[2020] KEELRC 1470 (KLR)

REPUBLIC OF KENYA

IN THE EMPLOYMENT AND LABOUR RELATIONS COURT

AT NAIROBI

CAUSE NO. 302 OF 2017

SARAH ADHIAMBO AWIYO.................................1ST CLAIMANT

CAROLINE WANGARI THUU.............................2ND CLAIMANT

VERSUS

G4S KENYA LIMITED.............................................RESPONDENT

CONSOLIDATED WITH CAUSE 153A OF 2017

MARTIN MWANGI MURIUKI...............................CLAIMANT

VERSUS

G4S KENYA LIMITED......................................RESPONDENT

(Before Hon. Justice Hellen S. Wasilwa 25th February, 2020)

JUDGEMENT

1. The Claimants filed a Memorandum of Claim on 30th January 2017 and 14th February, 2017 as Cause 153A of 2017 and Cause 302 of 2017. Cause 153A of 2017 was subsequently consolidated with Cause 302 of 2017.

2. The Claimants were employed by the Respondent on diverse dates as Strategic Accounts Managers. They aver that on 6th January, 2017 and 10th January 2017, the Compensation and Benefits Manager and the Human Resource Manager invited them for a meeting and informed them that they had been declared redundant with immediate effect. They aver that they were abruptly issued with redundancy letters dated 6th January, 2017 and 10th January, 2017.

3. They aver that the Respondent informed them that it was intending to restructure with a view to enhance its service delivery and achieving operational efficiency.

4. They aver that the alleged restructuring was a mere disguise to terminate their employment. They aver that the redundancy was arbitrary, hast, unlawful, without justification and did not follow the law.

5. In cause 302 of 2017, the Claimants seek the following reliefs:

(i) A declaration that the act of the Respondent of

terminating the service of the Claimants on grounds of redundancy was not procedural, illegal and unlawful.

(ii) Prorate leave

(iii) 1 month salary in lieu of notice:

1st Claimant Kshs. 417,610/-

2nd Claimant Kshs. 289,910/-

(iv) 12 months compensation for unlawful

termination

1st Claimant Kshs.417,610 x 12 months

= Kshs. 5,011,320/-

2nd Claimant Kshs.289,910 x 12months

=Kshs. 3,478,920/-

(v) Certificate of service

(vi) The Respondent do meet the Claimant’s costs

of the case.

6. In cause 153A of 2017, the Claimant seeks the following reliefs:

(i) A declaration that the act of the Respondent of terminating the service of the Claimants on grounds of redundancy was not procedural ,illegal and unlawful.

(ii)An order quashing the redundancy letter dated

9th January, 2017 and issued on 10th January, 2017 by the Respondent against the Claimant.

(iii)Salary for the days worked up to 10th January

2017.

In the alternative

(iv) I month salary in lieu of notice Kshs. 256,230/-

(v) Severance pay at the rate of 20 days for each

year completed

3 x 20 x 256,230/26= Kshs. 591,300/-

(vi) 12 months compensation for unlawful

termination

Gross pay Kshs. 256,230 x 12months

= Kshs. 3,074,760

(vii) Certificate of service

(viii) The Respondent do meet the claimant’s costs of

this case

7. The Respondent filed a Statement of Response on 13th April 2017 and 20th April 2017 to both claims.

8. It avers that on 24th November, 2016, its employees in the Business Development and Sales and Marketing Department were called into a meeting and informed of its intention to re-organise the structure for the Sales and Marketing Team.

9. It avers that the proposed structure showed that some roles were being rationalised. Its employees were invited to express their views and it acknowledged as their candid feedback on the restructuring.

10. It avers that individual consultations took place on 29th and 30th November, 2016. On 1st December, 2016 it gave notice to the Labour Office of its intention to declare the positions redundant.

11. It avers that the notice to declare the employees redundant was issued on 6th December 2016 and upon receiving these letters, the Claimants applied for leave, which they were granted.

12. It contends that the notices informed the employees of their terminal dues which included salary for the days worked, three (3) months’ pay in lieu of notice for the 1st Claimant and One (1) month for the 2nd Claimant in Cause 302, severance pay computed at 20 days pay for each completed year of service and leave earned and not taken. It contends that the Claimants were paid their dues.

