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ELRCDismissedELRC Appeal filed 29th April 2021· [2023] KEELRC 2846 (KLR)

Fursys Kenya Limited v Oyare (Appeal E046 of 2021) [2023] KEELRC 2846 (KLR)

Employment and Labour Relations Court
31 October 2023
4,835 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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An employer who skips the mandatory 30-day redundancy notice risks paying a full year's salary in compensation, even if the redundancy itself was genuine.

What this practically means

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Executive summary

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This is a first appeal to the Employment and Labour Relations Court against the judgment of a Senior Resident Magistrate in CMEL Cause No. 1413 of 2019, which had found that the Respondent employee's termination on grounds of redundancy on 7th August 2019 was procedurally unfair and awarded him 12 months' gross salary under Section 49(1)(c) of the Employment Act 2007, plus severance. The Appellant employer argued the trial court erred in finding wrongful termination, made contradictory findings (redundancy yet unfair termination), awarded excessive compensation without reasons, and ignored superior court precedent, notably Cargill Kenya Limited v Mwaka. The Court, re-evaluating the evidence as required on a first appeal per Selle v Associated Motor Boat Co., examined the termination letter of 7th August 2019 and the letter to the Labour Office of 22nd August 2019. It held that Section 40(1)(b) requires 30 days' written notice of intended redundancy to the employee and the labour officer; the termination letter took immediate effect and the labour office letter was post-termination, so no compliant notice was issued and no consultations occurred, consultation being implied in Section 40. Cargill was distinguished as addressing only whether two notices are required. The Court found the twin findings of redundancy and unfair termination non-contradictory, following Kenya Airways v Aviation & Allied Workers Union. On compensation, the trial magistrate had considered the Section 49(4) factors and given reasons, and per Mbogo v Shah the appellate court declined to disturb the award. The appeal was dismissed with costs to the Respondent.

Key legal issues

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01

Compliance with Section 40(1)(b) of the Employment Act - notice of intended redundancy

Holding

The Appellant did not issue the requisite 30 days' notice of intended redundancy to the Respondent and the Labour Office; the letter of 7th August 2019 was an immediate termination notice and the letter of 22nd August 2019 was a post-termination notification, so the termination was unfair

Reasoning

The Court re-evaluated the two letters. The termination letter took effect immediately rather than giving 30 days' notice, and its purpose was to terminate, not to notify of an intention to declare redundancy. The letter to the Labour Office merely forwarded the termination letter after the fact. Section 40(1)(b) contemplates advance written notice to both the employee and the labour officer to open consultations, which never occurred. The trial Magistrate therefore did not err.

p. 8
02

Whether the Cargill Kenya Limited decision assisted the Appellant

Holding

The Court distinguished Cargill Kenya Limited v Mwaka, holding that the point in that case was whether an employer must issue two notices (notice of intention and a subsequent termination notice); Section 40 contemplates only a notice of intended redundancy, which the Appellant never gave

Reasoning

The Court found the Appellant had misapprehended Cargill. The Court of Appeal there addressed whether Section 40 requires two successive notices and held only a notice of intended redundancy is contemplated. That is precisely what the Appellant failed to issue, so the authority did not advance its case and was effectively distinguished.

p. 8
03

Whether the findings of redundancy and unfair termination are contradictory

Holding

They are not contradictory; the trial Magistrate's statement referred to procedural fairness in the redundancy process, and Section 45(2) on procedural and substantive fairness applies to redundancy terminations

Reasoning

Relying on Kenya Airways Ltd v Aviation & Allied Workers Union, the Court held redundancy is a legitimate ground for termination if there is a valid and fair reason and a fair procedure. The trial court's twin findings addressed substantive validity (redundancy) and procedural fairness (unfair termination), which coexist. Section 45(2) applies to redundancy terminations.

p. 9
04

Whether the award of 12 months' gross salary compensation under Section 49(1)(c) was excessive

Holding

The trial court gave reasons for the award and considered the Section 49(4) factors; no sufficient basis was shown to interfere with the exercise of discretion per Mbogo v Shah, so the award stands

