Kamau & 3 others v Dot.Com Bakery Limited (Cause 693 of 2019) [2026] KEELRC 1426 (KLR) (28 May 2026) (Judgment)

**REPUBLIC OF KENYA** **IN THE EMPLOYMENT & LABOUR RELATIONS COURT AT NAIROBI** **CAUSE NO. 693 OF 2019** **ERICK KAMAU…………....................................................1ST CLAIMANT** **DANSON NJOROGE………………..………………………2ND CLAIMANT** **FREDRICK OTIENO……………………………………….….3RD CLAIMANT** **AGNES KARIUKI………………………………………………4TH CLAIMANT** **VERSUS** **DOT.COM BAKERY LIMITED………………………………RESPONDENT** **JUDGMENT** **Introduction** 1. Before Court is the Claimants’ Amended Memorandum of Claim, initially dated 17th October, 2019 and amended on 9th January, 2020. The Claimants seek the following remedies as against the Respondent:- 2. A declaration that the Respondent’s intention of termination of the Claimants’ employment contracts on account of redundancy vide letters dated 3rd October 2017, 7th October 2019, and 8th October 2019 is unprocedural, unfair, unlawful, and unconstitutional. 3. 12 months' compensation on account of unfair termination with respect to each of the Claimants. 4. Payment of salary in lieu of notice with respect to each Claimant 5. Payment of outstanding statutory and contractual dues as outlined as follows:- * 1. 1st Claimant Kshs.525,000 2. 2nd Claimant Kshs.90,000 3. 3rd Claimant Kshs.129,166.67 4. 4th Claimant Kshs.525,000 6. Costs of the suit. 7. In addition to the foregoing prayers, the Claimant in Cause No. 3 of 2020, Stephen Jackson Mutiso, sought the following further prayers:- 8. Payment on account of pending leave days (60 days) being Kshs.170,000 9. Payment on account of pending off days (104 days) being Kshs.294,666.67 10. Severance pay 11. Refund of sums unlawfully deducted from the Claimant's salary being Kshs.744,315.44 12. Payment of salaries for November to December, 2019 13. The Respondent filed a Memorandum of Response and a Counterclaim dated 19th February, 2020, and filed on 24th February, 2020, in opposition to the Claimants’ Claim. 14. This suit was later consolidated with **Cause No 3 of 2020, Stephen Jackson Mutiso v. Dot.Com Bakery Limited,** by an order issued on 22nd July, 2020, and the two were thus heard together, with the instant suit being the lead file. 1. The suit was first heard on 28th October, 2021, with the taking of the 1st Claimant’s evidence, who testified on his own behalf and on behalf of his Co-Claimants. He adopted his witness statement and produced their list and bundle of documents as exhibits in the matter. His cross-examination proceeded on 24th February, 2022. 2. The Claimant in Cause No. 3 of 2020, **Stephen Jackson Mutiso**, testified on 18th February, 2025, as CW2 in support of his case. The Respondent counsel filed an application to cease acting, which was allowed on 19th March, 2024, and the Respondent did not instruct another counsel; hence, CW2 was not cross-examined on his evidence. 3. The Respondent did not call a witness in support of its case, and the court declared its case closed on 18th February, 2026. 1. No submissions were received from either party. **The Claimants’ Case** 1. The Claimants state that he began working for the Respondent in July 2017 and was formally employed as the Group Chief Accountant on 1st January 2018. He further avers that he has annexed relevant evidence, including work communications, payments, and bank account statements, to demonstrate that he was orally employed by the Respondent and that he worked for the Respondent from July 2017. 2. The Claimants state that on 7th October 2019, they were summoned to the office of the Respondent’s Managing Director and issued with a letter titled “Notice of Redundancy.” It is his case that the letter stated that he had been declared redundant due to financial difficulties allegedly experienced by the Respondent in the preceding months. 3. The Claimants state that the notice indicated that the redundancy notice period would run from 7th October 2019 to 7th November 2019, that all monies due to them would be paid within 90 days thereafter, and that they would proceed on terminal leave during the notice period. He avers that the Respondent also thanked them for their services and wished them well in their future endeavors. 4. The Claimants contend that it was clear that they remained employees of the Respondent until 7th November 2019, being the date when the redundancy was to take effect. 5. The Claimants further aver that there is no provision in law, or in the Respondent’s own policies, recognizing “forced” or “terminal” leave, and therefore the purported requirement that the Claimants proceed on such leave was unlawful and not contemplated under Section 40 of the Employment Act, which governs redundancy procedures. 6. The Claimants aver that the letters issued by the Respondent amounted to a fait accompli and that they had effectively already been rendered redundant. He contends that although the letters were titled “Notice of Redundancy,” their contents revealed that it was, in substance, a termination letter disguised to take effect on 7th November 2019. 