https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/1495

Bliss Healthcare Limited v Olale (Appeal E025 of 2026) [2026] KEELRC 1495 (KLR) (2 June 2026) (Judgment) Neutral citation: [2026] KEELRC 1495 (KLR) Republic of Kenya In the Employment and Labour Relations Court at Mombasa Appeal E025 of 2026 M Mbarũ, J June 2, 2026 Between Bliss Healthcare Limited Appellant and Oddie Omondi Olale Respondent (Being an appeal from the judgment on Hon. R. Akee delivered on 29 January 2026 in Mombasa CMELRC No. E004 of 2022) Judgment 1.The appeal arises from the judgment delivered on 29 January 2026 in Mombasa CMELRC No. E004 of 2022. The appellant seeks that the decree be set aside and that the respondent's claims be dismissed instead. 2.The background to the appeal is a claim filed by the respondent before the trial court. His case was that he was employed by the appellant as centre manager on 7 January 2021 on a fixed-term contract. On 21 December 2021, his employment was terminated due to redundancy. Before the termination notice, the representatives, together with other centre managers, were invited to a meeting by the chief operating officer (COO), who cited company policy regarding future hiring. The COO also indicated that a communication from human resources would be issued regarding the policy changes by December 2021. None issued. The termination of employment notice was issued and intimated, stating that the respondent had no clinical qualifications, but during recruitment, such a requirement was not in issue. This resulted in an unfair termination of employment devoid of valid reasons or justification. The respondent cited discriminatory treatment, including being singled out and the application of an irregular and unlawful process. The respondent claimed the following dues:a.Notice pay Ksh. 50,000.b.12 months' compensation Ksh. 600,000.c.10 days accrued leave days Ksh. 16,667.d.Severance pay Ksh. 24,375.e.Pay for the unexpired term contract of 12.3 months Ksh. 516,000.f.Costs plus interest on the awards. 3.In reply, the appellant’s case was that the respondent was employed as a centre manager on a fixed-term contract on 7 March 2021, earning Ksh. 50,000 per month. The probation period was served successfully and confirmed by the Mombasa Centre Manager. At the time, the appellant operated under a centralised organisational structure with a hierarchy of decision-making. Management made decisions that were communicated to the respondent. This created a disconnect between different cadres in the structure. To ensure proper communication and deployment of its employees, a decentralised structure was proposed. The proposed changes affected the employment of centre managers, and their positions were declared redundant and replaced by the head office. On 4 November 2021, the appellant notified the employees of its intention to restructure and reorganise the company. Discussions were opened on the matter, and ultimately, some roles would be terminated. The Labour Officer was informed, and compliance with section 40 of the Employment Act (the Act) was confirmed. Notice was issued to the respondent, and terminal dues were tabulated and paid. The claims made are without merit and should be dismissed. 4.The learned magistrate heard the parties and held that due process under section 40(1) of the Act was not followed and that the termination of employment was procedurally unfair. The court assessed the claim and awarded the following:a.Notice pay Ksh. 50,000.b.Accrued leave days Ksh. 16,667.c.Unexpired term contract Ksh. 615,000.d.Severance pay Ksh. 24,375.e.3 months' compensation Ksh. 150,000.f.Costs plus interest on the awards.Aggrieved by the judgment, the appellant has 15 grounds of appeal. 5.The appeal is that the learned magistrate erred in law and fact in failing to analyse the evidence before it, thus reaching an erroneous decision. The trial court failed to find that there were sufficient grounds that justified the termination of employment following a redundancy under section 40 of the Act. Due to operational reasons permitted under section 45(2) of the Act, due process was observed before employment was terminated. Hence, the award of notice pay, leave pay, unexpired term contract, severance pay, and compensation was all unwarranted and without any legal basis. The respondent had not completed a full year to earn the awards. The appeal should be allowed and the claim dismissed with costs.Parties agreed to address the appeal by way of written submissions. 6.The appellant submitted that the respondent was lawfully declared redundant following the restructuring and reorganisation of the appellant’s operations, which aimed to improve efficiency and align staff roles with operational requirements. According to the appellant, centre managers under the new structure were required to have qualifications in medicine, clinical services, or health sciences, qualifications that the respondent, who holds a bachelor’s degree in economics, did not possess. The appellant, therefore, contends that the respondent’s position became redundant under the new operational structure. Additionally, the appellant submits that the redundancy was both substantively justified and procedurally fair, as notices were issued to employees and the Labour Office, and consultations were conducted. The respondent was informed, through the redundancy letter dated 21 December 2021, that his position no longer met the organisation’s operational needs following the restructuring. 