13. It avers that in respect of the Claimant in cause 153A, the Claimant has not cleared with the respondent and that he failed to return a company modem and laptop assigned to him which were both valued at Kshs. 26,528 and Kshs. 1000 respectively. However, his dues were paid into his account.

14. It contends that it applied the law in effecting the redundancy process and that the issue of a selection criteria did not arise as the restructuring abolished offices as opposed to reducing the number of employees in that position.

15. The 1st Claimant in Cause 302 testified on her behalf and that of the 2nd Claimant as CW1, while the Claimant in Cause 153A testified as Cw2. The Respondent on its part called one witness Elijah Teya Simiyu its Human Resource Manager who testified as RW1.

Claimants’ case

16. Sarah Adhiambo Awinyo, CW1, testified that she was employed on 6th February, 2006 as a National Sales Manager while the 2nd Claimant was employed in 1995 as a telephone operator and later as a strategic accountant.

17. She testified that at the time of her termination, her salary was Kshs. 417,610 while the 2nd Claimant’s salary was Kshs. 288,000. She testified that she did not receive the letter dated 6th February, 2016 and that the letter dated 1st December, 2016 did not mention her name or that of the 2nd Claimant.

18. She stated there was no mention of redundancy in all the meetings she attended. She testified that the letter dated 6th January, 2017 was issued to her after she went back to work from leave which was the same time she was issued with her redundancy letter.

19. She testified that the letter addressed to the labour officer dated 1st December, 2017 was stamped on 15th December, 2016 and was not copied to her. She testified that she was not issued with a notice of redundancy.

20. She testified that in the new structure, their roles were missing and the explanation given by the Respondent was that the organisation was considering lowering their roles.

21. She testified that Clause 13 of her appointment letter provided that she was to be given 3 months termination notice but was never issued such notice. She contended that she was paid her terminal dues and that her claim is for compensation due to unlawful redundancy.

22. In cross-examination, she confirmed that she was paid her redundancy dues but was neither issued with one months’ notice nor certificate of service. She testified that she had proceeded on her annual leave from 9th December, 2016 to 2nd January, 2017.

23. She testified that in the chart showed to her on 25th November, 2016, the Respondent’s proposal was to lower their roles to sales executives. She testified she never received the letters dated 1st December, 2016 and 6th December, 2016.

24. In re-examination, she testified that the only communication she received was in November, 2016 asking them for their job description.

25. Martin Mwangi Kariuki, Cw2, adopted his Witness Statement filed on 30th January, 2017 as his evidence in chief.

26. In cross-examination, he testified that on he attended the meetings held on 24th, 25th and 28th November, 2016 for all sales department and that he proceeded on leave from 13th December, 2016. He testified that he had no meeting with Mr. Sitimah in December 2016 before he went on leave.

27. He testified that on 6th December, 2016 he was not served with a letter informing him of the intention to declare him redundant. He testified that he was terminated on 10th January, 2017 and was not paid his termination dues of Kshs. 431,880. 90/. He testified that he had not cleared with the Respondent.

28. In re-examination, he testified that he did not sign any document that he had received his dues. He testified that in the meetings, they were only informed of their new positions. He stated that upon raising concern over their positions, they were told to explain their job description.

29. He stated that he seeks his terminal dues and compensation for unlawful termination.

Respondent’s case

30. Elijah Teya Sitimah, RW1, testified that they had meetings on 24th, 25th and 28th November, 2016 in which they discussed redundancy in the sales division. He testified that in the meetings, they shared with the Claimants the then structures and proposed structures.

31. It was his testimony that they did away with Strategic Accounts positions and that the functions of these positions are now dealt with by the Sales Management function. It was his further testimony that the Operations Manager and Sales Manager now deals with special clients when there is need.

32. He testified that they sent a notice to the Ministry of Labour. It was his testimony that he prepared the letters dated 6th December 2016, which were received by the Claimants. It was his further testimony that there had been previous discussions on the redundancies. He stated that 6 employees were declared redundant.

33. He confirmed that CW1 and CW2 were both on leave and that he met them before they went on leave. It was his testimony that CW2 was paid his dues being a gross of Kshs. 682,782. 90 and net of Kshs. 431,880. 90. He stated that they issued the Claimants with certificates of service.

