Kenya Redundancy Law and Processes

Definition

1. The definition of the term Redundancy is contained in Section 2 of the Employment Act, 2007.
2. Redundancy is the loss of employment, by an involuntary means through no fault of an employee. 
3. Redundancy, therefore, involves the termination of employment at the employer’s initiative, where the services of an employee are considered superfluous and the practices commonly known as the abolition of office, job or occupation and loss of employment. Redundancy carries with it legal implications in terms of the individual employment rights arising from redundancy dismissals; and collective labor law rights in connection with information and consultation.
4. Employment law in Kenya identifies the economic rights enshrined in the Constitution of Kenya and has responded to the effect of redundancy on the individual through the law of unfair dismissals, information and consultation obligations.
5. Individuals have the right not to be dismissed unfairly because of redundancy. 

Background

1. Section 40 of the Employment Act requires an employer to meet the procedural requirements before the employer terminates a contract of service on account of redundancy.
2. Before an employer terminates a contract of service on account of redundancy, they must comply with these conditions:
   1. Notify the trade union where the employee is a member of a trade union and the area labor officer. The notice should state the reasons for, and the extent of, the intended redundancy. The notice should be issued not less than a month before the date of the proposed redundancy date of termination;
   2.  Notification to the employee personally in writing and the labor officer where the employee is not a member of a trade union;
   3. Selection Criteria. The employer should consider the seniority in time, the skill, ability, and reliability of each employee affected by the redundancy, in the selection of employees to be declared redundant;
   4. Section 40(1)(c) of the Employment Act requires the employer not to place an employee at a disadvantage due to their membership in the trade union.
   5. Payment by the employer the leave due to an employee who is declared redundant;
   6. Payment of not less than one month’s notice or one month’s wages instead of the one month’s notice to the employee declared redundant; and
   7. Payment of severance pay. The rate is the payment is of not less than fifteen days’ pay for each completed year of service to the employee declared redundant.

Case Law on Notifications

1. An employer must comply with the Notification Conditions, the Redundancy Selection Methodology Conditions and the Payment of terminal dues requirements set out in Section 40 of the Employment Act.
2.  In Thomas De La Rue (K) Ltd v David Opondo Omutelema [2013] eKLR the Court of Appeal confirmed that the required notice to the employee and the labor office is one month.
3. The employer needs to comply with the notification requirements. In Kombo Kai Mtoro v Panal Freighters Ltd Cause no. 158 of 2012 the Industrial Court of Kenya at Mombasa while awarding the damages sought by the Claimant noted that the employer did not inform the local Labor Officer about the declaration of redundancy of the Claimant. The employer did not also copy the termination letter to the local Labor Officer. Secondly, the court found that the dismissal was unprocedural and substantively unfair.
4. The Court in Aviation and Allied Workers Union v Kenya Airways Ltd & 3 others [2012] eKLR the initial notice stated its intention to alert the parties to the situation. This notice is not the same thing as a notice of termination of employment. The employer, at this point, has not made any decision and is opening discussions on a possible redundancy situation.
5. An employer must also ensure that the selection of employees to be declared redundant adopted has due regard to seniority in time, skill, ability and reliability of each employee of the particular class of employees affected by the redundancy.

Timelines for the redundancy process

1. The Kenyan law does not prescribe deadlines for the redundancy process.
2. The employer must, however, comply with the notification requirements within the stipulated time.
3. The employer should give the employees a reasonable opportunity to consider the proposal and time to respond and their response given proper consideration.
4. The notice of termination comes after all the processes have been exhausted, and a decision made.

Explaining redundancy to staff

1. The Kenyan law does not prescribe the extent of explanations, the explanations to staff must be as detailed as possible and within fair labor practices.
2. It should be clear that positions and not employees have become redundant.
3. Communication should not be a decision that is initially communicated by the employer, but a proposal that ushers in constructive social dialogue.

Consultations

1. Consultation involves the right to be heard, and it is part of the reason for fair labor practices contained in Article 41 of the Constitution of Kenya. Discussion is also the main principle encompassed in the Labor Relations Act, 2007.
2. Concerning the warning of an impending redundancy, there is a greater emphasis on the need for a severe warning. The record consideration is consultation.
3. A collective consultation does not mean that an employer will avoid an individual discussion with each employee being declared redundant. 
4. Employees affected by the redundancy should be consulted individually and informed that their positions are at risk of redundancy and also allowed the chance to challenge the process and highlight the flaws in it.
5. The employer should discuss the selection criteria with the employee at the consultation stage.
6. In Kenya Airways Limited v Aviation & Allied Workers Union Kenya & 3 others [2014] eKLR, a majority of the Court of Appeal agreed with the lower court that consultation was mandatory.
7. It is, therefore, imperative for an employer to engage the employees before terminating them on account of redundancy.
8. In Industrial Court of Kenya Cause No. 390 of 2010, David Omutelema v. Thomas De La Rue, the Industrial Court (now Employment & Labor Relations Court) stated that consultations must be with an open mind. The employees affected by the redundancy should be encouraged to express their views individually. The employer should carefully consider the feedback from all stakeholders before the making of the decision. Accordingly, the notice of termination comes after all other processes have been exhausted, and a decision made.
9. The courts will determine whether in fact, and the degree of consultations with an employee or union is so inadequate as to render a dismissal unfair. In Eaton Ltd v King & Ors (No. 2) [1998] IRLR 686, the Court of Session held that there was no consultation with the unions and employees while formulating the selection criteria. The Court of Session concluded that an employer is not always, entitled to call evidence to support a reduction of compensation on the basis that the employee would have been dismissed.
10. Redundancy is an internal process and therefore the employee representative during the consultation process should be a fellow employee of the affected employees’ choice, and therefore it is not possible for employees to engage external legal counsel at this point.