7. The Claimants further state that by directing the employees to proceed on “forced” leave and thanking them for their services, the Respondent created the impression that no consultations would take place before the effective redundancy date. According to the Claimant, the notice was mechanical and therefore unfair, and that the letters dated 3rd, 7th, and 8th October 2019 effectively amounted to an immediate termination, though their effect was deferred until 7th November 2019. 8. The Claimants contend that by being directed to proceed on “terminal leave,” there could not have been any genuine consultations regarding the Respondent’s decision to unilaterally declare them redundant. The Claimants further aver that their individual redundancy letters did not disclose the reasons for or the extent of the redundancy, thereby preventing meaningful engagement with the Respondent. 1. It is their case that, to their knowledge, none of them had been subjected to any disciplinary action. Additionally, the Claimants aver that they worked in the Finance Department alongside three other staff members but were selectively targeted for redundancy within the same pool. 2. The Claimants contend that the redundancy process was unlawful, unfair, and predetermined. They aver that the Respondent failed to apply any lawful selection criteria, including the LIFO principle, despite them being the longest-serving employee, while junior employees were retained. The Claimants further state that their role remained essential to the Respondent’s operations and that the alleged financial difficulties cited as the basis for redundancy were false, as they were aware of the Respondent’s actual financial position. 3. The Claimants also state that they had previously raised concerns regarding financial malpractices by the Managing Director and that the redundancy was retaliatory in nature. They further contend that the Respondent unlawfully directed employees to proceed on “terminal leave,” failed to conduct genuine consultations, and deferred payment of redundancy dues contrary to statutory requirements. 4. The Claimants state that the Respondent’s actions demonstrated that the redundancy decision had already been finalized and effectively amounted to an immediate termination disguised as redundancy. 5. The Claimants maintain that the redundancy process was predetermined and effectively amounted to an unlawful dismissal disguised as redundancy, with no genuine consultations, discussion of selection criteria, or consideration of alternatives. They further contend that the Respondent unlawfully placed employees on “terminal leave” without a contractual or legal basis for such action. 6. The Claimants also dispute the alleged outsourcing and financial difficulties relied upon by the Respondent, asserting that the Respondent had instead recently engaged consultants at significant cost to improve operational efficiency, which undermined the claim of financial distress. According to the Claimant, these circumstances demonstrate that the redundancy was neither genuine nor conducted in compliance with the statutory safeguards under the Employment Act. 7. The Claimants maintain that the outsourcing by the Respondent was costly and unsupported by disclosed evidence, undermining its claim of financial difficulty. They further assert that employees’ functions were outsourced before the completion of any lawful redundancy process, while they were placed on “terminal leave,” constituting an unfair termination. 8. The Claimants further state that they were subjected to discriminatory treatment, stating that unionisable employees were retained and consulted through their union, while non-unionisable employees were excluded and forced out without consultation or application of selection criteria, contrary to Sections 5 and 40 of the Employment Act. 9. The Claimants contend that no disciplinary issues were raised against them and reiterate that the Respondent was required to comply with Article 41 of the Constitution and Section 40 of the Employment Act. They further aver that the redundancy was implemented using undisclosed and subjective selection criteria, targeting employees within their pool without explanation or justification. 10. The Claimants state that the Respondent failed to disclose any selection criteria or provide evidence of how the affected employees were chosen, despite having a workforce of over 300 employees. They argue that there is no evidence of departmental losses or of an objective justification for targeting specific groups. 11. The Claimant asserts that the Respondent was still operating normally and continuing its routine human resource functions, which is inconsistent with an employer undergoing mass redundancy. 