34. Upon cross-examination, he testified that there were emails sent out on the redundancy but there was no agenda of redundancy. He stated that the letter to the Ministry of labour does not give details of persons who were declared redundant and that the letter was not copied to the Claimants.

35. He testified that the Claimants were issued with redundancy notices by the Commercial Director but did not have evidence that they received the said notices. He testified that there were no minutes of the discussions held on 24th, 25th and 28th November, 2016.

Claimants’ submissions

36. The Claimants submit that the notice issued to the County Labour Office was backdated to 1st December, 2016 and received by the Labour Officer on 15th December, 2016. It is their submission that the notice was not within the one month required under Section 40 of the Employment Act.

37. They rely on the case of Thomas De La Rue (K) Ltd v David Opondo Omutelema [2013] eKLR where the Court held that the notice period stipulated under Section 40 (1) (a) and Section 40 (1) (b) of the Employment Act is similar.

38. They submit that for a redundancy to be valid, the employer must prove that both the labour officer and the employee of the employee’s union have been notified a month before the redundancy takes place. They submit that this notification of intention is different from the notice of termination under section 40 (1) (f) of the Employment Act.

39. They submit that they were never notified of the intention to carry out the redundancy as the Respondent only issued the notice of termination under section 40 (1) (f) of the Employment Act in the letters dated 6th January 2017 and 10th January 2017.

40. They further submit that there were no consultations before the redundancy and that the meetings held on 24th, 28th and 30th November, 2016 did not indicate that they would be declared redundant.

41. They submit that where the procedure set out under Section 40 of the Employment Act is not followed, any resulting termination is unprocedural and employees are entitled to damages as held in Caroline Wanjiru Luzze v Nestle Equatorial Regional Limited [2016] eKLR.

42. The Claimants further submit that the Respondent opted to pay one month’s salary in lieu of notice and that the payment only satisfied the termination notice and not the redundancy notice. It is therefore their submission that their termination was unfair under Section 45 of the Employment Act.

43. They also submit that at the time of termination, the Respondent failed to prove that there existed a genuine reason for termination of the contract of service.

44. They have further submitted that the selection criteria was not disclosed to them and it was not clear if they would retain their positions in the new structure presented by the Respondent in its meetings. They submit that if some of the offices were being retained, they ought to have been shown the selection criteria with regard to seniority in time, skill, performance, ability and reliability. In support of this argument, they relied on the case of Paul Ngeno v Pyrethrum Board of Kenya Ltd [2013] eKLR and Kenya Plantation and Agricultural Workers Union v Harvest Limited [2014] eKLR.

45. It is their submission that their termination was unfair, wrongful and unlawful and was contrary to Section 41 (2), 43, 44 and 45 of the Employment Act thus they are entitled to the reliefs sought. In support of this, they relied on the cases of Kenfreight (E.A.)Limited v Benson K. Ngiti [2013] eKLRand George Onyango Akuti v Security Kenya Limited [2013] eKLR.

Respondent’s submissions

46. The Respondent submits that the Claimants’ allegation that they were unfairly selected or that the redundancy was unfair is without basis because they admit that the reason for their termination was that the Strategic Sales Department had been done away with.

47. The Respondent submits that the selection criteria set out under Section 40 (1) of the Employment Act was not applicable.

48. They also submit that the Claimants having been terminated on account of redundancy, the provisions of Section 41, 43, 44 and 45 of the Employment act had no applicability in the process. Thus, the cases of Kenfreight (E.A.) Limited v Benson K. Ngiti [2013] eKLR and George Onyango Akuti v Security Kenya Limited [2013] eKLR are not relevant to this suit.

49. It is their further submission that it has set out the background to the rationalisation exercise which led to the marketing team being restructured and from this it is evident that it complied with Section 40 of the Employment Act.

50. They also submit that the notice to the Labour Office dated 1st December, 2016 was posted on even day and was received on 15th December, 2016 bearing the receipt stamp. Therefore, the Claimants’ allegation that the notice was not issued at all or that it was not issued within the set period are without basis. It is its submission that proper notice was issued to the labour officer.

