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ELRCPartially AllowedEmployment and Labour Relations Cause (Memorandum of Claim dated 27th March 2018)

Ngunia v Charm Industries Limited (Cause 433 of 2018) [2024] KEELRC 974 (KLR)

Employment and Labour Relations Court
11 April 2024
2,525 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 a redundancy unlawful because the employer skipped the proper notice and never explained how it picked the employee.

What this practically means

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Executive summary

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The Claimant, employed by the Respondent on 23rd December 2015 as a Data Entry Clerk and later placed in charge of stores, dispatch and transport, was terminated on account of redundancy by letter dated 9th March 2018. He claimed redundancy, discrimination and harassment, severance pay and unfair termination, seeking twelve months' salary in compensation, notice pay, leave pay, bonus, severance pay and general damages for discrimination. The Respondent defended the redundancy as a legitimate business measure, asserting it had notified the Labour Office at Industrial Area, issued the Claimant a one-month termination notice, tabulated his terminal benefits and tendered a cheque of Kshs. 61,795 which the Claimant refused to collect. The Court framed two issues: the lawfulness and fairness of the termination, and entitlement to remedies. Applying Section 40 of the Employment Act and the Court of Appeal authorities, the Court held that the redundancy notice under Section 40(1)(a) and (b) is distinct from the termination notice under Section 40(1)(f), that the Claimant received no redundancy notice and there were no prior consultations, and that the Respondent failed to demonstrate the selection criteria used, lending credibility to the Claimant's claim of being targeted for collateral reasons. However, the Respondent was not faulted on payment of statutory dues. The termination was held unlawful. The Court awarded four months' salary in compensation, notice pay, leave pay and severance pay, totalling Kshs. 171,067, subject to statutory deductions, with interest at court rates from the date of judgment. Claims for bonus, general damages for discrimination and punitive/exemplary damages were disallowed as unproved. The Claimant received costs.

Questions the Court framed

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

  1. 1.Whether the termination of the Claimant's employment was lawful and fair
  2. 2.Whether the Claimant is entitled to the remedies sought

Key legal issues

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01

Compliance with Section 40 redundancy notice requirements

Holding

The termination was unlawful because the Claimant was never issued with a redundancy notice and the notice to the Labour Office was served at the wrong station; only a termination notice was given

Reasoning

The Court found that the Respondent admitted serving the redundancy notice on the Labour Office at Industrial Area instead of Mavoko, within whose jurisdiction the Claimant worked. The first official communication to the Claimant was a termination notice, not a redundancy notice. Relying on Thomas De La Rue and Kenya Airways, the Court held that the Section 40(1)(a) and (b) notice is distinct from the Section 40(1)(f) termination notice and that no prior consultations occurred.

p. 5
02

Objective selection criteria under Section 40(1)(c)

Holding

The Respondent failed to demonstrate the selection criteria used to pick the Claimant, rendering the redundancy substantively suspect

Reasoning

The Claimant alleged he was targeted for redundancy due to a prior complaint of racial discrimination against his superiors. The Respondent admitted receiving a complaint but was obscure on details and action taken. The Court held the Claimant's concern was credible and the Respondent ought to have disclosed the actual selection criteria used; its failure left the Court guessing as to the real criteria.

p. 6
03

Payment of statutory dues on redundancy

Holding

The Respondent complied with conditions (e), (f) and (g) of Section 40 as dues were tabulated though the Claimant declined payment

Reasoning

Although the Claimant refused to collect the cheque for Kshs. 61,795, the Court found there was evidence that statutory dues were tabulated and offered. It accordingly found no basis to fault the Respondent on notice pay in lieu, cashing of leave and severance pay, which claims were admitted and payable.

p. 6

Legal principles established

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  • The redundancy notice under Section 40(1)(a) and (b) of the Employment Act is separate and distinct from the termination notice under Section 40(1)(f)
  • An employer declaring redundancy must lay before the Court the actual objective selection criteria used to select the affected employee

Court orders

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  1. 1.Judgment entered in favour of the Claimant for 4 months' salary in compensation of Kshs. 121,440
  2. 2.Notice pay of Kshs. 11,677
  3. 3.Leave pay of Kshs. 7,590
  4. 4.Severance pay of Kshs. 30,360
  5. 5.Total award of Kshs. 171,067 subject to statutory deductions with interest at court rates from date of judgment until payment in full
  6. 6.Claimant awarded costs of the case

The bench

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

majority

Wrote the judgment

Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, Section 40

Relief refused

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Bonus due as at 30th March 2018

Not proved

p. 6

General damages for discrimination

Not proved

p. 6

Punitive and exemplary damages

Not proved

p. 6

Costs

The Claimant will have the costs of the case.

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.

In the ultimate, I find and hold that the termination of the Claimant’s employment was unlawful for breach of the conditions on redundancy notice and selection criteria.
p. 6Unlawful redundancy
From the evidence on record, the Claimant was not issued with a redundancy notice as required by law nor was there prior consultations on the possibility of averting the redundancy or mitigating its negative impact.
p. 5Redundancy notice and consultation
I therefore award the Claimant four (4) months’ salary in compensation. In arriving at this award, I have considered the Claimant’s length of service and the fact that the Respondent had made efiorts to pay the Claimant’s terminal dues.
p. 6Compensation award
This amount will be subject to statutory deductions and will attract interest at court rates from the date of judgment until payment in full.
p. 6Interest and deductions

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, "Ngunia v Charm Industries Limited (Cause 433 of 2018) [2024] KEELRC 974 (KLR)", Case Analysis (2024). Employment and Labour Relations Cause (Memorandum of Claim dated 27th March 2018). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/974/eng@2024-04-11

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