[2018] KEELRC 1781 (KLR)
The court found that the respondent was the employer of all claimants based on payslips and termination letters issued by the respondent. The respondent failed to prove the alleged economic crisis or financial constraints justifying redundancy, and did not follow the mandatory redundancy procedure under section 40...
Source-derived case information.
- Citation
- [2018] KEELRC 1781 (KLR)
- Parties
- Applicant: Patrick Mwanzia Mutua; Applicant: Lydia Kithi; Applicant: Robert Osieko; Applicant: Holiness Kiute; Applicant: Victor Ouma; Applicant: Justus Mutua; Applicant: Jorim Okoth; Applicant: Fibian Chelangat Maru; Applicant: Vincent Ondeche; Applicant: Gertrude Ndiku; Applicant: Peter Opondo Otieno; Applicant: Joel Musyoka; Applicant: Martin Mwanzui; Applicant: Fredrick Ochieng; Applicant: Wycliffe Ashuma; Applicant: Paul Kilonzo; Applicant: Sammy Kyalo; Applicant: John Wambua; Applicant: Simon Okoth; Applicant: Johnson Musee; Respondent: Habo Group of Companies
- Court
- Employment and Labour Relations Court
- Court Station
- Employment and Labour Relations Court at Bungoma
- Jurisdiction
- Kenya
- Case Number
- Cause 724 of 2016
- Procedural Posture
- Employment Cause / Judgment
- Outcome
- claim allowed in part
- Judges
- AN Makau, L Ndolo
- Legal Topics
- Unfair Termination, Redundancy Procedure, Terminal Dues, Compensation for Dismissal, Employer Employee Relationship
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Patrick Mwanzia Mutua
Applicant
Lydia Kithi
Applicant
Robert Osieko
Applicant
Holiness Kiute
Applicant
Victor Ouma
Applicant
Justus Mutua
Applicant
Jorim Okoth
Applicant
Fibian Chelangat Maru
Applicant
Vincent Ondeche
Applicant
Gertrude Ndiku
Applicant
Peter Opondo Otieno
Applicant
Joel Musyoka
Applicant
Martin Mwanzui
Applicant
Fredrick Ochieng
Applicant
Wycliffe Ashuma
Applicant
Paul Kilonzo
Applicant
Sammy Kyalo
Applicant
John Wambua
Applicant
Simon Okoth
Applicant
Johnson Musee
Applicant
Habo Group of Companies
Respondent
Procedural Posture
Employment Cause / Judgment
Legal Issues
- 1 Whether the claimants were employed by the respondent.
- 2 Whether the claimants' services were unfairly and unlawfully terminated.
- 3 Whether the claimants are entitled to the reliefs sought.
Ratio Decidendi
The court found that the respondent was the employer of all claimants based on payslips and termination letters issued by the respondent. The respondent failed to prove the alleged economic crisis or financial constraints justifying redundancy, and did not follow the mandatory redundancy procedure under section 40 of the Employment Act, including giving prior notice to the claimants and paying terminal dues before termination. The claimants were not selected through a fair process, and the respondent did not provide evidence of financial hardship. The termination was therefore both substantively and procedurally unfair. The court awarded each claimant one month’s salary in lieu of notice,...
Court Disposition
claim allowed in part
Orders
- Each claimant is awarded one month salary in lieu of notice, ten months’ salary as compensation for unfair termination, salary arrears for May and June 2016 (or June and July as applicable), and refund of in-house savings/SACCO deductions at double rate as per contract.
- Each claimant to be issued with a certificate of service.