51. The Respondent submits that the Claimants received their notice of intent on 6th December, 2016 before they applied for leave. The Respondent further submits that although the Labour Officer acknowledged receipt of the letter on 15th December, 2016 the employees were terminated on 6th January and 9th January, 2017 and the difference in days was not significant and no prejudice was suffered by the Claimants.

52. Further, the Respondent submits that the Claimants were paid their redundancy pay in full as the 1st an 2nd Claimants admitted to having received their payments.

53. They submit that the termination was substantively and procedurally fair because it complied with Section 40 of the Employment Act. It urges the Court to consider the case of Churchill Ongalo v Kenya Kazi Services Limited, Cause 741 of 2014 where the Court held that the termination of only one employee on account of redundancy was proper and lawful.

54. They therefore submit that the Claim for 12 months compensation for unfair termination should fail. They urged the Court to consider the decisions where the Court awarded 2 and 3 months’ salary compensation where the redundancy was procedurally and substantively unfair unlike in this case. They relies on Dorcas Kemunto Wainaina v IPAS [2018] eKLR andKenya Union of Domestic, Hotels, Educational Institutions & Hospitals Workers v Mombasa Sports Club [2014] eKLR.

55. They also submit that the 1st and 2nd Claimants were issued with their certificates of service and that the 3rd Claimant was not issued with his certificate of service as he is yet to clear with the Respondent.

56. It is their submission that the Claimant in Cause 153A seeks reinstatement, which is a remedy that only applies in cases of unfair termination. They urge the Court to consider the provisions of Section 49 (4) of the Employment Act and that the Claimant has already been paid a total of Kshs. 431,880 as terminal dues.

57. They also submit that the Claimants were terminated as per their contracts of employments and have been paid their redundancy dues.

58. I have examined all the evidence and submissions of both Parties herein. The issues for this Court’s determination are as follows:-

1) Whether the redundancy of the Claimants was lawful and fair.

2) Whether the Claimants are entitled to the remedies sought.

59. On the 1st issue, the Claimants contend that prior to their termination, they were never accorded any hearing nor issued with any notice. They admit they had meetings on 24th, 28th and 30th November 2016 with the Respondent but were never informed that they would be rendered redundant.

60. Indeed minutes of the said meetings were not produced in Court by the Respondents. Therefore, this Court is unable to deduce whether there was any discussion on redundancy.

61. The Respondent also indicates that they served the Labour Office with the redundancy notice but the notice did not explain the names of employees to be affected. This letter though dated 1/12/2016 was received by the Ministry on 15/12/2016 yet the said redundancy was to take effect on 1/12/2016.

62. From the above scenario, the Respondents have failed to show that they adhered to the provisions of Section 40 of the Employment Act, which mandates the employer to give notice to the employees on the intended redundancy. There is no evidence that there were also consultations between the Claimants and the Respondents before the said redundancy.

63. Section 40 of employment Act 2007 provides as follows:-

(1)“An employer shall not terminate a contract of service on account of redundancy unless the employer complies with the following conditions:-

(a) Where the employee is a member of a trade union, the employer notifies the union to which the employee is a member and the labour officer in charge of the area where the employee is employed of the reasons for, and the extent of, the intended redundancy not less than a month prior to the date of the intended date of termination on account of redundancy;

(b) Where an employee is not a member of a trade union, the employer notifies the employee personally in writing and the labour officer;

(c) The employer has, in the selection of employees to be declared redundant had due regard to seniority in time and to the skill, ability and reliability of each employee of the particular class of employees affected by the redundancy;

(d) Where there is in existence a collective agreement between an employer and a trade union setting out terminal benefits payable upon redundancy; the employer has not placed the employee at a disadvantage for being or not being a member of the trade union;

(e) The employer has where leave is due to an employee who is declared redundant, paid off the leave in cash;

(f) The employer has paid an employee declared redundant not less than one month’s notice or one month’s wages in lieu of notice; and

(g) The employer has paid to an employee declared redundant severance pay at the rate of not less than fifteen days pay for each completed year of service.

