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ELRCPartially AllowedCause No. 314 of 2014· [2020] KEELRC 1107 (KLR)

James Oyoya Omusotsi v Meas Agricultural Centre Limited [2020] KEELRC 1107 (KLR)

Employment and Labour Relations Court of Kenya
11 May 2020
MMM. Mbaru
1,701 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Employment Court ruled that an employer claiming redundancy must prove why it selected a particular employee, and must pay statutory minimums including house allowance.

What this practically means

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Executive summary

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The claimant was employed by the respondent as a storekeeper by letter dated 1st September, 2005 at a monthly wage of Ksh.7,000 with 21 annual leave days, confirmed on 15th December, 2006. By notice dated 16th March, 2012 his employment was terminated on grounds of downsizing due to difficult economic times, and he was paid three months' notice pay of Ksh.21,000 and 15 days' service pay of Ksh.22,750, less statutory deductions, totalling Ksh.42,670. He sued for underpayments for six years, house allowance, severance pay and leave allowance, alleging he was the only employee targeted and discriminated against. The respondent denied underpayment and contended terminal dues were paid in full; it called no witness. The court held that under sections 40, 43(2) and 45(2) of the Employment Act the employer bears the duty to demonstrate operational requirements and the rationale for selecting affected employees, and that a redundancy must not target an individual employee. In the absence of evidence of the extent of the downsizing, the termination lacked procedural fairness and was declared unfair, attracting one month's compensation of Ksh.10,682. Following the applicable Wage Orders, the court found no underpayment at appointment but assessed underpayments at Ksh.50,102, and held house allowance of Ksh.153,187 due since the appointment letter could not legally consolidate wages in an underpayment. Severance pay and leave allowance were refused: service pay had already been generously paid, and granted leave and off days defeated a further leave claim. Judgment was entered for the claimant with costs, and a 30-day stay of execution was granted.

Key legal issues

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01

Procedural fairness of redundancy termination

Holding

The termination was procedurally unfair because the respondent did not adduce evidence of the extent of the downsizing or the rationale for targeting the claimant, contrary to sections 40 and 45 of the Employment Act.

Reasoning

Section 40(1)(a) requires notice of the reasons for and extent of an intended redundancy. Section 43(2) read with section 45(2) obliges the employer to prove a valid and fair reason based on operational requirements. The respondent made only general denials and did not address the targeting/discrimination claim in evidence or submissions. Absent material evidence of the extent of the downsizing, the termination lacked procedural fairness and compensation is due.

p. 2
02

Underpayment of wages

Holding

There was no underpayment at appointment in 2005, but underpayments accrued from May 2006 to April 2012, assessed at Ksh.50,102.

Reasoning

Under the Regulation of Wages (General)(Amendments) Orders, 2005 the minimum wage for a storekeeper was Ksh.6,531, below which the claimant was not paid. As wages were graduated, the claimant continued to receive Ksh.7,000 while minimum wages rose to Ksh.7,135, Ksh.9,495 and finally Ksh.10,682. The court computed the shortfalls period by period, totalling Ksh.50,102, and used Ksh.10,682 as the last due wage for computation of dues.

p. 2
03

House allowance

Holding

House allowance of Ksh.153,187 was due because the Wage Orders provide for a basic wage inclusive of house allowance and the appointment letter could not legally provide for a consolidated wage in an underpayment.

Reasoning

The applicable Wage Orders make provision for a basic wage inclusive of a house allowance. A private appointment letter cannot contract out of the statutory wage structure by treating the wage as consolidated where it is below the minimum. The claim for Ksh.153,187 was found reasonable and justified and was awarded in full.

p. 3

Legal principles established

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  • A redundancy must not be applied to target an individual employee; the employer must give the rationale for the affected employees and prove valid and fair operational requirements, failing which the termination is unfair.

Court orders

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  1. 1.Declaration that employment terminated unfairly
  2. 2.Compensation awarded at one month's pay of Ksh.10,682
  3. 3.Underpayments of Ksh.50,102
  4. 4.House allowance of Ksh.153,187
  5. 5.Costs to the claimant
  6. 6.Stay of execution for 30 days, with further time to be sought by formal application addressed on the merits
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (employment and severance/underpayment claims)

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, "James Oyoya Omusotsi v Meas Agricultural Centre Limited [2020] KEELRC 1107 (KLR)", Case Analysis (2020). Cause No. 314 of 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2020/1107/eng@2020-05-11

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