract· [2018] KEELRC 1993 (KLR)

Shadrack Otuoma Khamla & 7 others v Aniket Enterprises Limited [2018] KEELRC 1993 (KLR)

Employment and Labour Relations Court
18 May 2018
1,374 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 ruled these redundancies unfair because the employer never notified the Labour Officer in advance and couldn't prove its reasons in court.

What this practically means

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Executive summary

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This first-instance judgment of the Employment and Labour Relations Court at Nairobi, delivered by Radido Stephen, J on 18 May 2018, concerned a claim by eight Claimants whose contracts were terminated by the Respondent on account of redundancy, the termination letters citing market and economic effects leading to drastic reduction of work. After a history of adjournments, the Respondent failed to attend the hearing on 13 March 2018; the 1st Claimant testified on behalf of the others and the Respondent's case was deemed closed. Adopting the Claimants' proposed issues, the Court held that although the operational reasons would have constituted valid reasons had they been proved under sections 43 and 45(2)(b)(ii) of the Employment Act, the Respondent, by failing to attend Court to discharge the employer's burden under sections 43, 45 and 47, rendered the terminations substantively unfair. On procedure, although notices were allegedly issued to and acknowledged by the Claimants and union consultation records were filed, there was no evidence that the Labour Officer was notified in advance as required by section 40(1)(b); the Court applied the Court of Appeal's decision in Thomas De La Rue (K) Ltd v David Opondo Omutelema and found the terminations procedurally tainted. On remedies, the Court awarded the balance of one month's notice pay (only 10 days having been paid) under section 40(1)(f), and compensation equivalent to two months' gross wages per Claimant, taking into account service pay already made and service of two to seven years. Claims for leave balance, overtime, house allowance and underpayment failed for want of evidence, and the 2nd and 3rd Claimants' claims were dismissed as no pay or terminal records were produced. The Respondent was directed to deduct the 10 days' notice already paid, and the Claimants were denied costs for filing submissions out of time without explanation.

Key legal issues

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01

Substantive fairness of redundancy terminations

Holding

Terminations on account of redundancy were substantively unfair because the Respondent failed to prove the operational reasons in accordance with sections 43 and 45(2)(b)(ii) of the Employment Act.

Reasoning

The termination letters cited market/economic effects causing drastic reduction of work, which would have constituted valid reasons if proved under sections 43 and 45(2)(b)(ii). The Respondent did not attend Court to discharge the employer's burden under sections 43, 45 and 47. The Court therefore concluded the redundancy terminations were substantively unfair.

p. 2
02

Procedural fairness of redundancy terminations

Holding

Terminations were procedurally tainted because there was no evidence that the Labour Officer was notified in advance as required by section 40(1)(b).

Reasoning

Notices were allegedly issued to and acknowledged by the Claimants, and union records were filed, but there was no evidence the Labour Officer was notified in advance. Relying on Thomas De La Rue (K) Ltd v David Opondo Omutelema, notification to the labour officer is required in both union and non-union situations. The Labour Office was involved only after the decision to terminate.

p. 2
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Remedies - notice pay and compensation

Holding

Claimants entitled to balance of one month's notice pay under section 40(1)(f) and compensation equivalent of 2 months' gross wages each, considering service pay already paid and service of 2 to 7 years.

Reasoning

Section 40(1)(f) obliges the employer to pay one month's wages in lieu of notice; only 10 days were paid, so the balance is due. Considering service pay already made and service ranging from 2 to 7 years, 2 months' gross wages as compensation was found appropriate and fair for each Claimant.

p. 3

Legal principles established

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  • An employer who fails to discharge the burden imposed by sections 43, 45 and 47 of the Employment Act cannot establish valid and fair reasons for termination; unproved redundancy terminations are substantively unfair.
  • Redundancy requires notice to the local Labour Officer in advance in terms of section 40(1)(b) of the Employment Act; involvement of the Labour Officer only after the decision to terminate renders the termination procedurally unfair.
  • In redundancy an employer must pay the equivalent of one month's wages in lieu of notice under section 40(1)(f); payment of a lesser period (e.g. 10 days) entitles the employee to the balance.

Court orders

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  1. 1.A declaration that the termination of the Claimants' contracts on account of redundancy was unfair
  2. 2.Awards to the 1st, 5th, 6th, 7th and 8th Claimants of Kshs 10,000/- notice pay and Kshs 20,000/- compensation each (Kshs 30,000/- total each)
  3. 3.Award to the 4th Claimant of Kshs 9,500/- notice pay and Kshs 19,000/- compensation (Kshs 28,500/- total)
  4. 4.The Respondent to deduct the portion of 10 days' notice already paid to the Claimants from the awards
  5. 5.Claims of the 2nd and 3rd Claimants dismissed for failure to produce pay/terminal records
  6. 6.Claims for leave balance, overtime/off duties, house allowance and underpayment of salaries declined
  7. 7.Claimants denied costs for late filing of submissions
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (sections 40, 43, 45 and 47 applied)

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, "Shadrack Otuoma Khamla & 7 others v Aniket Enterprises Limited [2018] KEELRC 1993 (KLR)", Case Analysis (2018). not stated in extract. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2018/1993/eng@2018-05-18

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