64. In the Kenya Airways case – No. 46/2013 Kenya Airways Limited vs Aviation & Allied Workers & 3 Others (2014) eKLR Maraga JA (as he then was) considered the position of consultation and rendered himself thus:-

“51. Kenya is a State party to the International Labour Organization (ILO), which it joined in 1964 and is bound by the ILO conventions. Article 13of Recommendation No. 166of the ILO Convention No. 158-Termination of Employment Convention, 1982-requires consultation between the employers on the one hand and the employees or their representatives on the other before termination of employment under redundancy. It reads:-

“1. When the employer contemplates terminations for reasons of an economic, technological, structural or similar nature, the employer shall:

(a) provide the workers' representatives concerned in good time with relevant information including the reasons for the terminations contemplated, the number and categories of workers likely to be affected and the period over which the terminations are intended to be carried out;

(b) give, in accordance with national law and practice, the workers' representatives concerned, as early as possible, an opportunity for consultation on measures to be taken to avert or to minimise the terminations and measures to mitigate the adverse effects of any terminations on the workers concerned such as finding alternative employment.”

52. As I have said, besides this Convention, the requirement of consultation is implicit in the principle of fair play under Section 40(1) of the Employment Act itself and our other labour laws. The notices under this provision are not merely for information. Read together with Part VIIIof the Labour Relations Act, 2007which provides for reference to the Minister for Labour of trade disputes, including those related to redundancy (see Section 62(4)) for conciliation, I am of the firm view that the requirement of consultations implicit in these provisions. The purpose of the notice under Section 40(1) (a) and (b) of the Employment Act, as is also provided for in the said ILO Convention No. 158 - Termination of Employment Convention, 1982, is to give the parties an opportunity to consider “measures to be taken to avert or to minimize the terminations and measures to mitigate the adverse effects of any terminations on the workers concerned such as finding alternative employment.“The consultations are therefore meant to cause the parties to discuss and negotiate a way out of the intended redundancy, if possible, or the best way of implementing it if it is unavoidable. This means that if parties put their heads together, chances are that they could avert or at least minimize the terminations resulting from the employer’s proposed redundancy. If redundancy is inevitable, measures should to be taken to ensure that as little hardship as possible is caused to the affected employees.

In the circumstances, I agree with counsel for the 1st respondent that consultation is an imperative requirement under our law. Mr. Oraro’s criticism of the learned trial Judge’s reliance on the UK Employment Appeals Tribunal’s decision in Mugford v. Midland Bank, UK Employment Appeal Tribunal, 10and the treatise by Rycroft and Jordan,- “A guide to the South Africa Labour Law”both of which dealt with the requirement of consultation, was therefore unfair. Those were authorities on comparative jurisprudence which the learned Judge was perfectly entitled to make reference to and where appropriate rely on”.

65. There is no evidence that there was any such consultation in the case of the Claimants.

66. It is therefore my finding that the redundancy of the Claimants was unfair and unlawful.

67. In terms of remedies, I find for the Claimants and award them as follows:-

1. Claimants in Case No. 302/2017

1st Claimant – Sarah Adhiambo Awinyo

a) Salary in lieu of notice = 417,610/=

b) 10 months compensation as damages for unfair redundancy = 10 x 417,610 = 4,176,100/=

Total = 4,217,710/=

c) Issuance of Certificate of Service

d) Costs of this suit

2nd Claimant – Caroline Wangari Thuu

a) Salary in lieu of notice = 289,910/=

b) 10 months’ salary as compensation for unlawful termination = 10 x 289,910 = 2,899,100/=

Total = 3,189,010/=

c) Issuance of Certificate of Service

d) Costs of this suit

2. Claimant in Cause No. 153A/2017

Martin Mwangi

a) 1 month salary in lieu of notice = 256,230/=

b) Severance pay at the rate of 20 days for each completed year of service = 3 x 20/30 x 256,230 = 512,460/=

c) 10 months compensation for unlawful redundancy = 10 x 256,230 = 2,562,300/=

Total = 3,330,990/=

d) Costs of this suit

Those are the orders of this Court.

Dated and delivered in open Court this 24th day of February, 2020.

HON. LADY JUSTICE HELLEN WASILWA

JUDGE

In the presence of:

Onyancha for Claimants – Present

Sheikh holding brief Makori for Respondent – Present