7.The appellant submitted that employers have the prerogative to reorganise their workforce and that redundancy may arise when operational requirements change. In support, the appellant relies on Mercy Wangari Muchiri v Total Kenya Limited [2020] KEELRC 397 (KLR), where the court held that downgrading a position without changing its title may render the holder redundant where the restructured role is at a lower level within the employer’s organisational structure. Reliance was also placed on Atandi v African Medical and Research Foundation (Amref) Flying Doctors [2025] KEELRC 249 (KLR), in which the court held that termination on the grounds of redundancy is lawful when an employee lacks the qualifications, skills, and competencies required under a new operational structure. 8.The appellant further relies on The German School Society & another v Ohany & another (Civil Appeal 325 & 342 of 2018 (Consolidated)) [2023] KECA 894 (KLR), the court affirmed that an employer may lawfully terminate employment on account of redundancy where the employee’s services become superfluous due to operational requirements. The Court further cited with approval Jane I Khalachi v Oxford University Press E.A. Ltd, Cause No. 924 of 2010, where it was held that employers have the prerogative to determine the structures of their businesses and that reorganisation constitutes a fair reason for termination under section 45(2) of the Employment Act. 9.In Thomas De La Rue (K) Ltd v David Opondo Omutelema, Nairobi Civil Appeal No. 65 of 2012 [2013] eKLR, the court stated that employees facing redundancy are entitled to written notice, including the reasons for redundancy, at least one month before the redundancy is implemented. 10.The appellant submitted that the trial court erred in granting both severance pay and compensation for unfair termination. Reliance is placed on Bakery Confectionery Food Manufacturing & Allied Workers (K) v Devkan Enterprises Limited [2026] KEELRC 441 (KLR), where the court held that an employee cannot simultaneously pursue redundancy benefits under section 40 of the Employment Act and compensation for unfair termination under section 49, as this would amount to double compensation. 11.In Mary Kitsao Ngowa & 36 Others v Krystalline Limited [2015] eKLR and Mwalo v Ruai Family Hospital [2026] KEELRC 466 (KLR), the courts held that severance pay is a remedy attendant to redundancy and should not be awarded together with compensation for unfair termination, as this would amount to double compensation. 12.Regarding the award of salary for the unexpired term of the contract, the appellant submitted that in Minnie Mbue v Jamii Bora Bank Limited [2017] eKLR and Paul v Board of Management Holy Spirit Secondary School [2023] KEELRC 194 (KLR), the courts held that salary for the unexpired term of a contract is only awardable where the contract expressly provides for such payment. The appellant also relies on Ambogo v Sameer Agriculture and Livestock (Kenya) Limited [2023] eKLR, the court held that section 49 of the Employment Act does not provide for payment of salary for the unexpired term and that such awards are speculative because employment may terminate before expiry for unforeseen reasons. Compensation under Section 49 is intended to redress unfair termination and not to guarantee future earnings. Reliance was also placed on Grace Otieno v Salaries and Remuneration Commission [2020] eKLR, where the court observed that there is no guarantee that an employee would have served the entire unexpired period of the contract. In Anytime Limited v Fredrick Mutobera Omuraya [2022] KEELRC 837 (KLR), the court held that awarding compensation for unfair dismissal together with salary for the unexpired period amounts to unjust enrichment. The court also referenced Elizabeth Wakanyi Kibe v Telkom Kenya Ltd [2014] eKLR and D.K. Marete v Teachers Service Commission, Cause No. 379 of 2009, in which the courts held that employment remedies aim to redress economic harm rather than unjustly enrich employees proportionately. 13.Regarding interest, the appellant submitted that in King’ori v Basari Company Limited & 2 others (Civil Case 611 of 2016) [2025] KEMC 309 (KLR), the court held that the discretion to award interest under section 26 of the Civil Procedure Act must be exercised judicially. In Jane Wanjiku Wambui v Anthony Kigamba Hato & 3 others [2018] eKLR, the court held that appellate courts should not interfere with the exercise of discretion on interest unless incorrect principles were applied. 14.The appellant submitted that in Joe Jushua D’Silva v Mombasa Air Safaris Ltd [2017] eKLR and Gituamba Stones Limited v Omondi [2023] KEELRC 388 (KLR), the court held that interest on discretionary compensation or general damages ordinarily runs from the date of judgment, when the amount becomes ascertainable. The appellant, therefore, urges the court to find that the respondent’s redundancy was lawful and procedurally fair and to set aside the awards made by the trial court. 