Reasoning

Compensation under Section 49(1)(c) is discretionary and must consider the Section 49(4) factors. The Court was satisfied the Magistrate's judgment showed awareness of and consideration of those factors. Applying the Mbogo v Shah parameters, the Appellant did not demonstrate misdirection, reliance on wrong matters, or failure to consider relevant matters, so the maximum award could not be disturbed.

p. 10

Legal principles established

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  • Where an employee is not a member of a trade union, the employer must give not less than thirty days' written notice of intended redundancy to the employee personally and to the labour officer; a termination letter with immediate effect and a post-termination letter to the labour office do not satisfy Section 40(1)(b)
  • A letter to the labour office notifying it of an already-effected termination is not a notice of intended redundancy under Section 40(1)(b)
  • The requirement for consultation is implied in Section 40 of the Employment Act as the rationale for the notices in Section 40(1)(a) and (b)
  • Findings that an employee was declared redundant and yet unfairly terminated are not contradictory; redundancy is a legitimate ground for termination provided the reason is valid and the procedure fair

Court orders

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  1. 1.The Appeal is dismissed
  2. 2.Costs of the appeal awarded to the Respondent

Authorities

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Legislation

  • Employment Act 2007Section 40(1)(a)-(g), 40(2), 40(3)
  • Employment Act 2007Sections 43, 43(2), 45, 45(2), 49(1)(c), 49(4)
  • Constitution of Kenya 2010Article 2(6)
  • ILO Convention No. 158 - Termination of Employment Convention 1982Article 13 of Recommendation No. 166

Cases cited (18)

  • Selle & Another vs Associated Motor Boat Co. Ltd & Others
    (1968) EA 123
  • Abdul Hameed Saif vs Ali Mohamed Sholan
    (1955) 22 E.A.C.A. 270
  • The German School Society & another v Ohany & another
    (Civil Appeal 325 & 342 of 2018 (Consolidated)) [2023] KECA 894 (KLR)
  • Cargill Kenya Limited vs Mwaka & 3 Others
    Civil Appeal 54 of 2019 [2021] KECA 115
  • Kiambaa Dairy Farmers Co-Operative Society Limited v Rhoda Njeri & 3 others
    Civil Appeal No. 180 of 2017 [2018] eKLR
  • Ol Pejeta Ranching Limited vs David Wanjau Muhoro
    [2017] eKLR
  • Judy Gakii Njeru v Wananchi Group (K) Limited
    [2021] eKLR
  • Dodhia v National & Grindlays Bank Limited and Another
    [1970] EA 195
  • Jasbir Singh Rai & 3 others
    null
  • Mark Oururi Mose vs R
    [2013] eKLR
  • Mbogo & Another vs Shah
    [1968] EA 93
  • Farah Awad Gullet vs CMC Group Motors Limited
    [2018] eKLR
  • Hesbon Ngaruiya Waigi vs Equitorial Commercial Bank Limited
    [2013] eKLR
  • Liu Ching Liang vs Webwave Electric Manufacturing (K) Company Limited & 2 Others
    [2017] eKLR
  • Ancent Mumo Kalani vs Nairobi Business Ventures Limited
    [2018] eKLR
  • Julie Topirian Njeru vs Kenya Tourist Board
    null
  • Kenya Airways Limited and Aviation & Allied Workers Union of Kenya & 3 others
    [2014] eKLR; Civil Appeal No. 46 of 2013
  • Kenya Ports Authority v Kuston (Kenya) Limited
    (2009) 2EA 212
On appeal from
Chief Magistrates Court (Employment and Labour Relations)
CMEL Cause No. 1413 of 2019
Jurisdiction invoked
First appellate jurisdiction over the magistrates' court (ELRC appeal against judgment of Senior Resident Magistrate in CMEL Cause)

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, "Fursys Kenya Limited v Oyare (Appeal E046 of 2021) [2023] KEELRC 2846 (KLR)", Case Analysis (2023). ELRC Appeal filed 29th April 2021. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/2846/eng@2023-10-31

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