Charles Ochieng Owino v Maisha Packaging Company Ltd & National Cement Co. Ltd [2021] KEELRC 1025 (KLR)

REPUBLIC OF KENYA

IN THE EMPLOYMENT AND LABOUR RELATIONS COURT OF KENYA

AT NAIROBI

CAUSE NO 830 OF 2017

CHARLES OCHIENG OWINO...........................................................CLAIMANT

VERSUS

MAISHA PACKAGING COMPANY LTD.............................1ST RESPONDENT

NATIONAL CEMENT CO. LTD............................................2ND RESPONDENT

JUDGMENT

1. The Claimant was employed by the 1st Respondent as a looms operator with effect from 2nd October 2014. This was by a written contract of employment dated 26th September 2014.

2. The parties worked together up to 26th January 2016, when as pleaded by the Claimant, his contract of service aforesaid was brought to closure allegedly on account of redundancy. The Claimant asserts that the termination was communicated by the 2nd Respondent. Further, the Claimant asserts that the termination was unlawful as the redundancy was not processed in accordance with the applicable law. He therefore seeks for the reliefs set out in the statement of claim as compensation for wrongful termination.

3. The 1st and 2nd Respondents entered appearance and filed a response to the claim. In the reply, the Respondents admit that the Claimant was the 1st Respondent’s employee as asserted by the Claimant. While stating that the aforesaid contract of service ended about 25th of January 2016, they deny that the Claimant was wrongfully terminated. In the view of the Respondents, the Claimant was lawfully terminated in accordance with the law relating to redundancy in Kenya.

4. The parties did not file agreed issues before trial. The court will therefore formulate the issues for determination as appear from the pleadings on record having regard to the rules on joinder of issues.

5. The cause proceeded to trial on 6th August 2021 when only the Claimant testified. The Respondent’s Advocates though served, did not attend court. And neither did the Respondents themselves. In terms of the decision in Peyiai Nkoitoi v Aruba Mara Camp Safaris Ltd [2021] eKLR,where a suit proceeds without the participation of the defense even though there is a defense on record, such proceedings are to be deemed as undefended. The court adopts the same view in this cause.

6. At the trial, the Claimant elected to adopt his witness statement as his evidence in chief. He also adopted the list of documents filed together with the attached copies of documents as exhibits in the cause.  He then asked for the reliefs in the statement of claim.

7. In his witness statement which was adopted as evidence in chief, the Claimant alludes to the fact of having been employed by the 1st Respondent on 2nd October 2014. The Claimant produced the appointment letter dated 26th September 2014 showing that the Claimant had been appointed as  a looms operator with a net salary of Ksh. 25,000/=. It is therefore without doubt and the court finds that the Claimant was employed by the 1st Respondent as a looms operator at a net pay of Ksh. 25,000/= per month.

8. The Claimant further asserted that he was terminated on 26th January 2016 on account of redundancy. He produced a letter by the 2nd Respondent addressed to the Claimant indicating that the termination took effect on 26th January 2016. The reason for the purported termination was indicated as redundancy.

9. The Respondents in their statement of response admit that the Claimant’s services were terminated on account of an alleged redundancy. Although it is not explained why the 2nd Respondent would issue the termination letter on behalf of the 1st Respondent, the Claimant contended that the 1st Respondent was a subsidiary of the 2nd Respondent. In his view, the two companies had a relationship.

10. Although the Respondents deny the alleged relationship between them, they nonetheless admit that the letter issued by the 2nd Respondent dated 26th January 2016 is the one by which the 1st Respondent terminated the services of the Claimant. In the court’s view, this admission by the Respondents can only be construed in the context of creating an agency relation between the 1st and 2nd Respondents for purposes of issuing the letter of termination dated 26th January 2016. Accordingly, the court holds that the 1st Respondent indeed terminated the Claimant’s contract of service through the letter dated 26th January 2016 even though the letter was issued by the 2nd Respondent. In any event, the Respondents do not deny that the Claimant’s contract of service was terminated by the 1st Respondent on 26th January 2016.