15.The respondent submitted that the appellant’s appeal is without merit and that the trial court correctly held the redundancy to be substantively unjustified and procedurally unfair. The respondent was employed as a centre manager under a fixed-term contract, earning Kshs. 50,000 per month before the appellant restructured its operations and introduced a new requirement that centre managers hold clinical qualifications, a requirement that did not exist at the time of employment. According to the respondent, the position of centre manager was never abolished but merely redefined through unilateral changes to employment terms, contrary to section 10(5) of the Employment Act. 16.In Kenya Airways Ltd v Aviation & Allied Workers Union Kenya & 3 others [2014] KECA 404 (KLR), the court held that consultation is an important aspect of procedural fairness in redundancy processes and that fairness must be assessed in light of the requirements under section 40 of the Employment Act. in Board of Governors, Cardinal Otunga High School, Mosocho & 2 others v Elizabeth Kwamboka Khaemba [2016] KECA 486 (KLR), the court held that unilateral changes to employment terms without consultation amount to unfair termination and breach section 10(5) of the Act. Unilateral alteration of contractual terms by an employer amount to breach of contract. 17.The respondent submitted that the appellant failed to prove that his services had become redundant as defined under section 2 of the Employment Act, especially after the appellant’s witness admitted that the position itself was not abolished. The witness lacked direct knowledge of the events and that his evidence amounted to hearsay, contrary to section 63 of the Evidence Act. in Kenya Airways Ltd v Aviation & Allied Workers Union Kenya & 3 others (Civil Appeal 46 of 2013) [2014] KECA 404 (KLR), the redundancy was described as the loss of employment through no fault of the employee, where the services become superfluous, or the office is abolished. 18.On procedure, the respondent submitted that the appellant failed to comply with section 40 of the Act because there was no proper notice to the respondent or labour officer, no meaningful consultations, and no fair selection process based on seniority, skill, ability, and reliability. The respondent argues that no proof of service of the alleged notices was produced. In Barclays Bank of Kenya Ltd & another v Gladys Muthoni & 20 others [2018] KECA 718 (KLR), the court held that employers bear a heavy burden to justify redundancy and must prove service of proper notices on employees and the labour officer; failing which, the redundancy process becomes invalid. The same case also held that consultations must precede redundancy notices and must reflect fair labour practices and good faith. 19.In Kenya Airways Limited v Aviation & Allied Workers Union Kenya & 3 others [2014] KECA 404 (KLR), the court held that consultations must involve genuine two-way discussions conducted with candour and reasonableness. 20.The respondent also submitted that the appellant failed to apply the last-in, first-out principle or to demonstrate the use of objective selection criteria. In Thomas De La Rue (K) Ltd v Omutelema (Civil Appeal 65 of 2012) [2013] KECA 492 (KLR), the court held that employers must apply objective selection criteria based on skill, ability, performance, reliability, and length of service. 21.The respondent submitted that the appellant unlawfully withheld terminal dues by requiring him to sign a discharge voucher waiving future claims. In Coastal Bottlers Limited v Kimathi Mithika [2018] KECA 523 (KLR) and Trinity Prime Investment Limited v Lion of Kenya Insurance Company Limited [2015] eKLR, the courts held that discharge vouchers are binding only if executed voluntarily and without fraud, coercion, or misrepresentation. 22.On remedies, the respondent submitted that the award of compensation was lawful and within the court’s discretion under section 49 of the Act. The respondent further argues that severance pay and compensation for unfair termination may both be awarded when circumstances justify such relief. In Kenya Methodist University v Kaungania & another [2022] KECA 90 (KLR), the court upheld salary awards covering the unexpired term of a fixed-term contract following wrongful termination. 23.The respondent distinguishes Paul v Board of Management Holy Spirit Secondary School [2023] KEELRC 194 (KLR) and Ambogo v Sameer Agriculture and Livestock (Kenya) Limited [2023] KEELRC 2257 (KLR), arguing that those decisions involved contracts terminable by notice and not fixed-term contracts with specific expiry dates. Concerning interest, the respondent submits that the trial court correctly exercised its discretion under section 26 of the Civil Procedure Act and rule 29(3) of the Employment and Labour Relations Court (Procedure) Rules by awarding interest from the date of filing suit on liquidated claims. The respondent, therefore, urges the court to dismiss the appeal with costs. Determination 24.This is a first appeal. The court may review the record, reassess the findings, and 25.reach its conclusions. However, consider that the trial court had the opportunity to see and hear the witnesses testify. Hence, make such an allowance. 26.In a notice dated 21 December 2021, the appellant terminated the respondent’s employment on the basis that, following a company restructuring and reorganisation, an evaluation of the various roles had declared the centre manager's position redundant. The respondent’s position as centre manager in Mombasa was affected, hence the notice terminating employment. The application offered to pay terminal dues, including:a.Pay for days worked until 31 December 2021.b.Accrued leave days to 31 December 2021.c.Severance pay for every full year worked.These dues would be paid less statutory deductions. 