Full Case Text
Judgment text and source record
187 paragraphs
REPUBLIC OF KENYA
IN THE EMPLOYMENT AND LABOUR RELATIONS COURT
AT MOMBASA
CAUSE NO. 724 OF 2016
IN THE MATTER OF: THE EMPLOYMENT ACT, 2007 & THE LABOUR INSTITUTIONS ACT, 2007
1. PATRICK MWANZIA MUTUA
2. LYDIA KITHI
3. ROBERT OSIEKO
4. HOLINESS KIUTE
5. VICTOR OUMA
6. JUSTUS MUTUA
7. JORIM OKOTH
8. FIBIAN CHELANGAT MARU
9. VINCENT ONDECHE
10. GERTRUDE NDIKU
11. PETER OPONDO OTIENO
12. JOEL MUSYOKA
13. MARTIN MWANZUI
14. FREDRICK OCHIENG
15. WYCLIFFE ASHUMA
16. PAUL KILONZO
17. SAMMY KYALO
18. JOHN WAMBUA
19. SIMON OKOTH
20. JOHNSON MUSEE............................................................CLAIMANTS
VERSUS
HABO GROUP OF COMPANIES.........................................RESPONDENT
JUDGMENT
Introduction
1. The claimants brought this suit on 29. 9.2016 alleging that they were employed by the respondent on diverse dates between the year 2000 and 2014 and worked well until they were unlawfully and unfairly terminated on diverse dates in the year 2016. They averred that the termination was without any justifiable cause and the procedure followed was in breach of the mandatory provisions laid down by the Employment Act. They therefore prayed for terminal dues plus compensation for the unfair termination.
2. The respondent denied any employment relationship between the claimants and herself and averred that the claimants were employed by different entities which they should have sued. She however averred that the termination of the claimants’ services was lawful and their terminal dues were paid by their respective employers. She therefore prayed for suit to be dismissed with costs.
3. The claimants called Mr. Patrick Mwanzia Mutua and M/s Gertrude Wavinya Ndiku as their witness but the respondent never availed any witness despite being given the opportunity to do so. During the hearing, the claims by the 12th and 20th claimants were withdrawn.
After the hearing only claimants’ counsel filed written submissions.
Claimants’ Case
4. Mr. Patrick Mwanzia Mutua testified as Cw1 and he had secured written authority from all the other claimants to testify on their behalf. He told the Court that he joined the respondent as a Port Clerk on 15. 2.2011 and after 4 years he was promoted to be Warehouse Manager. He stated that all the other claimants herein were employed by the respondent. He produced a bundle of documents to support the said employment relationship.
5. Cw1 further stated that all the claimants, him included were served with termination letters citing hard economic times as the reason of their layoff. He however denied the validity of the alleged reason for their termination and contended that they were just replaced by new employees and the business continued to operate. Cw1 further faulted the lay off by accusing the employer for laying them off without prior Redundancy Notice and before paying them terminal dues. He therefore contended that the termination was unfair and unlawful and prayed for the reliefs sought by the suit to be granted to the respective claimants.
6. On cross examination Cw1 admitted that some of the claimants were working for different companies but they explained that they were all respondent’s subsidiary companies. He further contended that the appointment letters, payslips and their pay came from the respondent.
He further contended that the claimants’ were all terminated on account of redundancy but denied the alleged meeting between the employer and the claimants on 19. 7.2016. He further admitted that some claimants were going for their annual leave but others were not.
7. M/s Gertrude Wavinya Ndiku testified as Cw2. She was the respondent Internal Auditor from 25. 1.2016 earning Kshs.50,000 per month until 4. 8.2016 when she was laid off. She denied that the respondent was facing financial challenges. She maintained that as the Internal Auditor she knew very well that the company was financially stable and up to date it is still running.
8. Cw2 confirmed that all the claimants were terminated on account of redundancy and no prior notices were served on them and no terminal dues were paid.
Analysis and Determination
9. After careful considerations of the evidence and submissions the following issues arise for determination:
(a) Whether the claimants were employed by the respondent;
(b) Whether the claimants services were unfairly and unlawfully terminated.
(c) Whether the reliefs sought should be granted.
