https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/2263

 **REPUBLIC OF KENYA** **IN THE EMPLOYMENT AND LABOUR RELATIONS COURT AT NAIROBI** (ON Makau J on 30th July 2026) **CAUSE NO. E253 OF 2023** **AMARPREET SINGH SIDHU.......................................CLAIMANT** **-VERSUS-** **CANAAN FACTORIES LIMITED..............................RESPONDENT** **JUDGMENT** **Introduction** 1. By a Memorandum of Claim dated 17th October 2022, the Claimant sued the Respondent for unlawful termination of his employment, and prayed for the following: - 2. ***Damaged for unlawful termination (USD 5,000 X 12 months) = USD 60,000.*** 3. ***Unpaid salary for the month of August 2021 for USD 5,000.*** 4. ***3 month’s salary in lieu of Notice as indicated in the Employment Contract worth USD 15,000.*** 5. ***14 days salary in lieu of accumulated leave as per the terms of employment worth USD 2,333.33.*** 6. ***Rescheduling charges for the return ticket worth USD 153.9 (as per employment contract)*** 7. ***COVID testing charges worth USD 54.6.*** 8. ***Certificate of Service.*** 9. ***Costs of this suit.*** 10. ***Interest on (a), (b), (c) and (d) above.*** 11. The Respondent admitted that it employed the Claimant as its Chief Executive Officer from 23rd October 2020 till September 2021 when they mutually entered into a verbal agreement to separate. Therefore it denied the alleged unlawful termination and prayed for the suit to be dismissed with costs. 12. The suit proceeded by documentary evidence including witness statements and documents. They then filed written submissions to guide the court. **Claimant’s case** 1. The Claimant witness statement is dated 17th October 2022 and attaches copies of. 2. Employment contract dated 21st October 2020. 3. Airticket dated 21st September 2021. 4. Email correspondence. 5. Transaction receipt dated 12th April 2022 6. Hospital receipt for Covid -19 dated 22nd September 2021. 7. Invoice dated 23rd September 2021 for charge of air ticket. 8. In brief, he stated that he was employed by the Respondent as a CEO on 23rd October 2020 for a monthly salary of USD 5,000. He worked diligently and revived a company that had been shut down and helped pay accumulated debt of Kshs. 10,000,000. On 1st September 2021 the Respondent’s Group Chief Operating Officer Mr. Parantap Joshi informed him that his employment would be terminated because the Company was closing down due to financially problems. He was not given any other option and therefore he left the company and returned to India. 9. Subsequently he kept following up the Respondent for his benefits but all what he got was only USD 1186.86. He maintained that the termination was unlawful because there was no valid reason and fair procedure was not followed. He contended that the company never closed immediately after his exit. Therefore he prayed for compensation for unfair termination plus terminal benefits. **Respondent’s case.** 1. The Respondent adopted the witness statement by its former Chief Manager Administration and Internal Audit Mr. Letensie Tesggai dated 28th July 2025 and copies of the following documents:- 2. Contract of employment dated 28th October 2020. 3. Email correspondences. 4. Respondents cash flow projection for 2021. 5. Demand letters. 6. Certificate of Service. 7. In brief he confirmed the employment relationship between the Claimant and the Respondent from 21st October 2020. He further stated that the Claimant joined the company when it had outstanding debt of Kshs. 12,000,000 and he promised to rake in a profit of Kshs. 53,041,552. However as at August 2021 the company had made losses amounting to Kshs. 133,919,649 due to Covid -19 that was hurting the economy. 8. He stated that in September 2021, the company was forced to re-organize its affairs as a way of sorting its liabilities. He contended that the Respondent negotiated with the Claimant for a mutual separation due to the financial difficulties on the part of the company and, he be paid one month salary in lieu of notice. As a result the Claimant handed over his duties and travelled back to India. 9. He contended that the Respondent closed down its factory in March 2023 due to reduced production. It paid the Claimant USD 1186.86 on 13th April 2022. He denied the claim for compensation, accrued leave and certificate of service contending that the Claimant utilized all his leave days and was issued with certificate of service dated 31st August 2021. Therefore he prayed for the suit to be dismissed with costs. **Submissions and issues for determination** 1. The Claimant filed submissions dated 26th March 2026 while the Respondents are dated 4th April 2026. Having considered the submissions, pleadings and the evidence there is no dispute that the Claimant was employed by the Respondent as its CEO from October 2020 to August 2021 when he exited the company. The following are the main issues for determination:- 2. Whether the Claimant was dismissed by the Respondent or he left through mutual agreement. 3. If the answer to (a) above is dismissal, whether the same was unfair and unlawful. 4. Whether the reliefs sought are merited. **Dismissal or mutual** 1. The burden of proof of an allegation lies with the person who alleges. In this case the Respondent alleged under paragraph 5 (viii) of its Memorandum of Response that the Claimant and the company reached an oral mutual agreement to separate due to financial difficulties, and that he be paid one month salary in lieu of notice. 