Muthina v Maina International Consolidators Limited [2024] KEELRC 2359 (KLR)

Muthina v Maina International Consolidators Limited (Cause E534 of 2021) [2024] KEELRC 2359 (KLR) (30 September 2024) (Judgment)

Neutral citation: [2024] KEELRC 2359 (KLR)

Republic of Kenya

In the Employment and Labour Relations Court at Nairobi

Cause E534 of 2021

JK Gakeri, J

September 30, 2024

Between

Rose Koki Muthina

Claimant

and

Maina International Consolidators Limited

Respondent

Judgment

1. The Claimant commenced the instant suit on 8th July, 2021 by a Memorandum of Claim alleging unfair and unlawful termination of employment.

2. The Claimant’s case is that she was employed by the Respondent as a Copy Typist on 16th January, 1998 and was dedicated and hardworking.

3. The Claimant avers that on 1st December, 2020, she received a letter of termination of her employment allegedly because of reduced work and served until 31st December, 2020 and the Claimant acknowledged receipt of the letter vide letter dated 24th December, 2020.

4. The Claimant faults the purported redundancy on the ground that it was unlawful for want of a criteria, and targeted the Claimant.

5. The Claimant prays for;a.A declaration that the termination of the Claimant’s employment by the Respondent was unlawful and null.b.General and aggravated damages including exemplary damages for discrimination, distress and mental anguish.c.Certificate of service.d.Unconditional reinstatement.e.In the alternative;i.60 leave days Kshs.48,832. 00ii.Severance pay 11 years Kshs.134,288. 00iii.Gratuity 22 years Kshs.268,576. 00Total Kshs.451,686. 00

Respondent’s case 6. The Respondent admits that the Claimant was its employee effective January 1998 and having issued a letter of termination of employment in December 2020 and received a response.

7. That it did not receive the Union’s letter for want of an address.

8. It admits that the Claimant’s membership of National Social Security Fund was not required until 2009 and the Claimant took 21 days leave every year.

9. It denies that the Claimant is entitled to the prayers sought and prays for dismissal of the suit with costs.

Claimant’s evidence 10. On cross-examination, the Claimant confirmed that she worked for two (2) companies including the Respondent which paid her salary and sometimes there was less work.

11. That she received the letter of termination of employment according her one (1) month’s notice and understood its contents and responded and left on 5th January, 2021.

12. That she filed a complaint with the trade union and the letter to the Respondent was delivered by hand and signed but had no postal address and the Claimant did not avail the signed copy.

13. The witness admitted that NSSF dues were remitted effective 2009 as previously the companies employees did not meet the threshold for registration with the NSSF.

14. The Claimant admitted that she proceed on 21 days leave annually yet the contract provided for 24 days.

Respondent’s evidence 15. RWI, Mr. Pritesh Patel confirmed that the Claimant was an employee of the Respondent entitled to 24 days leave annually and the Respondent had 2 employees and only one was terminated from employment and 4 from the other company.

16. It was his testimony that the Claimant was hard working and was free to join a trade union but he was not aware that the Claimant was a member of any union.

17. That the Respondent received the letter from the union and paid the Claimant all her dues other than service pay and the Claimant took leave annually.

18. Finally, RWI confirmed that he did not notify the union as the Respondent was unaware of the Claimant’s membership and the Claimant was not consulted.

19. On re-examination, RWI testified that payment of NSSF commenced after there was a change in law on the number of employees and the Claimant was declared redundant on account of reduced volume of work and effects of the COVID-19 Pandemic and re-affirmed receipt of the union’s letter.

Claimant’s submissions 20. As to whether termination of the Claimant’s employment on account of redundancy was fair and lawful, counsel submits that it was not as the Claimant was not consulted and had no prior notice of the impending redundancy and the two companies were running as usual.

21. Reliance was made on the sentiments of the Court of Appeal in Cargil Kenya Ltd V Mwaka & 3 others KECA (2021) 115 (KLR) on notice and consultations in cases of a redundancy.