12. The 1st Claimant states that, as the officer in charge of the Respondent’s financial accounts, he is competent to confirm the Respondent’s financial position and avers that the company was in a healthy financial state. 13. The Claimants state that on 29th November 2019, the Court issued a conditional stay of execution requiring the Respondent to compute and pay each Claimant their contractual separation dues and redundancy pay as at 8th November 2019 in accordance with their employment contracts and Section 40 of the Employment Act, by 2nd December 2019. 14. The Claimants further aver that on 30th November 2019, they wrote to the Respondent forwarding their own computations for verification and alignment, but the Respondent failed to respond to the said correspondence before the court-imposed deadline of 2nd December 2019. 15. The Claimants state that after receiving no response, they attended the Respondent’s offices on 2nd December 2019 at 8:00 a.m. to reconcile and finalize their dues, but they were not attended to and only received an email at 5:00 p.m. indicating that the Respondent’s advocate was handling the matter. 16. It is their case that later the same day, their counsel received cheques together with the Respondent’s computation of their dues, but upon review, they disputed the calculations, citing unexplained deductions, unpaid leave and off days, unreimbursed expenses, and underpaid severance. 17. The Claimants state that despite follow-up correspondence from both parties’ advocates on 4th December 2019, no further communication or resolution was received from the Respondent. They contend that the Respondent has since failed to settle the full redundancy and contractual dues, demonstrating unwillingness to comply fully. 18. Finally, the Claimants pray that their claims be allowed as prayed. **The Respondent’s Case** 1. The Respondent denies that it engaged in an unlawful exercise of redundancy targeting the Claimants herein. The Respondent further denies that the Claimants were required to remain in employment while the company faced financial challenges. 2. The Respondent states that it declared the claimant redundant lawfully and within the provisions of the Employment Act. 3. It states further that the Claimants’ claim is misplaced as it cannot sustain the employment of the Claimants due to financial challenges, which it has informed the Claimants and the labour officer about. **The counterclaim** 1. The Respondent states under the counterclaim that it claims a sum of Kshs.85,076.60 from the 1st Claimant on account of overpayment in respect of accrued leave days, having paid 60 instead of 52 leave days. 2. The Respondent finally denies that it acted in violation of labour laws or the Constitution. 3. The Respondent prays for the dismissal of the Claimant’s claim with costs and for judgment in its favour in respect of the counterclaim. **Analysis and Determination** 1. The following issues arise for determination: - 2. Whether the termination of the Claimants’ employment on account of redundancy was fair 3. Whether the Claimants are entitled to the reliefs sought. **Whether the termination of the Claimants’ employment on account of redundancy was fair** 1. Termination by redundancy is governed by the Employment Act 2007, which requires strict compliance with both procedural and substantive safeguards spelled out under Section 40 of the Act. The Act requires that where termination is being considered on account of redundancy, the employer adheres to a fair selection criterion, prior consultation with employees and/or unions, that notice be issued to employees and the labour officer, and finally that payment of terminal dues be made before or at termination. 2. The Court of Appeal in ***Kenya Airways Ltd v Aviation & Allied Workers Union Kenya & 3 Others [2014] eKLR***, held that redundancy must not only be genuine but must strictly comply with statutory procedure, and failure renders it unfair and unlawful. Further, in ***Banking Insurance & Finance Union (Kenya) v Barclays Bank of Kenya Ltd [2016] eKLR***, the Court held that consultation is a mandatory substantive component of a lawful redundancy process and not a cosmetic exercise. 3. The Claimants herein have given detailed testimony and produced documentary evidence in support of their case. The Respondent, on its part, despite filing a defence and counterclaim, failed to call any witness in support of its case and did not also tender evidence in support of its pleaded position. 4. Section 47(5) of the Employment Act demands that an employee prove that an unfair termination of employment occurred and, once the employee establishes a prima facie case, the burden shifts to the employer to justify the termination. 