Claimants’ employer
10. I have carefully perused and considered the various documents filed by the claimants. It is clear that claimant number 1, 5, 9 and 10 were issued with appointment letters by the respondent (Harbo Group of Companies). It is also clear that number 2, 3, 6, 7, 8, 11, 113, 14, 15, 16, 18, and 19 were issued appointment letters by Awanad Enterprises Limited. However all the payslips to the claimants were from the respondent herein and not Awanad Enterprises Limited. Likewise the termination letter to all the claimants were issued by the respondent herein and not Awanad Enterprises. Flowing from the foregoing matters, it appears that the all the claimants were employed by the respondent herein because she is the one who paid their salary and also the one who terminated their services without any input or objection from Awanad Enterprises Limited. On a balance of probability, therefore it is my finding that the respondent herein was the employer of all the claimants herein.
Unfair termination
11. All the claimants were terminated on account of redundancy. The termination letters stated that all the claimants were laid off due to low business and company restructuring. The letters offered to pay terminal dues as provided by the Employment Act and the Labour Standards. Cw2 has however denied that the respondent had financial constraints that warranted job cuts. Being the company’s Internal Auditor, Cw1 contended that she was well aware of the financial position of the respondent as stable and maintained that the layoffs were unwarranted. She like Cw1 contended that after the lay off the respondent employed other employees to replace them.
12. After careful consideration of the uncontested evidence by the Cw1 and Cw2, I find that the claimants have proved on a balance of probability that the reason for their termination was not valid and fair. The respondent never availed any witnesses to testify. Even if the witness testified, the written statement filed on 26. 9.2017 did not respond to the statement, filed by Cw1 and Cw2 on 20. 6.2017 on the issue of economic crises. The respondent also never filed any documentary evidence was filed to support the alleged economic crisis. All what she filed was leave records and letter dated 2. 6.2016 notifying the County Labour Officer of the intended redundancy of her employees. No documentary evidence was filed to prove the alleged financial crisis or how the business was doing.
13. As regards the procedure followed, it is clear that the claimants were not served with the redundancy notice served on the Labour Officer. They were only served with the termination letters without any prior notice. There is no evidence that a fair selection was done to identify the claimants as the most suitable for the redundancy. In addition, the claimants were never paid their termination dues as provided by section 40 of the Employment Act before the termination took effect. I therefore find and hold that the termination of the claimant services was not accordance with section 40 of the Act and it amounted to unfair termination within the meaning of section 45 of the Act.
14. Under section 49 of the Act, I award each claimant one month salary in lieu of notice plus 10 months’ salary as compensation for unfair termination. In awarding the said compensation I have considered the fact that the claimant never contributed to their termination through misconduct. I have also considered the fact that they were not paid any gratuity after termination. The claim for salary for May and June 2016 is awarded to each claimant as prayed since the claim was not disproved by evidence.
15. The claim for leave is dismissed for want of particulars and evidence. It was admitted in evidence that the claimants took some leave but the same was not factored in their pleadings. The claim for service pay also fail because they were registered NSSF members and their payslips indicate that the employer regularly remitted their NSSF contribution. The said payslips further indicated that the salary paid to the claimants was gross pay and I therefore dismiss the claim for accrued House Allowance.
16. The claimants were deducted SACCO contribution and/or in-house savings from their salaries. They are claiming a refund of the said deductions at double rate as provided for under their appointment letters. I have perused the appointment letters filed by the claimants and I have confirmed that the respondent has a policy of deducting from her employees’ salary, Kshs.300 or 200 for in-house savings loosely referred to as SACCO which is refundable to the respective employee upon termination at a double rate. I therefore allow the said claims for in house savings as prayed but not both SACCO and in house the are one and the same items in the appointment letters and the payslips.
