https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/1737

Kenya Engineering Workers v Dunhill Auto Mobile Ltd (Cause E550 of 2020) [2026] KEELRC 1737 (KLR) (19 June 2026) (Judgment) Neutral citation: [2026] KEELRC 1737 (KLR) Republic of Kenya In the Employment and Labour Relations Court at Nairobi Cause E550 of 2020 AN Mwaure, J June 19, 2026 Between Kenya Engineering Workers Claimant and Dunhill Auto Mobile Limited Respondent Judgment Introduction 1.The Claimant commenced this cause vide a Memorandum of Claim dated 15th September 2020. Claimant’s case 2.The Claimant is a duly registered trade union representing workers in the engineering and technical construction industries sector. The Claimant filed this suit on behalf of the grievants herein, namely James, Otieno, James Karanja Wangari, Paul Mugunda Oloo, and Brian Magak, who were members of the said trade union. 3.The Claimant avers that it had entered into a duly signed and valid Recognition Agreement with the Respondent. 4.The Claimant avers that James Otieno, was engaged in March 2016 as a mechanic (Artisan Grade II) under a verbal or implied contract. He has been receiving regular salary payments, with the last recorded net salary being Kshs. 27,400/=. However, throughout his period of service, he has never been paid a house allowance, forming the basis of his complaint. 5.The Claimant avers that James Karanja Wangari was employed in April 2019 as a Mechanic Grade I, earning below the government’s stipulated salary and lacking a proper termination notice. Paul Mugunda Oloo, engaged in 2010 as a Mechanic Grade III, stopped receiving banking slips after joining the union, has never been paid house allowance, and also lacks a formal termination notice. Brian Magak was employed in November 2019 as a Tinder, has not received payslips beyond banking slips, was issued a termination notice without union notification, and, like the others, has never been paid house allowance. 6.Collectively, the Claimant avers that the grievants allege victimization due to union affiliation and refusal to sign backdated payslips and master rolls indicating they have been paid house allowances, and after issuing either termination notices or notification notices, the Respondent has engaged new employees. 7.The Claimant avers that the Respondent has breached several statutory and constitutional provisions. Specifically, they violated section 31 of the Employment Act, 2007, by paying James Karanja Wangari below the minimum wage set in the Regulation of Wages General Order. They further contravened section 40 of the Employment Act, 2007, by inconsistently issuing termination and notification notices, leaving some grievants without proper claimant notification despite imminent termination. Finally, the Respondent’s conduct infringes Articles 36, 41, and 47 of the Constitution of Kenya, 2010, undermining freedom of association, fair labour practices, and fair administrative action. 8.The Claimant prays that:a.The Honourable Court be pleased to find both the notification and termination notices to be unprocedural, unfair and unlawful and declare them null and void;b.The Honourable Court be pleased and issue an order against the Respondent to pay all unionisable employees 15% of their basic salaries as house allowance, and be backdated three (3) years from the date of filing this suitc.Interest be at the court’s rate to be paid for by the Respondent if prayer (b) is granted.d.In the alternative the grievants be paid 15% house allowance on grievants basic salaries for the period they have worked, 15 days from each completed year of service as severance pay, pro-rata leaves, notice in lieu of payment, 12 months’ salary to each as compensation, leave travelling allowance that was not paid, December holiday period where they did not go on leave and underpayment for Mr. James Karanja Wangari the difference of his salary and Government General Order.e.The Grievants be issued with certificates of service.f.The Honourable Court be pleased and issue an order against the Respondent and or her agents from vicitimizing the Claimant’s members on ground of trade union activities/affiliation.g.The costs of this suit are to be provided for by the Respondent. Respondent’s reply to the memorandum of claim 9.The Respondent opposed the Memorandum of Claim dated 30th September 2020. 10.The Respondent denies the Claimant’s allegations, save for limited admissions. 11.The Respondent acknowledges employing the grievants but insists all dues, including house allowances, were paid in accordance with contracts and the law. 12.The Respondent argues that any redundancy was conducted strictly under section 40 of the Employment Act, 2007, with proper notices and fairness, and denies victimisation or breach of constitutional rights under Articles 10, 41, and 47 of the Constitution. 13.The Respondent contests the validity of the Recognition Agreement, claims the suit is premature, and maintains that no arrears or allowances are owed. 14.The Respondent asserts readiness to issue certificates of service and urges dismissal of the Claimant’s suit with costs, contending the claims are unfounded and based on misinterpretation of labour laws. 15.The matter came to court on 13th February 2026, where the parties were directed to canvass the suit by way of written submissions. Claimant’s written submissions 16.The Claimant submitted Respondent acted unlawfully breaching the statutory provision on house allowance set out in section 31 of the Employment Act, which requires employers to provide reasonable housing or pay a housing allowance. The Claimant also submitted that the Respondent breached section 28(1) of the Employment Act, which guarantees employees annual leave and leave traveling allowance; section 40 of the Employment Act, which sets out mandatory redundancy procedures; and section 41 of the Employment Act, which requires fair hearing before termination. 17.The Respondent invoked section 74(1) of the Labour Relations Act, 2007, which governs dispute resolution, and relied on constitutional provisions including Article 36 on freedom of association, Article 41 on the right to fair labour practices, and Article 47 on the right to fair administrative action. These provisions form the foundation of the union’s argument that the grievants were unlawfully denied their entitlements, victimized for union activity, and terminated without adherence to due process. 