2. The Claimant denied alleged agreement and stated that he was informed of the unilateral decision to terminate his employment by Mr. Parantap Joshi (Respondents Group Chief Operating Officer) on 1st September 2021. The said Mr. Parantap Joshi has not written any statement to rebut the Claimant’s evidence. In the circumstances I consider the statement by one Letensie Tseggai to be hear say since he was not present when the alleged mutual agreement was entered between the Claimant and the Respondent. Consequently, I find and hold that the Claimant has proved on a balance of probability that he never exited the Respondent through mutual agreement, but termination by the Respondent on account of redundancy. **Unfair /unlawful termination** 1. Section 45(2) of the Employment Act provides that:- ***“(2) A termination of employment by an employer is unfair if the employer fails to prove-*** 1. ***That the reason for the termination is valid;*** 2. ***That the reason for the termination is a fair reason-*** 3. ***Related to the employees conduct, capacity or compatibility; or*** 4. ***Based on the operational requirements of the employer; and*** 5. ***That the employment was terminated in accordance with fair procedure.”*** 6. The Claimant averred that his employment was terminated for no valid reason and without following fair procedure. He averred that he was told that the company was closing down due to financial woes but that never happened as it continued in operation. He further averred that he was not given any hearing before the decision to terminate was made. 7. The Respondent witness admitted that the company continued its operation until March 2023, which was more than one and half years from the time when the Claimant exited. However considering the evidence by both sides, It is true that the Respondent was struggling financially even before the Claimant joined it. Therefore, I find financial challenges was a valid ground justifying termination of the Claimant’s services on account of redundancy. 8. I gather support from the case of **Kenya Airways Limited v. Aviation & Allied Workers Union Kenya & 3 Others (Civil Appeal 46 of 2014) [2014] KECA 403 (KLR)**, observed that: - ***“ 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 fair procedure*** ***The decision to declare redundancy has to be that of the employer. In the above New zealand case of G. N. Hale & Son Ltd, it was held that so long as the employer genuinely believed that there was a redundancy situation, then any dismissal was justified, and it was not for the Court, or the union, to substitute their business judgment with that of the employer. The decision to declare redundancy, as I have said, is that of the employer based on purely commercial considerations and not principles such as sustainable development, noble and lofty as it may be.”*** 1. In **Cargill Kenya Ltd v. Mwaka & 3 Others [2021] KECA 115 (KLR),**the Court of Appeal held that:- ***“Thus, redundancy is a legitimate ground for terminating a contract of employment provided that there is a valid and fair reason based on the 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 the abolition of office, job or loss of employment.”*** 1. However, the termination in my view was not done in accordance with a fair procedure. I say so because Section 40(1) of the Employment Act provides a mandatory procedure for carrying out redundancy, thus:- “***(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.*** 1. The above Section emanates from ILO Convention 158 which provides as follows in Article 13:- ***“ (1) When the employer contemplates termination for reason of an economic, technological, structural or similar nature, the employer shall:*** ***Provide the workers representatives concerned, in good time, with relevant information including the reason 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;*** ***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 minimize the terminations and measures to mitigate the adverse effects of any termination on the workers concerned such as finding alternative employment.”*** 1. Having considered the evidence presented by both sides, the above mandatory procedure was ignored and that rendered the termination unfair and unlawful within the meaning of Section 45 of the Employment Act. **Reliefs** 1. In view of the foregoing conclusion the Claimant is entitled to relief under Section 49(1) of the Act, being salary in lieu of notice plus compensation for unfair termination. His contract provided for termination notice of 3 months and therefore I award him the same being USD 5,000 X 3 = USD 15,000. 2. As regards compensation for unfair termination, I award him one month salary, being USD 5,000 considering that he worked for less than one year and he did not cause the termination through misconduct. 3. The claim for leave lacks particulars and it is therefore declined. However the claim for rescheduling return ticket of USD 153.9 and Covid -19 testing of USD 54.6 have been proved by documents and it is granted. Likewise claim for salary for August 2021, being USD 5,000 is allowed because the Respondent has not adduced any documents to rebut the same. 4. The claim for certificate of service must fail because the Respondent as proved that it issued the Claimant with a certificate dated 31st August 2021. Since the suit has succeeded, I award the Claimant costs of the suit. **Conclusion.** 1. I have found that the termination of the Claimants employment was unlawful and unfair within the meaning of Section 45 of the Employment Act. I have further found that he is entitled to some of the reliefs sought. Therefore I enter Judgment for him against the Respondent for payment of the following:- 2. Notice………………………….USD 15,000 3. Compensation…………………USD 5,000 4. Unpaid salary……….USD 5,000 5. Ticket reschedule….USD 153.9 6. Covid-19………USSD 54.6 Total……………USD 20,208 Less paid …….USD 1186.86 Net payable…USD 19021.64 1. The award is subject to statutory deductions. 2. Costs and interest at court rates from the date of the Judgment. **DATED, SIGNED AND DELIVERED VIRTUALLY IN OPEN COURT AT NAIROBI THIS 30TH DAY OF JULY, 2026.** **ONESMUS MAKAU** **JUDGE** **Appearance:** Moindi for Claimant Mwangi for Kaula for Respondent