The Redundancy Process in Kenya in employment occurs when an employer finds that they no longer require an employee’s role due to changes in operational needs, technological advancements, or financial constraints. In Kenya, the process for handling redundancy is governed by specific legal frameworks outlined in the Employment Act, Cap 226 of the Laws of Kenya.
This article provides a detailed examination of the redundancy process in Kenya, including the legal framework, sequential procedures, and relevant case law that shape redundancy practices in the country.
Legal Framework
The primary legal framework for redundancy in Kenya is the Employment Act, Cap 226. The Act provides comprehensive guidelines on employment practices, including redundancy. Key sections relevant to redundancy are found in Part VI of the Act, which covers employment termination.
Additionally, the Kenyan Constitution (2010) and the Employment and Labour Relations Court Act provide overarching principles related to fair employment practices and dispute resolution, further influencing how redundancy processes are implemented.
Sequential Redundancy Process as per the Employment Act
1. Identification of Redundancy
The first step in the redundancy process is identifying the need for redundancy. Employers must determine that the redundancy is necessary due to economic reasons, technological changes, or organizational restructuring. The decision must be genuine and not merely a pretext for dismissing employees.
2. Consultation with Employees
According to Section 40 of the Employment Act, employers are required to consult with affected employees or their representatives before proceeding with redundancy. The consultation should involve discussions on the reasons for redundancy, the selection criteria, and potential alternatives to termination.
3. Notification of Redundancy
The employer must provide written notice to the employee. This notice period should be in accordance with the terms of the employment contract or the Employment Act's minimum notice periods, typically one month.
4. Selection Criteria
Employers must use fair and objective criteria for selecting employees for redundancy as per section 40 (1) (c) of the Employment Act. These criteria should be clearly communicated to employees and should be applied consistently. Common criteria include skills, qualifications, and length of service.
5. Compensation and Severance Pay
Section 40(1)(f) of the Employment Act stipulates that employees who are made redundant are entitled to severance pay. This payment is calculated based on the employee’s duration of service and is typically equivalent to 15 days' wages for each completed year of service.
6. Issuance of Certificates
Employers must issue a certificate of service to employees who have been made redundant. This document serves as a record of employment and can be beneficial for future job searches.
7. Appeal Mechanism
Employees who believe that the redundancy process was unfair or did not follow legal procedures have the right to appeal. They may file a complaint with the Employment and Labour Relations Court or the Magistrates Court (If the salary of the employee is less than Kshs 80,000 per month) for redress.
Relevant Case Law
The case Lebo & 331 others v Kenya Power & Lighting Co Ltd was heard in the Employment and Labour Relations Court at Eldoret. Here’s a summary of the judgment delivered on January 20, 2023:
Background: The claimants, led by Christopher Kipkorir Lebo, were former employees of Kenya Power & Lighting Co Ltd. They were terminated through a “staff reduction programme” in 2002 and filed the suit seeking various reliefs, including declarations that the termination was unlawful and compensation for withheld allowances and benefits.
Claims: The claimants sought several declarations, including that the retrenchment was unlawful, the withheld allowances and benefits should be paid, and the termination was inhuman and discriminatory. They also sought a substantial sum in compensation for the alleged wrongful termination and withheld benefits.
Court’s Findings: The court, presided over by Hon. Mr. Justice Abuodha Jorum Nelson, reviewed the evidence and submissions. The court found that the reasons for declaring the claimants redundant were valid and justified. The employer had followed the applicable laws and procedures in implementing the staff reduction programme.
Outcome: The court dismissed the claimants’ suit, finding no merit in their claims. The court upheld the employer’s actions as lawful and justified, and the claimants were not entitled to the reliefs sought.
This judgment underscores the importance of employers adhering to legal procedures during redundancy processes and validates the employer’s actions when done correctly.
In the case of Doris Kairuthi Kaaria & 59 others v Kenya Methodist University, the plaintiffs, who were employees of Kenya Methodist University, filed a suit against the university for unfair termination of their employment contracts.
Background: The plaintiffs were employed in various capacities at Kenya Methodist University. They claimed that their termination was abrupt and without due process, violating their rights under the Employment Act.
Claims: The plaintiffs sought compensation for unfair termination, including unpaid salaries, damages for wrongful dismissal, and other employment benefits.
Defense: Kenya Methodist University argued that the terminations were lawful and justified due to financial constraints and restructuring needs.
Redundancy Process: The university claimed that the terminations were part of a redundancy process necessitated by financial difficulties. However, the court found that the university did not follow the proper redundancy procedures as outlined in Section 40 of the Employment Act.
Specifically, the university failed to provide adequate notice to the employees and the labor officer, and did not consult with the affected employees or their representatives.