The Redundancy Selection Methodology

1. It is probably in the area of selection that most employers find difficulty and are found liable for unfair dismissal. The employer must make sure that the selection is fair and objective.
2. There may be more than one fair method of selection for redundancy; the issue for the employer will be whether the procedure which is adopted is reasonable. In the absence of such evidence, a court may well find the dismissal unfair.
3. The criteria should be objective, not subjective because objectivity is central to the selection criteria.
4. The court in Aviation and Allied Workers Union v Kenya Airways Ltd & 3 others [2012] eKLR, stated that an employer should avoid subjective criteria. 
5. For instance, where there are no measures of performance or attitude the employer can rely on, performance and attitude will be subjective criteria. Similarly suspected misconduct which has been addressed by the employer is not a proper criterion. 
6. Objectivity is vital because the redundancy process is about positions, not people. For instance, consideration of pending disciplinary issues, the presence of valid warnings in the employee’s file and documented performance are objective selection criteria. 
7. In Kenya Union of Domestic, Hotel, Education, Institutions and Allied Workers [KUDHEIHA] v. Rabai Road Primary School Industrial Court of Kenya Cause Number 231 of 2010, Justice I.E.K Mukunya found that while the employer had correctly terminated the contract of the employee for economic reasons the employer failed on fairness and awarded compensation. 
8. It is vital that while engaging in this process, the selection criteria is fair and procedural and the process followed should be as set out in Sections 45 and 40 of the Employment Act respectively, failure to which the employees will take legal action against the employer for unfair termination.

Redundancy & Discrimination

1. Employers should not discriminate directly or indirectly, against an employee or prospective employee or harass an employee or prospective employee.
2. Discrimination may arise in during the recruitment, training, promotion, in the terms and conditions of employment, termination of employment or any other matters arising out of the employment.
3. The Employment Act,2007 provides that nationality, race, colour, sex, pregnancy, language, religion, political or other opinions, ethnic or social origin, disability, marital status or HIV status are grounds of discrimination.
4. The court in Aviation and Allied Workers Union v Kenya Airways Ltd & 3 others [2012] eKLR while finding that Kenya Airways had discriminated on the grounds of race and nationality stated that Kenya Airways did not explain what the new business model was in which the selected employees could not fit.
5. The employer must ensure the selection criteria is objective and not subjective and within the provisions of Section 5 so that claims for discrimination do not arise.

Redundancy and Unfair Dismissal

1. Any employee dismissed because of redundancy has the right not to be unfairly dismissed. Common complaints concern failure to inform and consult, unfair selection, and failure to consider alternative employment.
2. It is necessary for an employer to establish valid reason or reasons for termination, and demonstrate that it followed a fair procedure as required under Section 43 and 45 of the Employment Act, 2007. 
3. A fair redundancy procedure involves notification to employee, their trade union, and the government of the intended redundancy.
4. In unfair dismissal claims under redundancy, it is for the employer to prove that the dismissal was because of redundancy.

Redundancy in the COVID-19 situation

1. We recently published an article on the Legal Implications of the COVID-19 Pandemic here https://www.bmmusau.com/kenya-legal-implication-of-the-covid-19-pandemic/.
2. The Government of Kenya has not, as at the date of this publication, advanced any support for job retention to struggling employers.
3. Employers adversely affected by the COVID-19 are now forced to reduce the size of their workforce in order to survive.
4. The legal provisions on redundancy apply in the event an employer decides to pursue a redundancy programme.
5. The employers will be required to follow the correct fair procedure and adhere to the minimum conditions of redundancy set out in Kenya’s employment laws discussed.

Susan Mutinda

Susan Mutinda is a lawyer and an Articled Clerk with the law firm of B M Musau & Co., Advocates, a position she has held since May 2013.

Her work encompasses drafting court documents and giving legal advice to clients in both civil and criminal matters as well as facilitating alternative dispute resolution mechanisms.