5. The evidence on record clearly shows that the Claimants have established a prima facie case of an unfair redundancy, which shifts the evidential burden to the Respondent to justify compliance with Section 40 of the Employment Act. 6. The Claimants’ assertion is that they were issued with notices already determining their exit dates, that they were placed on “terminal/forced leave” immediately, that no consultations or engagement occurred between them and the employer/Respondent, and that no selection criteria were disclosed or applied. 7. They contend that they were simply thanked for their work and asked to await payment after exit, which they argue was not fully paid, as they dispute the Respondent’s computation of their terminal dues. 1. In ***Invesco Assurance Co. Ltd v Oyange Bundi Ombija [2015] eKLR***, the court affirmed that a redundancy process that presents employees with a predetermined outcome is unlawful as it defeats the purpose of consultation. 2. Similarly, in ***Thomas De La Rue (K) Ltd v David Opondo Omutelema [2013] eKLR,*** the Court held that failure to consult and demonstrate the selection criteria renders redundancy unfair. 3. The court further notes that although the Respondent pleaded financial difficulties, it failed to adduce evidence in support of its assertion. On the other hand, the Claimants produced evidence suggesting that the Respondent was operational and carrying out HR disciplinary actions during the same period, financial statements indicating profitability, and assertions of engagement of consultants at high cost during the period of the alleged financial distress. 4. For reason of not availing a witness, the Claimants’ evidence remained unchallenged. The law requires an employer to prove an actual operational or financial justification for redundancy; mere assertion is insufficient. 5. Further, in ***Kenya Airways Ltd v Aviation Workers Union (supra),*** the Court emphasized that redundancy must be both procedurally and substantively justified, and the absence of either renders the termination unfair. 6. In light of the foregoing, I find and hold that the Respondent failed to demonstrate compliance with Section 40 of the Employment Act, and which renders the termination by redundancy both procedurally and substantively unfair and unlawful. **Whether the Claimants are entitled to the reliefs sought** **12 Months’ compensation for unfair termination** 1. Having found the Claimants’ termination unfair and unlawful, entitles them to compensation pursuant to Sections 49 and 50 of the Employment Act, 2007. 2. Considering that the Claimants were in the service of the Respondent for slightly over a year, and further considering that terminal dues were remitted during the pendency of this case and the unfair manner in which they were terminated, I deem an award of seven (7) months’ salary sufficient compensation for the unfair termination. **Terminal and Statutory dues** 1. The pay slips produced by the Claimants, with the exception of the Claimant in ***Cause No. 3 of 2020***, show that they were paid their salaries for the days worked in October, severance pay, leave days, and pay in lieu of notice. 2. Further, they have not led additional evidence to show that they are owed the amount they claim on account of the terminal dues. The pay slips further show that the statutory dues were deducted, and they have not shown that they were not remitted to the relevant statutory bodies. 1. These claims are therefore devoid of merit and are dismissed in their entirety. 2. With respect to the Claimant in Cause No. 3 of 2020, whose suit was consolidated with this file, no evidence was led to show that he received his terminal dues, and for this reason, his claims are found to have merit and are allowed, save for the claim for refund of sums unlawfully deducted, as he did not prove that the deductions were unlawful. He similarly did not work in the month of December 2019, the claim for salary for that period is declined. 3. In whole, the Claimants’ claim succeeds, and the following orders are granted:- 4. A declaration that the termination of the Claimants’ employment on account of redundancy is unfair and unlawful. 5. An order be and is hereby issued directing the Respondent to pay each of the Claimants seven (7) months' salary as compensation for the unfair termination. 6. The costs of the suit shall be borne by the Respondent. 7. The Respondent’s counterclaim is dismissed for want of proof. 8. For Cause No. 3 of 2020, the following additional reliefs are granted:- 9. Payment on account of pending leave days (60 days) being Kshs. 170,000 10. Payment on account of pending off days (104 days) being Kshs. 294,666.67 11. Severance pay 12. Payment of salaries for November, 2019 13. It is so ordered. **SIGNED, DATED, AND DELIVERED BY VIDEO-LINK AND IN COURT AT NAIROBI THIS 28TH DAY OF MAY, 2026.** **C. N. BAARI** **JUDGE** **Appearance:** Ms. Obiero h/b for Mr. Ogembo for the Claimants N/A for the Respondent Ms. Esther S- C/A | | | | | --- | --- | --- | | | | | | | | | | | | | | |