Court’s Findings: The court determined that the redundancy process was not conducted in a fair and transparent manner. It was found that the plaintiffs were not given adequate notice or a fair hearing before their termination.
Judgment: Hon. Mr. Justice Byram Ongaya sitting in Meru, ruled in favor of the plaintiffs, awarding them compensation for unfair termination. The university was ordered to pay the plaintiffs’ unpaid salaries, damages for wrongful dismissal, and other benefits as claimed.
This case highlights the importance of adhering to fair labor practices and the legal requirements for conducting a redundancy process in Kenya
3. Kenya Airways Limited v Aviation & Allied Workers Union Kenya, Minister for Transport, Minister for Labour & Human Resource Development & Attorney General (Civil Appeal 46 of 2014) [2014] KECA 403 (KLR) (Civ) (11 July 2014) (Judgment)
The case Kenya Airways Limited v Aviation & Allied Workers Union Kenya, Minister for Transport, Minister For Labour & Human Resource Development & Attorney General was heard in the Court of Appeal at Nairobi. Here’s a summary of the judgment delivered on July 11, 2014:
Background: In 2012, Kenya Airways Limited (KQ) undertook a staff rationalization exercise, resulting in the redundancy of 447 unionisable employees. The affected employees, represented by the Aviation & Allied Workers Union Kenya, challenged the redundancy process in the Industrial Court, claiming it was unfair and unlawful.
Industrial Court Decision: The Industrial Court ruled in favor of the employees, declaring the redundancy process substantively unjustified and procedurally unfair. The court ordered the reinstatement of all affected employees with back pay and allowances.
Appeal: Kenya Airways appealed the Industrial Court’s decision. The Court of Appeal reviewed the case and found that while the redundancy was justified due to economic difficulties and high operating costs, the selection process was flawed and unfair.
Court of Appeal Findings: The Court of Appeal set aside the Industrial Court’s order for reinstatement but acknowledged that the selection criteria used by Kenya Airways were unfair. The court held that the termination was unlawful due to procedural flaws, but reinstatement was not the appropriate remedy.
Outcome: The appeal was allowed in part. The Court of Appeal set aside the reinstatement order but recognized the procedural unfairness in the redundancy process.
This judgment highlights the importance of fair and transparent procedures in redundancy exercises, even when the economic rationale for such actions is justified.
The case Kenya Plantation and Agricultural Workers’ Union v Harvest Limited was heard in the Employment and Labour Relations Court at Nakuru. Here’s a summary of the judgment delivered on June 27, 2014:
Background: The claimants, represented by the Kenya Plantation and Agricultural Workers’ Union, were employees of Harvest Limited. The respondent desired to undertake a redundancy exercise which would culminate in about 350 employees being members of the claimant terminated from employment.
Claims: The union argued that the termination was unfair and contrary to Section 40 of the Employment Act. They claimed that declaration that the redundancies are wrongful, unfair and un-procedural
Respondent’s Defense: Harvest Limited contended that the redundancy was justified due due to poor performance of floriculture industry, weak Kenyan currency and harsh climatic conditions.
Court’s Findings: The court, presided over by Hon. Mr. Justice Byram Ongaya, reviewed the evidence and submissions. The respondent was ordered not to proceed with the redundancy except in strict compliance with the provisions of section 40 and the selection process prescribed in section 40 (1) (c) of the Employment Act, 2007.
Outcome: The court ruled in favor of the claimants, finding the redundancy unlawful. A declaration was issued that the notices leading to the intended redundancies are set aside as far as they affect the employees still in the respondent’s service as at the date of this judgment.
This judgment emphasizes the importance of adhering to proper disciplinary procedures and ensuring that any grounds for termination are well-documented and justified.
In the case of Thomas De La Rue (K) Ltd v David Opondo Omutelema, the central issue was whether the redundancy process followed by the employer, Thomas De La Rue (K) Ltd, complied with the legal requirements under the Employment Act.
Background: David Opondo Omutelema was employed by Thomas De La Rue (K) Ltd, a company specializing in secure printing. The company decided to close one of its passport production lines in Nairobi, leading to the redundancy of 35 employees, including Omutelema.
Claims: Omutelema claimed that his redundancy was unlawful, irregular, and malicious. He sought a declaration that the redundancy was illegal, reinstatement, salary arrears, damages for unlawful redundancy, and compensation.
Defense: Thomas De La Rue (K) Ltd argued that the redundancy was genuine and necessary due to operational restructuring and cost reduction. The company claimed it acted in accordance with the law.