17. The following is summary of the awards to each claimant save the two who withdrew their claims:
Patrick Mwanzia Mutua
Notice …………………………………………….50,000
Compensation …………………………..…..500,000 Salary (May & June) ……………….………100,000
In house savings/SACCO ………..………. 40,200
690,200
======
Lydia Kithi
Notice …………………………………………….30,000
Compensation …………………………..…..300,000
Salary for June & July……………………….60,000
In house savings/SACCO ………………. 25,800
415,800
=======
Robert Osieko
Notice …………………………………………….16,000
Compensation …………………………..…..160,000
Salary for June & July……………………… 32,000
In house savings/SACCO ………………. 96,600
304,600
=======
Holiness Kiute
Notice …………………………………………….30,000
Compensation …………………………..…..300,000
Salary for June & July …………………….. 60,000
In house savings/SACCO ……….………. 27,600
417,000
======
Victor Ouma
Notice …………………………………………….13,000
Compensation …………………………..…..130,000
Salary for June & July……………………….13,200
In house savings/SACCO ………………. 13,200
169,400
=======
Justus Mutua
Notice …………………………………………….20,000
Compensation …………………………..…..200,000
Salary for June & July……………………….40,000
In house savings/SACCO …………...……. 40,200
300,200
======
Jorim Okoth
Notice ……………………………………......40,000
Compensation …………………………..…..400,000
Salary for June & July……………………… 80,000
In house savings/SACCO ……………..…. 56,400
576,400
======
Fabian Chelangat Maru
Notice …………………………………………….25,000
Compensation …………………………..…..250,000
Salary for June & July……………………….50,000
In house savings/SACCO ………………. 56,400
381,400
======
Vincent Ondeche
Notice …………………………………………….40,000
Compensation …………………………..…..400,000
Salary for June & July……………………….80,000
In house savings/SACCO …..………….…. 36,600
569,600
======
Gertrude Ndiku
Notice …………………………………………….50,000
Compensation …………………………..…..500,000
Salary for June & July…………………….100,000
In house savings/SACCO ………………. 4,200
654,200
=======
Peter Opondo Oteino
Notice …………………………………………….20,000
Compensation …………………………..…..200,000
Salary for June & July………………..…….40,000
In house savings/SACCO ……………... 39,600
299,600
=======
Martin Mwanzui
Notice …………………………………………….25,000
Compensation …………………………..…..250,000
Salary for June & July……………………….50,000
In house savings/SACCO …………………. 24,600
345,600
=======
Fredrick Ochieng
Notice …………………………………………….20,000
Compensation …………………………..…..200,000
Salary for June & July……………………….40,000
In house savings/SACCO …………….…. 19,500
279,500
=======
Wycliff Ashuma
Notice …………………………………………….18,000
Compensation …………………………..…..180,000
Salary for June & July……………………. 36,000
In house savings/SACCO ………………. 46,600
280,200
=======
Paul Kilonzo
Notice …………………………………………….17,000
Compensation …………………………..…..170,000
Salary for June & July……..……………….34,000
In house savings/SACCO ………………. 19,200
240,200
======
Sammy Kyalo
Notice …………………………………………….13,000
Compensation …………………………..…..130,000
Salary for June & July……………………….13,000
In house savings/SACCO ……….………. 29,400
185,400
=======
John Wambua
Notice …………………………………………….12,600
Compensation …………………………..…..126,000
Salary for June & July……………..……….25,200
In house savings/SACCO ……….………. 19,200
183,000
======
Simon Okoth
Notice …………………………………………….22,000
Compensation …………………………..…..220,000
Salary for June & July…………………..….44,000
In house savings/SACCO ………………. 115,200
401,200
=======
Each claimant will be issued with certificate of service plus costs and interest on their respective awards from the date hereof until payment in full. The said award, will also be subjected to the relevant statutory deductions.
Signed and dated and at Nairobi this 11thday of May, 2018.
ONESMUS N. MAKAU
JUDGE
Delivered at Mombasa this 28thday of May, 2018.
LINNET NDOLO
JUDGE