Tamarindi Management Limited v Gatheru (Employment and Labour Relations Appeal E021 of 2023) [2025] KEELRC 2110 (KLR)
The bottom line
#A Kenyan court ruled that a hotel's Covid-19 layoff was an unlawful redundancy, not contract frustration, and that a worker cannot be paid both severance and unfair-termination compensation.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the separation between the parties herein was through redundancy or frustration of the contract.
- 2.If the answer to (a) is redundancy, whether it was unlawfully done.
- 3.Whether the awards by the trial court should stand.
- 4.Who pays the costs of the appeal?
Key legal issues
#Whether the termination was on account of frustration or redundancy
The termination was redundancy, not frustration; the appellant exercised managerial judgment to suspend operations, and the pandemic restrictions were not permanent and did not cancel the appellant's operation permits.
Redundancy arises from a deliberate managerial decision to keep the business afloat, while frustration is a spontaneous occurrence without fault rendering performance impossible. Frustration is rare in employment and arises e.g. on death or permanent incapacitation. The Covid-19 restrictions did not completely lock down businesses; restaurants operated on take-away basis, and the respondent had accepted austerity measures including salary reduction. The termination letter dated 28th May 2020 showed a deliberate decision, not automatic discharge of the contract.
Whether the redundancy was lawful
The redundancy was unlawful because the mandatory procedure under section 40(1) of the Employment Act, including notification of the trade union and the labour officer, was not followed.
Section 40 prescribes conditions precedent to terminating a contract on account of redundancy, including at least one month's notice of intention to the union and labour officer, and payment of severance. The appellant admitted it did not follow the procedure, contending automatic frustration. Having found the separation was redundancy, the appellant was legally obliged to act fairly and did not. A termination letter issued on 4th June 2020 backdated to 28th May 2020 was not the notice contemplated by section 40(1)(a) or (b).
Whether the awards of the trial court should stand
All awards stand except compensation for unfair termination, which was set aside as duplicative of severance pay; the notice pay award also stands because the notice given was defective under section 40(1).
Severance at 15 days' pay per year for 21 years was well founded. House allowance arrears were supported by the conciliator's finding that a Kshs.5,400 allowance was discontinued without consultation, and the employer failed to disprove the allegation under section 10(7). The house allowance claim was a continuing injury filed within the period under section 90. The one-month notice pay stood because the appellant failed to serve the union or labour officer with the requisite notice of intention to declare redundancy.
Legal principles established
#- Termination of employment occasioned by Covid-19 business impacts that amount to a deliberate managerial decision is redundancy under section 40 of the Employment Act, not frustration of contract.
- Compensation for unfair termination under section 49 and severance pay under section 40 serve the same purpose and should not both be awarded; the court should award whichever is more favourable to the employee.
- A notice of termination on account of redundancy is defective unless it is the declaration of intention to undertake redundancy contemplated under section 40(1)(a) or (b) of the Employment Act.
- Failure to pay house allowance amounts to a continuing breach, so a claim filed within the statutory period after the breach ceases is not time barred under section 90 of the Employment Act.
- Under section 10(7) of the Employment Act the employer bears the burden of disproving verbal allegations of terms of the contract of employment, such as a change to consolidated pay.
Court orders
#- 1.Appeal allowed to the extent that the award of compensation for unfair termination (Kshs.138,600) is set aside
- 2.The award of severance pay of Kshs.242,550 stands as the more favourable relief to cushion the respondent
- 3.The rest of the awards by the lower court (house allowance of Kshs.324,000, one-month salary in lieu of notice of Kshs.23,100, certificate of service) are not disturbed
- 4.Each party to bear own costs of the appeal
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
- On appeal from
- Chief Magistrate's Court at Nyeri (Employment and Labour Relations Case No. E14 of 2021)
- E14 of 2021
- Jurisdiction invoked
- First appeal to the Employment and Labour Relations Court against a judgment of the Chief Magistrate's Court at Nyeri
Relief refused
#Appellant's prayer that the entire judgment and orders of the trial court be set aside and the respondent's suit be dismissed
The court upheld the trial court's finding that the termination was an unlawful redundancy and only interfered with the compensation award
Respondent's award of compensation for unfair termination of Kshs.138,600
Awarding both compensation under section 49 and severance pay would amount to double benefits; the court retained the more favourable severance pay
Costs
Each party shall bear own costs of the appeal since it has only succeeded partially.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
Accordingly, I allow the appeal to the extent highlighted above and vary the impugned judgment by setting aside the award of compensation for unfair termination. The rest of the awards by the lower court are not disturbed.
Each party shall bear own costs of the appeal since it has only succeeded partially.
The court should lean more towards a finding of redundancy than frustration if failure to perform a contract of service is due to mere reduction or stoppage of businesses to avoid losses.
I am of considered opinion that awarding both compensation and severance pay amounts to double benefits on the part of the employee and double jeopardy to the employer.
Frustration is very rare in employment matters and may occur in instances like death of the employee or permanent incapacitation or failure to secure necessary entry or work permits in a foreign Country.
This being a first appeal, my mandate is to re-evaluate the evidence on record and make my own conclusions but bearing in mind that I did not see the witnesses giving evidence.
Issues in the judgment
#The judgment describes itself as an appeal but was included in a set of first-instance judgments; it is in fact a first appeal from the Chief Magistrate's Court at Nyeri, decided under the first appellate mandate.
Internal arithmetic inconsistency in the house allowance computation quoted in the judgment.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Tamarindi Management Limited v Gatheru (Employment and Labour Relations Appeal E021 of 2023) [2025] KEELRC 2110 (KLR)", Case Analysis (2025). Chief Magistrate Employment and Labour Relations Appeal from ELRC Case No. E14 of 2021 (Memorandum of Appeal dated 27th November 2023). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/2110/eng@2025-07-18
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.