22. Reliance was also made on the sentiments of Nderitu J. in Daniel Mburu Muriu V Hygrotech East Africa Ltd (2022) eKLR on the requirements of a substantive justification and procedural fairness in cases of redundancy to urge that the provisions of the Employment Act were not complied with and that the termination of the Claimant’s employment on account of redundancy was unfair, wrongful and unlawful.

23. As regards the reliefs sought, counsel urges that the Claimant is entitled to the prayers as provided under Section 49 of the Employment Act.

Respondent’s submissions 24. By 9th September, 2024 when the Court retired to prepare this judgment, the Respondent had not filed submissions.

Analysis and determination 25. It is common ground that the Claimant was an employee of the Respondent from January 1998 to 5th January, 2021 and served diligently.

26. It is equally not in contest that the Claimant’s employment was terminated by the Respondent on account of redundancy vide letter dated 1st December, 2020 and the Claimant received the letter on 3rd December, 2020 and responded vide letter dated 24th December, 2020 by which she requested to proceed on terminal leave for 2 days and a recommendation letter.

27. It is also not in dispute that the Claimant reported the dispute to the union which wrote a demand letter to the Respondent dated 15th February, 2021 claiming the sum of Kshs.451,686. 00 comprising leave days (60), severance pay and gratuity but the letter was not responded to.

28. The Claimant neither alleged nor availed evidence of membership of the Kenya Union of Commercial Food and Allied Workers Union.

29. The Claimant’s counsel’s letter dated 5th May, 2021 demands the same amount as is the Memorandum of Claim.

30. Section 2 of the Employment Act, 2007 defines redundancy as;“The loss of employment, occupation, job or career by involuntary means through no fault of an employee involving termination of employment at the initiative of the employer, where the services of an employee are superfluous and the practice commonly known as abolition of office, job or occupation and loss of employment.”

31. Clearly, redundancy entails loss of employment at the instance of the employer in circumstances in which the employee is free from blame.

32. As held in Kenya Airways Ltd V Aviation and Allied Workers Union & others (2014) eKLR, redundancy is one of the legitimate approaches to termination of the employment relationship and conducting the process in consonance with the provisions of Section 40 and 45 of the Employment Act accords the process a clean bill of health.

33. The provisions of Section 45 of the Employment Act ensures that the redundancy was substantively justifiable and procedurally fair.

34. The circumstances that gave rise to the redundancy be it re-organization, restructuring, change in technology, down or right sizing for purposes of cost cutting must be shown to have been necessary for the survival of the organization and a fair process must be employed.

35. The provisions of Section 40(1) of the Employment Act prescribe the circumstances in which a redundancy may pass the fairness test.

36. As underscored by the Court of Appeal in a catena of decisions, the provisions of Section 40(1) of the Employment Act are mandatory.

37. In Barclays Bank of Kenya Ltd & another V Gladys Muthoni & 20 others (2018) eKLR, the Court of Appeal held that;“Section 40(1) of the Employment Act prohibits, in mandatory tone, the termination of a contract of service on account of redundancy unless the employer complies with the following seven conditions, namely; . . .”

38. The Court expressed similar sentiments 7 months later in Freight In Time Ltd V Rosebell Wambui Munene (2018) eKLR.The mandatory conditions are;a.Notice to the union and the labour officer where the employee to be declared redundant is a member of the union, not less than one month prior to the intended date of termination on account of redundancy.b.The notice must set out the reasons for and the extent of the intended redundancy.c.Written notice to the employee and the Labour Officer, if the employee to be declared redundant is not a member of the union.d.In determining the employees to be declared redundant, the employer must consider seniority in time, skill, ability and reliability of the employees.e.Where the terminal benefits payable on redundancy are set out under a collectively agreement, the employer must not disadvantage any employee on account of being or not being a member of the union.f.The employer must pay the employee any leave in cash.g.The employer must pay the employee at least one month’s notice or one month’s wage in lieu of notice.h.The employer must pay the employee severance pay at the rate of not less than 15 days for each completed year of service.

39. Another mandatory requirement is consultations.

40. As regards notice, the Respondent relies on the letter addressed to the Claimant dated 1st December, 2020 received on 3rd December, 2020.

41. Section 40(1)(a) of the Employment Act states that the notice must be sent not less than one month before the intended date of termination.