Redundancy Process: The court examined whether the redundancy process complied with Section 40 of the Employment Act. It was found that the employer did not provide the required one-month notice to the employee and the local labor officer. The employer also failed to consult with the affected employees or their representatives about the redundancy. The court noted that the redundancy process lacked transparency and fairness.
Court’s Findings: The court determined that the redundancy process was not conducted in a fair and transparent manner. The failure to comply with procedural requirements rendered the termination unfair.
Judgment: The court ruled in favor of David Opondo Omutelema, awarding him compensation for unfair termination. Thomas De La Rue (K) Ltd was ordered to pay the plaintiff’s unpaid salaries, damages for wrongful dismissal, and other benefits as claimed.
This case emphasizes the importance of adhering to the legal requirements for conducting a redundancy process in Kenya, ensuring that employees are treated fairly and transparently
In the case of Kombo Kai Mtoro v Panel Freighters Ltd , the plaintiff, Kombo Kai Mtoro, filed a suit against Panel Freighters Ltd for unfair termination on account of redundancy.
Background: Kombo Kai Mtoro was employed by Panel Freighters Ltd. He claimed that his termination was abrupt and did not follow the due process required under the Employment Act.
Claims: The plaintiff sought compensation for unfair termination, including unpaid salaries, damages for wrongful dismissal, and other employment benefits.
Defense: Panel Freighters Ltd argued that the termination was lawful and justified due to redundancy necessitated by operational requirements.
Redundancy Process: The court focused on whether the redundancy process followed by the employer complied with Section 40 of the Employment Act. It was found that the employer did not inform the local labor officer about the redundancy, which is a mandatory requirement. Additionally, the employer failed to provide adequate notice to the employee and did not consult with the employee or their representatives about the redundancy.
Court’s Findings: The court determined that the redundancy process was not conducted in a fair and transparent manner. The employer’s failure to comply with the procedural requirements rendered the termination unfair.
Judgment: Hon. Mr. Justice Stephen Radido, ruled in favor of Kombo Kai Mtoro, awarding him compensation for unfair termination. Panel Freighters Ltd was ordered to pay the plaintiff’s unpaid salaries, damages for wrongful dismissal, and other benefits as claimed.
This case underscores the importance of adhering to the legal requirements for conducting a redundancy process in Kenya, ensuring that employees are treated fairly and transparently
In the case of Jane I Khalechi v Oxford University Press E.A. Ltd, the plaintiff, Jane I Khalechi, filed a suit against her employer, Oxford University Press E.A. Ltd, for unfair termination on account of redundancy.
Background: Jane I Khalechi was employed as a Publicity Secretary. She claimed that her termination was abrupt, discriminatory, and did not follow the due process required under the Employment Act.
Claims: The plaintiff sought compensation for unfair termination, including unpaid salaries, damages for wrongful dismissal, and other employment benefits.
Defense: Oxford University Press E.A. Ltd argued that the termination was lawful and justified due to redundancy necessitated by operational restructuring.
Redundancy Process: The court focused on whether the redundancy process followed by the employer complied with Section 40 of the Employment Act. It was found that the employer did not provide adequate notice to the employee or the local labor officer, which is a mandatory requirement.
The employer also failed to consult with the employee or her representatives about the redundancy. The court noted that the plaintiff was the only employee affected in her department, raising concerns about the fairness and transparency of the redundancy process.
Court’s Findings: The court determined that the redundancy process was not conducted in a fair and transparent manner. The employer’s failure to comply with the procedural requirements rendered the termination unfair. The court also found that the redundancy was used as a pretext to unfairly dismiss the plaintiff.
Judgment: Hon. Lady Justice Monica Mbaru ruled in favor of Jane I Khalechi, awarding her compensation for unfair termination. Oxford University Press E.A. Ltd was ordered to pay the plaintiff’s unpaid salaries, damages for wrongful dismissal, and other benefits as claimed.
This case highlights the importance of adhering to the legal requirements for conducting a redundancy process in Kenya, ensuring that employees are treated fairly and transparently
Conclusion
The Redundancy Process in Kenya is governed by a structured legal framework designed to protect both employers and employees. Adhering to the procedures outlined in the Employment Act, ensures that redundancy is carried out fairly and transparently.
Employers must engage in genuine consultation, apply objective selection criteria, provide adequate notice, and offer proper compensation.Failure to follow these guidelines can lead to legal challenges, as demonstrated by relevant case law.
Understanding and complying with these requirements is crucial for maintaining fair employment practices and minimizing the risk of legal disputes. If you have any questions about redundancy in Kenya or need legal assistance with employment matters, contact our experienced legal team today.
We are here to help you navigate the complexities of Kenyan employment law. Schedule a consultation with us to get personalized legal advice and support.
To learn more, see the Employment Act, Cap 226 of the Laws of Kenya.