18.The Claimant concluded that the suit is solid proof that the Respondent was in breach of the law and should allow the claim as prayed. Respondent’s written submissions 19.The Respondent submitted that the three grievants’ employment ended due to reduced work caused by the COVID-19 lockdown, which made it impossible to sustain operations. Prior to their termination, other employees such as Mr. Godfrey Atsango and Mr. David Amuhanda had already been let go as part of austerity measures, with the Union and one grievant actively participating in negotiations. 20.The Respondent emphasized that labour laws were respected, notices were issued, and both the Union and County Labour Office were informed. The Respondent argued that severance pay was already settled annually, and for 2020 it was not yet due; house allowance was included in the overall pay; and claims for bus fares and hotel expenses during mediation were unpleaded and therefore untenable, citing the case of Kalpana H. Rawal & 2 others v Judicial Service Commission & 3 others [2016] KESC 4 (KLR) where the Supreme Court held it erred in basing its decision on un-pleaded issues. 21.The Respondent further submitted that compensation for wrongful termination is unwarranted since the termination was lawful redundancy, and awarding 12 months’ compensation would amount to granting a new contract when only three months remained. 22.In conclusion, the Respondent prays that the Claimant’s case be dismissed with costs. Analysis and determination 23.The court has considered the memorandum of claim, reply to the memorandum of claim, together with the rival submissions on record; The issue for determination is whether the Respondent complied with the legal process in terminating the Grievants by declaring them redundant. 24.In Thomas De La Rue (K) Ltd v Omutelema [2013] KECA 492 (KLR) the Court of Appeal held as follows:“Section 40 of the Employment Act sets out seven conditions which the employer must comply with before declaring an employee redundant. These are:if the employee to be declared redundant is a member of a union, the employer must notify the union and the local labour officer of the reasons and the extent of the redundancy at least one month before the date when the redundancy is to take effect;if the employee is not a member of the union, the employer must notify the employee personally in writing together with the labour officer;in determining the employees to be declared redundant, the employer must consider seniority in time, skill, ability, reliability of the employees;where the terminal benefits payable upon redundancy are set under a collective agreement, the employer shall not place an employee at a disadvantage on account of the employee being or not being a member of a trade union;the employer must pay the employee any leave due in cash;the employer must pay the employee at least one month’s notice or one month’s wages in lieu of notice; andthe employer must pay the employee severance pay at the rate of not less than 15 days for each completed year of service.As far as we can deduce, the requirements of section 40 that the court found not to have been complied with by the appellant are those set out in section 40 (a) and 40 (c), leading to the further finding that the termination of the respondent was unfair within the meaning of section 45 of the Act.It is quite clear to us that sections 40 (a) and 40 (b) provide for two different kinds of redundancy notifications depending on whether the employee is or is not a member of a trade union. Where the employee is a member of a union, the notification is to the union and the local labour officer at least one month before the effective redundancy date. Where the employee is not a member of the union, the notification must be in writing and to the employee and the local labour officer. Section 40 (b) does not stipulate the notice period as is the case in 40 (a), but in our view, a purposive reading and interpretation of the statute would mean the same notice period is required in both situations.” 25.In Africa Nazarene University v David Mutevu & 103 others [2017] KECA 381 (KLR), the Court of Appeal cited the case of Kenya Union of Domestic Hotels Educational Institutions and Hospital Workers (KUDHEIHA) vs Aga Khan University Hospital Nairobi [2015] eKLR, where Mbaru, J. summarising the provisions of Section 40 (1) stated as follows: -“The procedures applicable in a redundancy are therefore set out in law as above. The conditions precedent require:a.A notice to the union and the Labour Officer stating the reasons for, and the extent of, the intended redundancy;b.Non-union employees should receive a personal notice together with the Labour Officer;c.The selection criteria; andd.Address the terms of the Collective Bargaining Agreement on redundancy on terminal dues without disadvantaging non-union employees.” 26.In Kenya Airways Ltd v Aviation & Allied Workers Union Kenya & 3 Others [2014] KECA 404 (KLR) the Court of Appeal stated as follows:“Section 40(1) of the EA is merely procedural by its tenor. It has to be read together with sections 43, 45 and Section 47(5) of EA. It is implicit from the four sections that to establish a valid defence to a claim for unfair termination based on redundancy, an employer has to prove:I.the reasons or reasons for termination.II.that reason for termination is valid and thatIII.the reason for termination is fair reason based on the operational requirements of the employer andIV.that the employment was terminated in accordance with fair procedure.However, as section 43(2) of EA provides the reason or reasons for termination of a contract are the matters that the employer at the time of termination of the contract genuinely believed to exist and which caused the employer to terminate the services of the employer. Further, as section 47(5) of EA provides the burden of proving unfair termination of employment rests with the employee while the burden of justifying the grounds for termination rests with the employer.Thus, redundancy is a legitimate ground for terminating a contract of employment provided there is a valid and fair reason based on operational requirements of the employer and the termination is in accordance with a fair procedure. As section 43(2) provides, the test of what is a fair reason is subjective. The phrase “based on operational requirements of the employer” must be construed in the context of the statutory definition of redundancy. What the phrase means, in my view, is that while there may be underlying causes leading to a true redundancy situation, such as reorganization, the employer must nevertheless show that the termination is attributable to the redundancy – that is that the services of the employee has been rendered superfluous or that redundancy has resulted in abolition of office, job or loss of employment.” 