27.Under paragraph 1.5 of the Memorandum of Claim, the respondent admitted to a meeting with the COO, who stated that there were policy changes and intimated that the human resources office would inform me of the matter. 44.In response, the respondent attached various work records, including a notice dated 15 September 2021, to the Labour Officer, Mombasa. The notice indicates the intention to declare a redundancy following a restructuring and reorganisation of the company. This would affect the centre manager's position, which had become centralised at the head office. 45.Further notice was issued on 3 November 2021, with a list of the affected employees, including the respondent. The list contains persons serving as centre managers in different parts of the country, including Mombasa, where the respondent was based. 46.Under section 40 of the Act, the employer may terminate employment for operational reasons, including restructuring and reorganisation, upon notice to the employees and to the Labour Office on the extent and breadth of the redundancy. 47.In Barclays Bank of Kenya, Barclays Africa Group (SA) Ltd v Gladys Muthoni & 2 Others [2018] eklr, the court held that the employer should first give general notice of that intention to declare a redundancy to the employees likely to be affected or to their union. It is that notice that will elicit consultation between the parties. The intention then invites consolation on the mode of its implementation, where it is found to be justifiable. This position is reiterated in Kenya Airways Limited v Aviation & Allied Workers Union Kenya & 3 others [2014] eKLR, where, for valid operational reasons, employment can be lawfully terminated. 48.In this case, the respondent testified that the COO called a meeting and announced there were policy changes. 49.The memos dated 3 and 4 November 2021 to all employees of the appellant are not contested. 50.There is a notice to the labour officer with the list of the affected employees, all under the role of centre managers, including the respondent. 51.The court finds that valid reasons existed to justify the termination of employment under section 40 of the Act. Due process was adhered to, as the relevant notice was issued to all employees, and then the personal notice to the respondent pursuant to section 40(1) (b) and 45(2) of the Act. 52.In Cargill Kenya Limited v Mwaka & 3 others [2021] KECA 115 (KLR) and The German School Society & another v Ohany & another [2023] KECA 894 (KLR), the courts have emphasised that the personal notice due to the employee can be paid pursuant to section 40(1)(f) of the Act. See also Juma v Ketty Tours Travels and Safari Limited [2026] KEELRC 920 (KLR) and Ondego v Winguard Security Services Limited [2026] KEELRC 1098 (KLR). 53.In this case, the appellant tabulated the terminal dues payable to the respondent, including payment of notice pay until 31 December 2021, despite the notice having been issued on 21 December 2021. There was a one-month notice pay.Employment terminated lawfully. 54.The respondent argued that there was discriminatory treatment. However, there is no relief sought in this regard. On the pleadings, the analysis above shall suffice. 55.Regarding the claim for 12 months' salary damages for unlawful termination of employment, as outlined above, the employment was terminated lawfully, and the appellant adhered to the due process under sections 40 and 45(2) of the Act. 56.The notice dated 21 December 2021 outlined the terminal dues payable. These included leave days earned and not taken. 57.Severance pay is regulated under section 40 of the Act. It is payable based on each full year worked. The respondent commenced employment on 7 January 2021 and continued until 21 December 2021. This was under a year. Severance pay is not prorated. However, in the payment of the terminal dues, the appellant offered the sum of Ksh. 25,000. Although not required by law, the appellant offered to pay. 58.Regarding the claim for an unexpired term contract, the reason for termination of employment was lawful and justified, unrelated to misconduct or gross misconduct; the respondent was released to seek new employment. This is a requirement set out in Juma v Berc Mining Company Limited [2026] KEELRC 1050 (KLR): the employee must mitigate the loss of employment by securing new employment based on their skills and competencies. In Magma Holdings Limited v Musembi [2026] KEELRC 967 (KLR), the court emphasised that at the end of employment, the employee’s skills are intact. Such an employee is allowed to secure other employment and put such skills to good use. 59.On the whole, the learned trial magistrate erred in analysing the reasons leading to the declaration of redundancy and hence arrived at the judgment which is hereby set aside. 60.The appeal is allowed and the trial court judgment in Mombasa CMELRC No. E004 of 2022 is set aside in its entirety. For the appeal and trial court proceedings, each party shall bear its costs. DELIVERED IN OPEN COURT THIS 2ND DAY OF JUNE 2026.M. MBARŨJUDGEIn the presence of:Court Assistants: Catherine, Kemboi and Omar……………………………………………… and…………………………………..…………..