Abere v Mini Bakeries (Nairobi) Limited [2024] KEELRC 2207 (KLR) | Redundancy Procedure | Esheria

Abere v Mini Bakeries (Nairobi) Limited [2024] KEELRC 2207 (KLR)

Full Case Text

Abere v Mini Bakeries (Nairobi) Limited (Cause E004 of 2024) [2024] KEELRC 2207 (KLR) (19 September 2024) (Judgment)

Neutral citation: [2024] KEELRC 2207 (KLR)

Republic of Kenya

In the Employment and Labour Relations Court at Kisumu

Cause E004 of 2024

CN Baari, J

September 19, 2024

Between

Geoffrey Mang'Eea Abere

Claimant

and

Mini Bakeries (Nairobi) Limited

Respondent

Judgment

1. The Claimant’s Statement of Claim is dated 18th December, 2023 and filed in Court on 25th January, 2024. Under the claim, the Claimant seeks the following reliefs: -a.A declaration that his termination was unlawful, unfair and illegal for want of substantive justification and procedural fairness.b.A declaration that the Respondent’s action amounted to discrimination against the Claimant and in violation of Section 5 of the Employment Act and Article 27 of the Constitution.c.Compensation in the sum of Kshs.1,320,000. 00 on account of unlawful and unfair termination of employment being 12 months pay.d.Damages for breach of the Claimant’s right to freedom from discrimination.e.Damages for breach of the Claimant’s right to fair labour practices.f.Damages for breach of the Claimant’s right to fair administrative action.g.Damages for breach of the Claimant’s right to legitimate expectation.h.Interest at court rates.i.Costs of the suit.

2. The Respondent filed a response to the claim dated 16th March, 2024, wherein, it denied the Claimant’s claim save to admitting that they justifiably separated through declaration of redundancy.

3. The matter proceeded for hearing on 3rd June, 2024, with the Claimant testifying in support of his case and the Respondent’s Human Resource Officer named Stephen Wambua testifying in support of its case.

4. Submissions were received from both parties.

The Claimant’s Case 5. The Claimant’s case is that by a letter of appointment dated 10th February, 2004 and signed on 12th February, 2004, the Respondent employed him as a mechanic in its Maintenance department, at a gross salary of Kshs. 10,000. He states that he was on 23rd November, 2004 confirmed into the Respondent’s employment.

6. It is his case that vide a Memo dated 21st February, 2006 the Respondent informed him about review of the terms and conditions relating to application of the notice period, and subsequently on 23rd May, 2005, reviewed his salary to Kshs. 14,000 with effect from 1st May, 2005.

7. The Claimant states that by yet another Memo dated 20th June, 2007, the Respondent further reviewed his salary to Kshs. 20,000 effective 1st June, 2007.

8. The Claimant further asserts that vide a letter dated 11th April, 2008, the Respondent changed his designation to Maintenance Foreman from 1st May, 2008. It is his case that his salary was again reviewed by a Memo dated 14th August, 2009 to Kshs.24,750 and that in further appreciation of his diligence to work, the Respondent further reviewed the salary to Kshs. 75,000.

9. The Claimant states that at the time his services were unfairly terminated, he had risen in rank to Technical Manager at a gross salary was Kshs. 110,000.

10. It is his case that on 3rd June, 2022 at 4pm or thereabouts, while in the course of duty, the Respondent called him for a meeting where he was informed that the Company was in the process of restructuring the Maintenance Department, and as such, his position was declared redundant.

11. He states further that during the meeting of 3rd June 2022, the Respondent's Human Resource Manager, a Mr. Stephen Wambua verbally told him that the purported restructuring was just a smokescreen to rid off my services which in any event, were excellent as noted in the minutes. He states that he was simply not wanted.

12. The Claimant states that on 4th June, 2022, the Respondent issued him with a termination letter, paid his dues and thanked him for his services.

13. That the Respondent’s decision to terminate his services was abrupt and it took him by surprise. He states that the Respondent did not conduct pre-redundancy consultation and was not informed or consulted prior to the decision to terminate his services.

14. It is the Claimant’s position that the Respondent did not explain to him what selection criteria it applied in declaring his position redundant having been senior in time. He states that there was no evidence presented to him during the meeting of 3rd June, 2022 indicating that someone else’s abilities, skills and reliabilities were superior to his, and therefore he could not fit in any other role within the Respondent's structures .

15. He avers that the termination of his contract was unfair and unlawful. That it was made through a rushed process to ostensibly appear to satisfy the motions of the law.

