By Antony Mutugi

With the wake of the global economic crisis, that has precipitated as a direct consequence of the COVID-19 pandemic, increased employee lay-offs are imminent. Accordingly, it is important for both employers and employees to appreciate their Constitutional and statutory employment rights and obligations with regards to the termination of the employment relationship arising out of redundancy. This article provides a brief synopsis of procedural and substantive considerations that parties to an employment relationship ought to adhere to, in order to ensure that termination of employment on account of redundancy is effected lawfully and fairly.

The primary statutory protection of rights appurtenant to the employment relationship is provided for under the Employment Act, 2007 Cap. 226 Laws of Kenya[i].  One of the primary objects of this Act is to declare and define the fundamental rights of employees and provide for basic conditions of employment. Accordingly, the Act jealously safeguards the rights of employees to fair substantive and procedural labour practices throughout the employment relationship even during the termination process.

Section 40 of the Act provides for the mandatory procedures and preconditions that should be met by employers terminating employees on account of redundancy.

The following constitute key considerations that parties in an employment relationship should consider during the termination process culminating from intended redundancy: –

NOTICE TO EMPLOYEE [SECTION 40 (1) (A) & (B)]

Employer Must Issue Redundancy Notice:

The employer has a mandatory obligation to notify both the employee or the trade union to which the employee belongs and the Labour Officer of the intended redundancy. The notification period should not be less that one month. This notification period applies to both unionized and non-unionized employees. The reasons and extent of intended redundancy as well as the selection criterial, should be included in the redundancy notice. The purpose of this notification period was highlighted by the Court in the case of Kenya Airways Limited versus Aviation & Allied Workers Union Kenya & 3 Others [2014] eKLR wherein the Court noted that the purpose of the notice under Section 40(1) (a) and (b) of the Employment Act is to allow the employee, trade union or labour officer to understand and appreciate the purpose of the redundancy and engage in negotiations aimed at mitigating the intended impact of the intended redundancy or altogether avoiding the intended redundancy.[ii]. The Notice also enables parties to ensure that, before termination of employment on account of redundancy, the necessary preconditions under Section 40 of the Act are met.

Employers need to note that the issuance of the Notice is a MANDATORY requirement absence of which amounts to procedural illegality in the termination process.

This position was affirmed by the Courts in the case of Kenya Union of Domestic Hotels Educational Institutions and Hospital Workers (KUDHEIHA) v Aga Khan University Hospital Nairobi [2015] eKLR[iii] where the Court held that failure by the employer to issue a redundancy notice as required under Section 40 of the Act amounts to procedural illegality thereby rendering any subsequent termination processes on account of redundancy of no legal consequence.

The Duration of Notice Is Subject to Any Collective Bargaining Agreement Entered into By the Parties:

The notification period of one month is subject to variation depending on the existence of more favorable terms in any collective agreement to which the employee is a party to.  This was the position as held by the Court in the case of Thomas De La Rue (K) Ltd v David Opondo Omutelema [2013] eKLR[iv] where the Court held that although the minimum required period for a redundancy notice for unionisable employees is a one-month notice, if there are more favourable terms agreed upon by the parties under a collective bargaining agreement, then the more favourable terms will take precedence.

For instance, if the collective agreement provides for a notification period of two months, the notification period of two months will take precedence.  Section 40 of the Act sets the bare minimums subject to more favorable terms in any collective agreement. In other words, any unfair term of a collective agreement aimed at circumventing the provisions under Section 40 of the Act amounts to unfair labour practices.

It Is the Employer’s Prerogative to Declare Redundancy and The Reasons Thereto:

As a general rule, the employer has wide discretion to declare reasons justifying the intended redundancy. Courts ordinarily refrain from interfering with this discretion except in instances where there has been a breach of statutory duty, where there is manifest injustice or in circumstances whereby the employer was proceeding in a manner that made it impossible to deal with the breach through the employer’s internal process.   

This was the position of the Court in the case of Kenya Plantation & Agricultural Workers union versus James Finley (K) Limited [2013] eKLR.[v]

The Failure of The Employee to Ensure Procedural Fairness Renders Any Further Step by The Employer as An Illegality:

I would like to emphasize at this point that the provisions of Section 40 of the Employment Act are couched in mandatory terms. This means that employers have a mandatory obligation to follow the procedure as set out under this section. Accordingly, non-compliance with the provisions can neither be justified by ignorance of the law nor abruptness of an economic crisis such as what the Country is experiencing from the effects of the COVID-19 pandemic. It is, necessary that employers act pre-emptively by following the above set procedures when ending the employment relationship and by so doing, shield themselves from liability arising from any future litigation on unfair termination from employees.

The position is now settled that any procedural illegality renders any other step by the employer as having no legal consequence. Essentially, what this means is that if the employer fails to meet any requirement, for instance, failure to issue the requisite one-month notice, then the termination of employment will be considered as unfair regardless of validity for the reasons for termination.

The above position was affirmed by the Court in the above cited case ofKenya Union of Domestic Hotels Educational Institutions and Hospital Workers (KUDHEIHA) v Aga Khan University Hospital Nairobi [2015] eKLR

CONCLUSION

The unfortunate reality that we now face as a country is businesses continue to amass considerable loss due to harsh economic conditions thereby necessitating strategic measures to scale-down operations which consequently leads to laying-off staff. Nonetheless, employers must ensure that while terminating staff on account of redundancy, they adhere to the mandatory statutory procedure as set out under Section 40 of the Employment Act. Similarly, it is essential that employees remain cognizant of their rights under the above section in order to identify instances where they might have a claim for compensation against their employers for unfair termination on account of redundancy.

*Antony Mutugi is an Advocate of the High Court of Kenya.

NOTE that the article is for purposes of general advice and SHOULD NOT be relied upon without seeking specific legal advice. For queries and legal advice, contact the author at mburiamutugiadv@gmail.com*

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[i] Employment Act, 2007, Cap. 226 Laws of Kenya.

[ii] Kenya Airways Limited versus Aviation & Allied Workers Union Kenya & 3 Others [2014] eKLR.

[iii] Kenya Union of Domestic Hotels Educational Institutions and Hospital Workers (KUDHEIHA) v Aga Khan University Hospital Nairobi [2015] eKLR

[iv] Thomas De La Rue (K) Ltd v David Opondo Omutelema [2013] eKLR

[v] Kenya Plantation & Agricultural Workers union versus James Finley (K) Limited [2013] eKLR.