Eliud Sifuna, Maurice Nyanga & Joshua Ukala v Tata Chemicals Magadi Limited [2018] KEELRC 1317 (KLR)

REPUBLIC OF KENYA

IN THE EMPLOYMENT AND LABOUR RELATIONS COURT OF KENYA AT NAIROBI

CAUSE NO. 1941 OF 2011

ELIUD SIFUNA ............................................................. 1ST CLAIMANT

MAURICE NYANGA .................................................... 2ND CLAIMANT

JOSHUA UKALA ....................................................... 23RD CLAIMANT

- VERSUS -

TATA CHEMICALS MAGADI LIMITED ................... RESPONDENT

(Before Hon. Justice Byram Ongaya on Friday 27th July, 2018)

JUDGMENT

The claimants filed the statement of claim alleging that the termination of their respective contracts of employment on account of redundancy was unfair because the redundancy was not genuine. They each prayed for compensation being 12 months’ salaries for the unfair termination, general damages for loss of employment for the period pending retirement, and costs. The 3rd claimant also prayed for bonus amounting to Kshs. 141, 120. 00.

The respondent’s case is that the claimant’s were at all material time employed as managers under individual contracts of service. Each of the was not bound by the collective agreement because they were not members of a trade union. Further the respondent experienced difficult financial times for three years prior to the redundancies so that the redundancy was as a result of reorganisation or restructuring in view of the difficult economic times for the respondent’s enterprise. It is the respondent’s case that initially staff left through natural attrition and were not replaced. Later the respondent employed the criteria of merging roles. The departmental heads identified roles that could be merged and relevant skills. In the process the claimants were amongst the 8 affected employees. The respondent’s case was that the termination of the claimants’ services on account of redundancy was therefore lawful and justified. Staff had been consulted, memos issued, and they were sensitised in preparation of the redundancy. The employees targeted were limited to supervisors and managers towards achieving a ratio of 1:6 for supervisor or manager to workers. The respondent claimed that the 2nd claimant owed Kshs. 172, 285. 00 being unsettled loan. The respondent prayed that the claimants’ suit should be dismissed with costs.

The 1st issue for determination is whether the redundancy was genuine. The Court considers that redundancy as a ground for termination must be valid or genuine as envisaged in section 43 of the Employment Act, 2007. In the instant case, the if the redundancy was not genuine then the termination will be found to have been unfair. The claimants disputed that the respondent was undergoing financial difficulties because profits were reported and staff were paid bonuses in view of those profits. Whereas the respondent filed organograms showing merger of posts, the Court finds that it failed to provide financial statements showing its financial position. Considering the concerns raised for the claimants, the Court returns that the redundancy based on financial difficulty was not established. The Court considers that it was not enough for the respondent to allege financial or economic hard times without specifically providing the evidence demonstrating that alleged hard time. The termination was therefore unfair for want of a valid reason to justify the redundancy as envisaged in section 43 of the Act. In any event, the evidence was that some of the employees declared redundant were shortly thereafter reengaged by the respondent. The Court finds that the redundancy decision was substantively unfair for want of genuine reason, namely, the respondent showing that indeed it was undergoing a difficult financial period prior to the redundancy.

The claimants pleaded that the redundancy was unprocedural. The Court returns that the respondent did not show how the claimants were identified as per section 40 of the Act. The identification was said to have been by senior managers in an opaque criteria. The Court finds that the criteria in section 40 were not shown to have been complied with. The evidence was that the labour officer was not notified as required under section 40 of the Act. In any event, there was no evidence that the offices that were alleged to have been abolished had been notified to the Director of Employment as per section 76 of the Act. Thus, the redundancy is found to have been unfair for want of due process.

The 2nd issue for determination is whether the claimants are entitled to the remedies as prayed for. It is clear that they did not contribute to their termination. Each desired to continue in employment. They had served for a long time and had a clean record of service. Considering these factors, each is awarded 6 months’ salaries under section 49 of the Act. As submitted for the respondent, the severance pay was on 21 days for each completed year of service rather than the statutory 15 days and the Court has considered that mitigating factor in awarding the 6 months.

As submitted for the respondent there is no basis for general damages in the nature of salaries and benefits till retirement at age of 60 years because the claimants would after the termination, move on and secure alternative employment or other gainful activities. The prayer will fail as unreasonable and unjustified.

The 3rd claimant put a logical basis for a bonus that he was not paid. However, there was no evidence and basis of the amount claimed. As submitted for the respondent, the prayer will fail as it was not proved.

To answer the 3rd issue for determination the Court returns that the respondent is entitled to recover Kshs. 172, 285. 00 from the 2nd claimant being a loan advanced to the claimant and not repaid. In any event no defence was filed to oppose the claim and it is deemed admitted.

In conclusion judgment is hereby entered for the parties for:

a) The declaration that the termination of the claimants’ employment by way of redundancy was unfair.

b) The respondent to pay each of the claimants 6 months’ gross salaries at the rate of last monthly pay by 01. 10. 2019 failing interest to run thereon at Court rates from the date of the judgment till full payment.

c) The respondent to recover from the 2nd claimant’s dues a sum of Kshs. 172, 285. 00.

d) The respondent to pay the claimants’ respective costs of the suit.

Signed, datedanddeliveredin court atNairobithisFriday 27th July, 2018.

BYRAM ONGAYA

JUDGE