Banking Insurance and Finance Union (Kenya) v Inoi Farmers Co-operative Society Limited (Cause E041 of 2024) [2025] KEELRC 2257 (KLR)
The bottom line
#A Kenyan court voided a cooperative's redundancy of 23 workers because it notified employees directly instead of their union and the labour officer.
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 redundancy is justified.
- 2.Whether the redundancy is in accordance with the procedure under section 40 of the Employment Act.
- 3.Whether the reliefs sought by the claimant should be granted.
- 4.Whether the reliefs sought in the respondent's counterclaim should be granted.
- 5.Who should bear the costs of the suit?
Key legal issues
#Whether the redundancy was justified
Yes. The respondent had a valid reason - an unsustainable wage bill under the Wages (General) Order as opposed to the Wages (Agricultural Industry) Order. The best judge of a redundancy situation is the employer exercising managerial prerogative.
The court held that justification for redundancy is the existence of a redundancy situation, which is best judged by the employer with managerial prerogative and business experience. The respondent contended the wage bill based on the Wages (General) Order rather than the Wages (Agricultural Industry) Order was unsustainable. Although the CBA was properly checked by the Ministry of Labour and registered, the court cannot force an employer to retain employees it cannot afford to pay, and noted contentions of collusion in CBA negotiations.
Whether the redundancy complied with section 40 of the Employment Act
No. The respondent failed to serve the redundancy notice on the union and the local labour officer as required by section 40(1)(a); service directly on employees rendered the notices unlawful, null and void.
Section 40(1)(a) requires that where employees are union members, notice of the reasons for and extent of the intended redundancy be given to the union and the labour officer at least one month before termination. Relying on De La Rue and Kenya Airways, the court emphasised that the notices are not merely informational but are meant to trigger consultation to avert or minimise terminations. The legal burden of serving proper notices lay on the respondent, which it failed to discharge.
Whether the reliefs sought by the claimant should be granted
Yes. The termination notices had not taken effect due to the consent suspension; the court declared them null and void and prohibited the respondent from laying off the grievants without following lawful procedure, while leaving the employer free to re-do the redundancy lawfully.
Since the notices were suspended by consent and the employees were still working and being paid, the court declared the intended terminations unlawful and null and void. It prohibited the unlawful redundancy but stressed that the employer retains the right to declare redundancies in future if the correct procedure is followed, as the court or a trade union cannot run the business of employers.
Whether the respondent's counterclaim reliefs should be granted
No. The counterclaim was dismissed for lack of merit.
The court noted the respondent is represented by an advocate presumed to know the law and cannot be muzzled from undertaking redundancies, but must follow the law and international labour standards. It cannot choose a trade union for its employees as that would violate Article 41(2)(c) of the Constitution, and the law provides a procedure for revoking recognition agreements. A registered CBA can be amended by a subsequent collective agreement to avert redundancies.
Legal principles established
#- Where employees are members of a trade union, redundancy notification under section 40(1)(a) of the Employment Act must be served on the union and the local labour officer; service on the employees directly renders the redundancy process unfair and unlawful.
- The employer has managerial prerogative to decide that a redundancy situation exists, and the court will not stop a redundancy outright but will only compel compliance with the prescribed procedure.
Court orders
#- 1.The redundancy notices issued by the respondent to all the 23 grievants dated 22nd August 2024 are declared unlawful, null and void.
- 2.The respondent is prohibited from laying off the grievants without following the lawful procedure.
- 3.The respondent is at liberty to proceed with the intended redundancies provided that it complies with the lawful procedure under section 40 of the Employment Act and the CBA.
- 4.Costs of the suit shall be to the claimant.
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
- Jurisdiction invoked
- First-instance jurisdiction of the Employment and Labour Relations Court over employment and labour relations disputes (Employment Act, section 40 dispute); no specific constitutional provision invoked
Relief refused
#Respondent's counterclaim: to be allowed to carry out the re-organisation/redundancy and operate within its means; to remove unionised workers from the General Order and place them under the Agricultural Industry Order; to renegotiate the CBA afresh; costs and interest
The court held the employer must follow the law when carrying out redundancies, cannot choose a trade union for its employees as that would violate Article 41(2)(c) of the Constitution, and that a registered CBA can be amended by subsequent collective agreement; the counterclaim lacked merit.
Costs
Costs of the suit shall be to the claimant.
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.
The redundancy notices issued by the respondent to all the 23 grievants dated 22nd August 2024 are unlawful, null and void.
The respondent is prohibited from laying ofi the grievants without following the lawful procedure.
For avoidance of doubt the respondent is at liberty to proceed with the intended redundancies provided that it complies with the lawful procedure under section 40 of the Employment Act and the CBA.
Costs of the suit shall be to the claimant.
Failure to serve the notice as required under section 40(1)(a) of the Employment Act rendered the redundancy process unfair and unlawful.
The court does not intervene to stop the process altogether but to put the employer back on the track of the prescribed procedure for separating with its employees.
Issues in the judgment
#Internal inconsistency in the number of affected employees: the memo is described as covering 24 permanent staff while the relief and orders refer to Twenty-three (23) Grievants.
Inconsistent recognition agreement dates: the claimant's witness testified it was signed on 12th August 2012, while RW2 admitted it was dated 10th August 2012.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Banking Insurance and Finance Union (Kenya) v Inoi Farmers Co-operative Society Limited (Cause E041 of 2024) [2025] KEELRC 2257 (KLR)", Case Analysis (2025). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/2257/eng@2025-07-29
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.