16. The Claimant prays that his claim be allowed.

The Respondent’s Case 17. The Respondent states that it has been undergoing a period of financial constraints caused by Covid-19 from the year 2020 and further compounded by the general economic difficulties in the Country which forced it to restructure.

18. It is its case that arising from the restructuring, sometime in 2022, the Claimant’s position, which was within the company’s Transport and Sales Department, was declared redundant.

19. It states that the consideration prior to the Claimant’s position being declared redundant was discussed by their redundancy committee, and that the Claimant was fully involved and was subsequently notified of the intention to declare him redundant.

20. The Respondent’s case is that the redundancy notice was copied to the relevant County Labour Office. The Respondent further states that in declaring the Claimant’s position redundant, the Respondent duly considered all the relevant factors as per the law.

21. The Respondent states that the position of technical manager was completely phased out and the Claimant procedurally declared redundant.

22. The Respondent further states that the Claimant was informed of the final decision to declare him redundant and taken through a meeting that also availed counselling to him.

23. The Respondent states that it paid the Claimant a net pay of Kshs. 1,184,759. 75 after statutory deductions, comprising all his dues upon clearance with the Respondent company. It states that it paid the Claimant severance pay due to him under redundancy together with 3 months’ salary in lieu of notice.

24. The Respondent states that based on the confirmation issued by DTB Bank, the Claimant was paid his pension contributions, and for which the Respondent also contributed towards, at Jubilee Insurance Limited after he opted to withdraw from the scheme.

25. It states that it duly issued the Claimant with a certificate of service.

26. The Respondent states that for the reasons foregone, this claim is misconceived and merely a claim seeking unjust enrichment to the utter detriment of the Respondent.

27. The Respondent further states that it would not be equitable for the court to grant the prayers sought since the Claimant was duly declared redundant, and his severance pay duly paid including 3 months’ pay in lieu of notice together with other allowances

28. The Respondent prays that this suit be dismissed with costs.

The Claimant’s Submissions 29. It is the Claimant’s submission that the Respondent failed the test set in Section 40 (1) (b) of the Employment Act, as no evidence was led to show that it issued notices contemplated under Section 40 (1) (b) of the Employment Act that clearly communicated a notice of intended redundancy, reasons for, and extent of the intended redundancy of the Claimant’s department at least one month before the intended date of termination. The Claimant had reliance in the case of Prideinn Hotels & Investment Limited v Madzungu (Civil Appeal 88 of 2017) [2022] KECA 764 (KLR) (24 June 2022) to support this position.

30. The Claimant further submits that there is no evidence that he was consulted prior to the decision to declare his department redundant, hence the redundancy failed the test of consultation. He sought to rely in the case of Peter Apolo Ochieng v. Amedo Centre Kenya Limited [2016] eKLR to buttress this assertion.

31. It is submitted that there is no evidence on the selection criteria and/or consideration undertaken, no selection matrix and that there is no evidence why the Respondent picked on the Claimant’s department. That the Respondent’s witness only stated that the Claimant was the only technical manager in his department and that the department was phased out, which fact only came to the fore during the hearing.

32. The Claimant urges that the Court to be guided by the holding in Kenya Union of Domestic, Hotels, Educational Institutions, Hospital and allied Workers (Kudheiha) v Nairobi Hospital [2022] eKLR where it was held that the Respondent failed in all fronts to comply with the requirements of stipulated in Section 40 of the Employment Act including failing the crucial test on selection.

33. The Claimant finally submits that he is entitled to the remedies sought and urges the court to award him as prayed.

The Respondent’s Submissions 34. The Respondent submits that its company no longer has the position that was previously occupied by the Claimant as the position was abolished. It submits further that the Claimant confirmed that he was the only one who occupied the said position and did not know whether anybody holds his position at the company anymore, which in their view makes it clear that the Claimant was declared redundant.

35. It is the Respondent’s further submission that the Claimant had been notified earlier of the intended redundancy in the redundancy meeting which he confirmed attending. It submits further that the Claimant was paid and accepted the terms of the redundancy by signing on the letter forming part of his own exhibit 11 and only filed the present suit in 2024, having accepted the terms of the redundancy way back in June 2022. It placed reliance in Mercy Wangari Muchiri v Total Kenya Limited [2020] eKLR to support this position.