11. Having studied the pleadings, the only issues that arise for determination subsequent to the aforesaid are as follows:-

a. Whether the termination of the Claimant’s contract of service by the 1st Respondent on account of redundancy was substantively and procedurally fair.

b. What remedies, if at all, is the Claimant entitled to?

12. In relation to the 1st question, it is not in dispute that the Claimant received a letter dated 26th January 2016 communicating the 1st Respondent’s decision to terminate the Claimant’s services. The reason given in the letter is one of redundancy. According to the termination letter, the termination was to take effect on 26th January 2016. Does the letter comply with the requisites of sections 40 and 45 of the Employment Act on the reasons for and procedure to be followed in declaring a redundancy?

13. Section 45 (2) (b) (ii) of the Employment Act recognizes termination of employment on the basis of operational requirements of an employer as a valid ground for termination. This provision relates to termination of employment on any ground that would justify declaration of a redundancy by rendering the position of the affected employee obsolete or unnecessary. Some of the grounds could be downscaling of the employer’s business, adoption of new technology in the workplace that renders some methods of working moribund among others.

14. However, an employer who has valid grounds to declare a redundancy must then work within the procedural strictures set by section 40 of the Act. He must issue notice of the intended redundancy to the employees, the local labour office and trade union as appropriate. The notice, which must be of a minimum period of a calendar month, must indicate the reasons for and extent of the proposed redundancy. The employer must then undertake the selection process of employees to be terminated in line with the guidelines set out under the Act. The law also obligates the employer to then issue a termination notice to the employees identified for termination or pay them salary in lieu of such notice. In addition, the employer must pay such employees all dues including accrued leave but not taken, salary for the days worked and severance pay.

15. From the evidence tendered in the cause, there is no indication that the 1st Respondent met the legal parameters alluded to above. Although the 1st Respondent alludes to reduction of work in the packaging plant as the substantive justification for declaring a redundancy, no evidence is laid before the court to support this assertion. It remains a bare assertion.

16. Further, there is no suggestion that the Respondents issued a notice that precedes the selection process during a redundancy. All that was issued was a termination letter. Similarly, there is no evidence of the procedure that was adopted in order to settle on the Claimant as the person to be terminated.

17. Section 45 of the Employment Act requires an employer to prove the validity and fairness of a termination both in terms of the grounds for and the procedure adopted before termination. This validation has not been rendered by the Respondents in this cause. In the premises, the court finds that the 1st Respondent’s termination of the Claimant allegedly on account of redundancy was flawed both procedurally and substantively. The termination was therefore unlawful.

18. Having found that the termination was unfair, the next question for determination relates to the reliefs the Claimant is entitled to if at all. In the statement of claim, the Claimant prays for the following reliefs:-

a. Damages for discriminatory treatment at work.

b. One month’s salary in lieu of notice fixed at Ksh. 31,381/=.

c. Compensation equivalent to twelve months’ salary totaling Ksh 376,572/=.

d. Severance pay of Ksh 15,690/=.

e. Accrued leave of Ksh. 15,690/=.

f. Costs of the suit.

19. From the evidence tendered in the cause, the Claimant was earning a gross pay of Ksh. 32,518 (including the sum deducted towards absenteeism) as at December 2015. This is supported by the pay slip supplied by the Claimant and appearing as document number 3 on the Claimant’s list of documents and produced as exhibit in the cause.

20. The court has declared the Claimant’s termination as having been unlawful. Consequently, the Claimant can only get the reliefs set out under section 49 of the Employment Act. The prayer for severance pay is therefore declined as it presupposes a valid declaration of redundancy.