27.In the present case, the Respondent, by a letter dated 29th July 2020, informed the Claimant of a rescheduling of working days and hours to three (3) days per week due to the global impact of the COVID-19 pandemic. The Claimant, through a letter dated 30th July 2020, proposed a joint meeting to be held on 4th August 2020 at the Respondent’s office. Subsequently, on 29th August 2020, the Respondent terminated the contracts of the four grievants, granting one month’s salary in lieu of notice with effect from the same date. Thereafter, on 11th September 2020, the Respondent communicated to the County Labour Office and the Claimant regarding the intended termination of the grievants’ contracts. Clearly, the notification was issued after the termination notices had already been served on the grievants. 28.The court is persuaded that the Respondent failed to adhere to due process in terminating the grievants, thereby contravening Sections 40, 41, 43 and 47 of the Employment Act. These provisions collectively require that termination be based on valid reasons, preceded by a fair hearing, and properly justified by the employer. The Respondent not only failed to discharge its statutory burden under section 47(5) of the Employment Act but also acted improperly by communicating to the Labour Office and the Claimant its intention to terminate the grievants on grounds of redundancy without substantiating such grounds which is considered as an afterthought. 29.In the instant case the grievants received respective notices dated 2nd September 2020 for James Otieno and 28th August 2020 for Brian Magak. The said letters gave one month Notice to terminate the employment but the Respondent did not give notice to the grievant or the union a month before termination and clear reasons and selection criteria should have been set out. The Respondent did not comply with the mandatory requirements set out in the employment law as far as termination of an employee is concerned on the basis of redundancy. 30.The court finds that the Respondent unfairly terminated the grievants and did not communicate as required and provided as per section 40(1)(a) of the Employment Act. They also did not follow the procedure as set out in sections 41, 43, 45 and 47(5) of the Employment Act. 31.In the already cited case of KENYA AIRWAYS LTD -VS- AVIATION & ALLIED WORKERS UNION & 3 OTHERS (SUPRA) It was held: -“----Redundancy is legitimate ground for terminating a contract of employment provided there is a valid reason based on operational requirements of the employer and the termination is in accordance to fair procedure----" 32.The court having considered the pleadings, submissions, and case laws finds the Respondent failed to follow fair and lawful procedure in terminating the grievants through redundancy. The court holds the termination notices of the grievants were unprocedural and unfair and so judgment is entered in their favour. 33.The court having entered judgment in favour of the Claimants now proceeds to award the following: -a.The court will award the Grievants-:Paul Oloo who worked for the Respondent for about 10 years is awarded six(6) months equivalent of his salary. The pleadings did not set out his salary or the total relief prayed.b.James Otieno is awarded equivalent of two(2)months having worked for the Respondent for less than 2 years – so same translates to Kshs.27,400 X 2 = Kshs.54,800/=.c.James Karanja Wangari is also awarded two(2) months equivalent of salary also having worked for the Respondent for less than two years and so the same amounts to Kshs.30,000 X 2 = Kshs.60,000/=.d.Brian Magak is also awarded 2 months equivalent of his salary which is also not pleaded and neither is total relief prayed provided. 34.The court is very dissatisfied by the Claimant’s pleadings since they are very shallow. The Claimants made general prayers but no particulars.The court cannot give reliefs which are in abstract and are not specified. The court cannot work out awards for the Claimant which are not pleaded.The general prayers of house allowance, and pro-rata leave, notice in lieu of payment, leave, travelling allowance, December holiday dues and underpayment of James Karanja Wangari are all pleaded but no iota of evidence to support such prayers. Regrettably, the court is unable to write pleadings for Claimants. These prayers are unproved and unspecified and are denied. 35.The court will grant: -a.Severance pay for the grievants as they were terminated by redundancy. Paul Oloo is awarded 50% of his salary for the ten years worked.b.The other three grievants James Otieno, James Karanja Wangari and Brian Magate are awarded 50% severance pay for only 2 years they worked for the Respondents. The parties will give the figures to court for verification and adoption on 16th July 2026. 36.The parties will have to work out the total award as will be agreed between the rival parties. 37.The Grievants are awarded costs of the suit. They are also awarded interest at 14% per annum from date of this judgment till full payment. 38.The Grievants will also be given their Certificates of Service within 30 days from today’s date. IT IS SO ORDERED. DATED, SIGNED AND DELIVERED VIRTUALLY AT NAKURU THIS 19TH DAY OF JUNE, 2026.ANNA NGIBUINI MWAUREJUDGEORDERIn 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.A signed copy will be availed to each party upon payment of Court fees.