36. The Respondent submits that the Claimant did not suffer any prejudice as the typographical mistake on the redundancy notice indicating the month of June, 2022 and not July, 2022 does not affect the Claimant. It submits further that the Claimant was deemed to have remained in employment until 4th July, 2022 as confirmed by the Certificate of Service produced by the Claimant in evidence, and further supported by the fact that his last pay slip was issued at the start of August, 2022 after the end of July, 2022.

37. It is the Respondent’s submission that the Claimant’s suit is a clear attempt at unjust enrichment.

38. The Respondent submits that it met all the procedural requirements under Section 40(1) of the Employment Act, having paid the Claimant all his dues on account of severance pay, 3 months in lieu of notice and all outstanding leave days. The Respondent sought to rely in Muraguri v Mpala Research Centre & 2 others (Cause E045 of 2022) [2024] KEELRC 440 (KLR) (28 February 2024) to support this position.

39. The Respondent finally submits that for the foregoing reasons, this suit is for dismissal and should be dismissed with costs.

Analysis and Determination 40. Upon careful consideration of the pleadings, the evidence adduced, witnesses’ testimonies and the parties’ submissions, the following issues crystalize for determination.i.Whether the Claimant’s redundancy amounts to an unfair terminationii.Whether the Claimant is entitled to the remedies sought.

Whether the Claimant’s redundancy amounts to an unfair termination 41. The Respondent attributes the termination of the Claimant’s employment to the abolition of the position of technical manager that he occupied due to financial challenges. This situation where an employee is terminated upon abolition of office is ideally a declaration of redundancy.

42. The Claimant on his part, asserts that his termination on account of redundancy failed the test set out in Section 40 (1) (b) of the Employment Act, on the basis that the notices contemplated under Section 40 (1) (b) were not issued, and further that the reasons for, and extent of the intended abolition of his department at least one month before the intended date of termination were not communicated to him. He further avers that he was not consulted prior to the abolition of office and/or the declaration of redundancy.

43. As a general rule, redundancy is a fair reason for dismissal for as long as the employer can prove that actual redundancy was the reason for dismissal.

44. The Claimant has not disputed that the Respondent was facing financial challenges at the time of his termination. His only issue with the termination, seems to be non-adherence with the procedural requirements under Section 40 of the Employment Act.

45. Section 40 of the Employment Act, states thus on termination by redundancy:“An employer shall not terminate a contract of service on account of redundancy unless the employer complies with the following conditions:i.where the employee is a member of a trade union, the employer notifies the union to which the employee is a member and the labour officer in charge of the area where the employee is employed of the reasons for, and the extent of, the intended redundancy not less than a month prior to the date of the intended date of termination on account of redundancy:ii.where an employee is not a member of a trade union, the employer notifies the employee personally in writing and the labour officer;iii.the employer has, in the selection of employees to be declared redundant had due regard to seniority in time and to the skill, ability and reliability of each employee of the particular class of employees affected by the redundancy;iv.where there is in existence a collective agreement between an employer and a trade union setting out terminal benefits payable upon redundancy; the employer has not placed the employee at a disadvantage for being or not being a member of the trade union;v.the employer has where leave is due to an employee who is declared redundant, paid off the leave in cash;vi.the employer has paid an employee declared redundant not less than one month’s notice or one month’s wages in lieu of notice; andvii.the employer has paid to an employee declared redundant severance pay at the rate of not less than fifteen days pay for each completed year of service…..”1. The Claimant disputed receiving notice of redundancy from the Respondent prior to his termination on account of redundancy. The Respondent on its part, argued that it served both the Claimant and the labour officer with notice of the intended redundancy, save that the same was wrongly dated.2. From the minutes of a meeting held on 3rd June, 2022 between the Claimant and the Respondent’s representative and produced in evidence by the Claimant, it is evident that the reason for the Claimant’s termination was abolition of the office of technical manager held then by the Claimant.3. The notice of termination that the Claimant raises issue with is indeed dated 31st May, 2022. The Respondent’s assertion that the date was made in error, is in my view supported by the fact that the same letter refers to a meeting held on 4th June, 2022, which is a date before the said meeting. This said, it is however true that the letter still provides 4th June, 2022 as the date the notice takes effect, which goes to say that the redundancy notice was to take effect immediately and not one month later as is envisaged under Section 40 of the Employment Act.4. The notice as correctly submitted by the Claimant does not meet the mandatory statutory requirement of Section 40 of the Employment Act, which renders the termination by redundancy unfair on account only of procedure.5. It was also not shown that notice was issued and/or received by the labour officer. In Kenya Union of Journalists and allied workers v. Nation Media Group (2013) eKLR, the court held that the provisions of Section 40 are couched in mandatory terms and an employer desirous of undertaking an involuntary redundancy has the sole responsibility of complying with the law, even where the redundancy is by consent.6. The Claimant has equally challenged the criteria adopted in declaring him redundant and further alleged that he was never consulted prior to the termination. The consultation process principally aims at adopting proper criteria for selection for redundancy and exploration of alternatives to redundancy.7. An employer is ideally required to identify a pool of employees from which those to be made redundant are selected in the interest of fair play and in accordance with the provisions of Article 41 of the Constitution.8. In Joseph Macharia Warutere & 3 Others v. Saab Kenya Ltd (2017) eKLR, it was held that the selection criteria must be objective and where questioned, the employer should be able to show that there was a criterion in place.9. The minutes of 3rd June, 2022, point to consultation prior to the termination and hence, this allegation is not supported. It is equally true that the position declared redundant was held by the Claimant and there was no other employee in a similar position or even in the department per the evidence adduced. There was therefore no option to consider the issue of seniority, skills, ability and reliability of each employee, since the Claimant was alone in the department that was abolished.10. For the reason foregone, I would be slow to fault the Respondent on the issue of criteria.11. In the end, I find the Claimant’s termination on account of redundancy unfair, based solely on the improper notice to both him and the labour officer.