42. Under Section 3(1) of the Interpretation and General Provisions Act, Cap 2 “month” means “calendar month”.

43. As the notice is dated 1st December, 2020 and lapsed on 31st December, 2020, it was less than a calendar month.

44. Similarly, the notice on record was not given to the Labour Officer not less than a Calendar month before 31st December, 2020 or any other time.

45. In the court’s view, the letter dated 1st December, 2020 by the Respondent to the Claimant was ineffectual for purposes of Section 40(1)(b) of the Employment Act.

46. Since the Claimant tendered no evidence of union membership or disclose the same to the Respondent, the Respondent was not obligated to send the notice to the union.

47. Second, as regards the substantive justification of the redundancy, Section 40(1)(a) of the Employment Act requires the employer to set out the reasons for and extent of the redundancy.

48. In its letter dated 1st December, 2020, the Respondent merely stated that the company had been doing very little business and the company had been struggling to meet operational costs.

49. It is unclear to the Court how little the company’s business was or the extent of the so called struggle.

50. For unexplained reasons, the Respondent did not provide particulars of the company’s performance to justify the redundancy as the letter dated 1st December, 2020 lacks specificity.

51. To the question whether the Respondent provided a substantive justification for the redundancy, the Court returns that it did not as the dearth of the reasons for and extent of the redundancy is apparent.

52. As regards the selection criteria, none was provided and RWI admitted as much as cross-examination. He could not explain how it determined who of the two employees it had would be declared redundant.

53. The issue of ensuring that the employee is not disadvantaged on account of being or not being a member of the union does not arise as it was neither pleaded nor proved that the Claimant was a member of any trade union.

54. As regards payment of leave in cash, the Respondent testified that it paid the Claimant all her dues but did not respond to her letters dated 24th December, 2020, 5th January, 2020 and 2nd February, 2019 on accumulated leave days which, according to the Claimant were 58 and is one of the reliefs sought.

55. Concerning severance pay, the Claimant prays for 15 days for the 11 years served, a sum of Kshs.134,288/=.

56. Finally, as regards consultations, which is now a requirement in cases of redundancy, RWI confirmed that the Claimant was not consulted at all. See Cargil Kenya Ltd V Mwaka & 3 others (Supra) where the Court of Appeal underscored the need for consultations between the parties.

57. The foregoing demonstrates that the termination of the Claimant’s employment on account of redundancy was not conducted in accordance with the provisions of Section 40(1) of the Employment Act and thus lacked the requisite substantive justification and procedural fairness.

58. As held by the Court of Appeal in Barclays Bank of Kenya and another V Gladys Muthoni and 20 others (Supra), the law places a heavy burden on an employer who desires to declare an employee(s) redundant and must comply with the provisions of Section 45 of the Employment Act.

59. In sum, the purported redundancy transitioned to an unfair termination of the Claimant’s employment contract.

Appropriate Reliefs i. Declaration 60. Having found that termination of the Claimant’s employment on account of redundancy was unfair, a declaration to that effect is merited.

ii. General, aggravated and punitive damages for discrimination, distress and mental anguish 61. Neither the Claimant’s written statement nor the oral testimony adduced in court particularise the alleged discrimination, distress or mental anguish.

62. Indeed, the claim is silent on how the Claimant was discriminated by the Respondent.

63. In the absence of evidence of the alleged discrimination, distress or mental anguish, the claim for general damages is unsustainable and is rejected.

64. It is trite law that aggravated damages are typically awarded in actions based on defamation, false imprisonment, malicious prosecution and trespass to land and goods among others on torts and the matters considered in making of the award include Respondent’s conduct and motive in committing the tort.

65. See George Ngige Njoroge V Attorney General (2018) eKLR.

66. Exemplary damages on the other hand are different and are awarded to punish and deter as guided by the sentiments of Lord Devlin in Rookes V Barnard (1964) AC 1119.