21. There is no evidence that the Claimant was served with a termination notice in terms of section 35 of the Employment Act. As a result, this court finds that he is entitled to pay in lieu of such notice in terms of section 36 of the Employment Act. Although the December 2015 pay slip shows the Claimant’s gross pay to be Ksh. 32,518 as indicated above, he claims Ksh. 31,381/= under this head. As a result, the claim for pay in lieu of notice at Ksh 31,381/= is allowed.

22. The court also awards the Claimant compensation for wrongful termination but fixed at 7 months of the Claimant’s gross salary. This works to Ksh. 219,667/=. In making this award, the court is guided by the parameters set out in section 49 of the Employment Act in determining the relief to award.

23. Although the Claimant did not contribute to the circumstances that resulted into his termination, the law requires him to take steps to mitigate his loss. There is no evidence that the Claimant sought but failed to get alternative employment in mitigation of his loss. In the premises, to award full compensation equivalent to 12 months’ salary would be to unfairly require the 1st Respondent to shoulder the unmitigated loss of the Claimant.

24. The Claimant has also claimed for leave pay of Ksh. 15,690/=. The fact that the Claimant was entitled to some leave days is admitted by the Respondents in the final dues document dated 26th January 2016 in the Respondents’ list of documents. The court allows this claim.

25. The Claimant has prayed for damages for discrimination. However, no evidence was presented to show discriminatory treatment in terms of section 5 of the Employment Act. The failure by the employer to follow the first in last out principle alone cannot provide a basis for a claim for discrimination. In any event, this principle is not cast in stone and an employer could depart from in on sound grounds. This prayer is therefore declined.

26. The Claimant is said to have been paid terminal dues of Ksh. 55,192. 76 as appears from the final dues computation by the Respondent. The court is mindful not to permit double payments as this would be unjust. Subject to proof that the above amount of Ksh. 55,192. 76 was deposited with the Claimant, it shall be discounted from the Claimant’s final payments under this judgment. Such proof to be furnished to the Deputy Registrar of this court in the event of disagreement between the parties on this aspect of the matter,

27. All the payments aforesaid to be subject to statutory deductions in line with the requirements of section 49 of the Employment Act.

28. The Claimant shall also be entitled to interest on the amounts above from the date of institution of the suit till payment in full. As well, costs of the suit are awarded to the Claimant.

29. Summary of the award:-

a. The 1st Respondent’s termination of the Claimant was unlawful.

b. The Claimant is awarded compensation for unlawful termination equivalent to his gross salary of 7 months totaling Ksh 219,667/=.

c. The Claimant is awarded pay in lieu of leave of Ksh. 15,690/=.

d. The Claimant is awarded salary in lieu of notice of Ksh. 31,381/=.

TOTAL                                                                      Ksh. 266,738/=.

e. The claim for severance pay is declined.

f. The claim for damages on account of discriminatory treatment is declined.

g. The sum of Ksh. 55,192. 76 said to have been paid to the Claimant in settlement of his final dues to be deducted from the final payments under this judgment but subject to proof of payment of the amounts to the Claimant. Such proof to be filed with the Deputy Registrar of the court in the event of disagreement between the parties.

h. The claimant is awarded interest on the amounts above from the date of presenting the claim to court till payment in full.

i. Costs of the suit are awarded to the Claimant.

j. The awards under section 49 of the Employment Act are subject to the applicable statutory deductions.

DATED, SIGNED AND DELIVERED ON THE 10TH DAY OF SEPTEMBER 2021

B O M MANANI

JUDGE

In the presence of:

..........................................for the Claimant

.....................................for the Respondent

ORDER

In view of the declaration of measures restricting court operations due to the Covid-19 pandemic and in light of the directions issued by his Lordship, the Chief Justice on 15th April 2020, this judgment has been delivered to the parties online with their consent, the parties having waived compliance with Rule 28 (3) of the ELRC Procedure Rules which requires that all judgments and rulings shall be dated, signed and delivered in the open court.

B O M MANANI

JUDGE