Whether the Claimant is entitled to the remedies sought.Compensation 57. A finding of an unfair termination of employment entitles the Claimant to compensation in accordance with Sections 49 and 50 of the Employment Act. The Claimant’s termination has been found to be unfair premised only on the notice of redundancy to both the Claimant and the Labour officer, not having met the statutory one month period.

58. The Court notes that the Respondent did pay the Claimant 3 months’ salary in lieu of notice instead of the statutory one-month salary in lieu of notice. It is further noted that the Claimant was paid severance pay at the rate of 17 days wages for each year of service together with pay for all pending leave days.

59. In Elizabeth Wakanyi Kibe v Telkom Kenya Ltd [2014] eKLR the Court cited the case of D.K. Marete v Teachers Service Commission Cause No. 379 of 2009 for the holding that remedies are not aimed at facilitating the unjust enrichment of aggrieved employees, but are meant to redress economic injuries in a proportionate way.

60. Guided by the above decision and the effort the Respondent evidently put in trying to abide by the letter of the law in terminating the Claimant, I deem an award of two months' salary sufficient compensation for the unfair termination, and which is hereby granted.Awards on account of Discrimination, unfair labour practices and breach of right to legitimate expectation

61. The Claimant did not lead any evidence to prove discrimination. The Court notes that he was the only employee in the Respondent’s technical department, hence it would be difficult for this court to construe his termination as having been discriminatory, against whom I would ask?. No single ground has been alluded to as the basis upon which the Claimant claims discrimination. The claim is unfounded and is dismissed.

62. Similarly, the claims for damages for unfair labour practices, fair administrative action and legitimate expectation, were not proven. In Kenya Ports Authority v Munyao & 4 others (Petition E008 of 2023) [2023] KESC 112 (KLR) (Civ) (28 December 2023) (Judgment), also cited by the Respondent, the Supreme Court of Kenya stated as follows: “From the above definition unfair labour practice encompasses all conduct prior to, in the course of employment, during and after termination of employment. The provisions of article 41 therefore encompass the full spectrum of labour practices. The provisions of article 41 are borne from the realization that employment and/or right to work is a human right. The right is also linked to other rights in the bill of rights more so the protection of life and the dignity of a person… “

63. The Claimant neither laid the basis for the allegations nor led evidence in their prove. The claims fail and are dismissed.

64. In the final analysis, the Claimant’s claim partly succeeds and orders granted as follows: -a.A declaration that the Claimant’s termination on account of redundancy is unfair.b.An order that the Claimant be paid two months’ salary for the unfair termination at Kshs. 220,000/-c.The Claimant is awarded half the costs of the suit.

65. Judgment of the Court.

SIGNED, DATED AND DELIVERED BY VIDEO-LINK AND IN COURT AT KISUMU THIS 19TH DAY OF SEPTEMBER, 2024. CHRISTINE N. BAARIJUDGEAppearance:Ms. Mugenya present h/b for Mr. Omulama for the ClaimantMs. Monica Otieno h/b present h/b for Mr. Ndolo for the RespondentMs. Anjeline -C/A