67. The Claimant has not evidentiary demonstrated entitlement to general, aggravated or exemplary damages and the claim is dismissed.

ii. Certificate of service 68. The Claimant is entitled to a certificate of service by dint of Section 51 of the Employment Act.

ii. Unconditional reinstatement 69. Reinstatement is a discretionary remedy provided by the provisions of Section 12(3)(vii) of the Employment and Labour Relations Court read with Section 49(3)(a) of the Employment Act.

70. However, its award is restricted to 3 years from the date of termination of employment or summary dismissal.

71. As the Claimant’s employment came to an end on December 31st 2020, the 3 years have already lapsed and remedy is unavailable and is declined.

72. In the alternative, the Claimant prays for;

i. Accumulated leave 60 days 73. It is not in contest that the Claimant’s letter of employment dated 16th January, 1998 accorded her 24 leave days for each completed year of service but both parties agreed that she proceeded for 21 days leave annually.

74. It is unclear to the Court why the Claimant by conduct abrogated her right to the 24 days leave in favour of 21 days and never raised the issue with the Respondent until February 2019.

75. Having acquiesced to 21 days, the Claimant cannot after 22 years claim, the balance of 60 or 58 days.

76. However, as it was a contractual term which the Claimant did not insist on performance, she can only recover leave days lost in the last three years, a total of 9 days, by virtue of Section 90 of the Employment Act.

77. The Claimant is awarded payment for 9 leave days.

ii. Severance pay 78. The Claimant is praying for severance pay for 11 years at 30 days for every completed year.

79. It is unclear to the Court how the 30 days was arrived at as before 2nd June, 2008, the Employment Act, Cap 226 had no provision on redundancy when the claim arose.

80. Similarly, before 2009, the National Social Security Fund Act did not require employers of less than 7 persons to register them as members of the National Social Security Fund for purposes of Social security, thus service pay is not available.

81. In the absence of a legal justification for the prayer of severance pay, the same is unmerited and is declined.

iii. Gratuity for 22 years 82. It is trite that gratuity is an amount paid by the employer to the employee gratuitously in appreciation of the services rendered by the employee and is contractual.

83. It is either set out in the contract of employment or incorporated by a Collective Bargaining Agreement (CBA).

84. In the instance case, the basis of the claim has not been provided and it is dismissed.

85. However, having found that the termination of the Claimant’s employment by the Respondent on account of redundancy was unfair, the Claimant is not entitled to general damages but is entitled to compensation by virtue of the provisions of Section 49(1)(c) of the Employment Act.

86. The Court has taken into account the fact that the Claimant served the Respondent diligently for 22 years, which is a long period of time and no record of misconduct or notice to show cause.

87. Similarly, the Claimant prayed for reinstatement to demonstrate her wish to remain in the Respondent’s employment.

88. However, the Claimant did not appeal the Respondent’s decision to terminate her employment.

89. In the circumstances, the Court is satisfied that the equivalent of 9 months’ salary is fair compensation, Kshs.224,244. 00.

90. In conclusion, judgment is entered in favour of the Claimant against the Respondent in the following terms;a.Declaration that termination of employment was unfair.b.Equivalent of 9 months gross salary Kshs.224,244. 00. c.9 days leave Kshs.7,474. 80. d.Certificate of service.e.50% costs of this suit.Total award Kshs.231,718. 80It is so ordered.

DATED, SIGNED AND DELIVERED VIRTUALLY AT NAIROBI ON THIS 30TH DAY OF SEPTEMBER 2024. DR. JACOB GAKERIJUDGEORDERIn 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 March 2020 and subsequent directions of 21st April 2020 that judgments and rulings shall be delivered through video conferencing or via email. They have waived compliance with Order 21 Rule 1 of the Civil Procedure Rules, which requires that all judgments and rulings be pronounced in open court. In permitting this course, this court has been guided by Article 159(2)(d) of the Constitution which requires the court to eschew undue technicalities in delivering justice, the right of access to justice guaranteed to every person under Article 48 of the Constitution and the provisions of Section 1B of the Civil Procedure Act (Chapter 21 of the Laws of Kenya) which impose on this court the duty of the court, inter alia, to use suitable technology to enhance the overriding objective which is to facilitate just, expeditious, proportionate and affordable resolution of civil disputes.DR. JACOB GAKERIJUDGE