Background
1 At all material times, the Claimant was an employee of the Respondent as a Sales Manager until her employment was terminated in May 2021. Contending that the termination was unfair and unlawful, she sued the Respondent herein seeking the reliefs:
I. A declaration that the termination of her employment by the Respondent violated Section 40 of the Employment Act and was therefore unfair and unlawful.
II. Salary for the month of June,2020, KShs. 234,434.00.
III. Twelve months’ salary compensation for wrongful/illegal termination, KShs. 2,813,208.00.
IV. An order for the Respondent to issue the Claimant with a certificate of service.
V. House allowance at KShs. 1,311,750.00.
VI. Costs of the suit.
VII. Interest.
2 The Respondent resisted the Claimant’s claim, through a statement of response by which it denied the Claimant's cause of action and entitlement to the reliefs sought.
3 Per this Court’s Procedure Rules, the Claimant filed a Reply to the response by the Respondent. At the close of pleadings, the matter became ripe for hearing.
4 After hearing the parties on their respective cases, this Court directed them to file written submissions. They obliged. The submissions are on record.
The Claimant’s case.
5 The Claimant adopted her witness statement herein filed as part of her evidence in chief, and produced the documents under the list dated 3rd August 2021 as her documentary evidence.
6 She stated that she first entered the employment of the Respondent on 5th January 2017, as a Sales Manager, with a monthly salary of KShs. 434.
7 On 15th May 2020, she received a letter dated 11th May 2020 from the Group Human Resources Manager informing her that her position in the Company had been declared redundant.
8 In the termination letter, the Respondent undertook to pay her terminal dues, calculated as salary for May, one month's pay, and severance pay for her completed years of service.
9 On the same day she received the termination letter, she was offered a job by the Respondents with higher pay. According to the job offer, she was to work as a Project Manager for transformation on a six-month contract. The job description for this role included the same responsibilities and duties as those she had while employed by the Respondent in her previous role.
10 She signed the termination letter, confident she would remain employed on contract by the Respondents. However, this never happened because the Respondent never issued an official letter.
11 The alleged redundancy wasn’t genuine; if her position was truly redundant, how could she then be offered a new role on a contract basis with the same responsibilities and duties?
12 The Respondent’s action was driven by bad faith. After her employment was terminated due to redundancy in February 2021, the Respondent hired PG [initials of name] for her previous position at a monthly salary of KShs. 800,000.
13 The termination was not in conformity with the procedural requirements of the Employment Act. The notice issued was less than that prescribed under the Act. There was no valid criterion used to justify her termination of employment due to redundancy.
14 Throughout her employment, the Respondent neither provided her with reasonable accommodation nor paid her house allowance.
The Respondent’s Case.
15 The Respondent presented Sarah Kitheka to testify on its behalf. The witness stated that the Claimant was employed in January 2016, and at the termination of her employment, she worked as a Sales Manager
16 In March 2020, the Government of Kenya put in place several measures to contain the spread of COVID-19, which negatively affected businesses all over the country, including the Respondent’s Motor Vehicle business.
17 The Respondent experienced a significant drop in vehicle sales during the period. As a result, it decided to reorganise itself to achieve business efficacy, with the result that some positions were to be rendered redundant.
18 On 1st May 2020, the Respondent issued a Memo to all the employees of the Respondent informing them of the impending redundancy owing to the effects of COVID-19 that would likely affect 28 employees of the Respondent.
19 A notice was subsequently issued to the Labour Officer as required by law. The notice to the employees and the Labour Officer contained the reasons and extent of the redundancies as required by law.
20 The office held by the Claimant [ Sales Manager] was earmarked for redundancy, and being affected, she was effectively consulted through her line Manager and various alternatives explored collectively, including re-assignment to a different post, but the Claimant declined.
21 On 11th May 2020, the Claimant was issued with a redundancy notification, indicating that her position was earmarked for redundancy, effective 31st May 2020. In the notice, the Respondent set out the Claimant’s terminal benefits.
22 The Claimant was effectively declared redundant on 31st May, 2020 and does exist to date. The Respondent never employed any other person to take over her said role.
23 It was asserted that the Claimant’s claim for house allowance is not maintainable as it contravenes the mandatory provisions of section 90 of the Employment Act.
Analysis and Determination.
24 There is no dispute that at all material times, the Claimant was an employee of the Respondent; furthermore, her employment was terminated at the Respondent’s initiative due to redundancy. The Claimant charged that the termination was not procedurally fair, and the reason for it was camouflaged.
25 I have carefully considered the pleadings, oral and documentary evidence, and submissions by both parties, and the following issues emerge for determination:
I. Whether the termination of the Claimant’s employment was fair.
II. Whether the Claimant is entitled to the reliefs sought.
a. Whether the termination of the Claimant’s employment was fair.
26 There is no dispute that the Claimant’s employment was terminated on the grounds of redundancy. However, there is considerable controversy regarding whether it was both procedurally and substantively fair.
27 Redundancy is defined in Section 2 of the Employment Act and the Labour Relations Act, 2007 as:
“The loss of employment, occupation, job or career by involuntary means through no fault of the employee involving termination of employment at the initiative of the employer, where the services of an employee are superfluous, and the practices commonly known as abolition of office, job or occupation and loss of employment.”
28 Termination due to redundancy falls under no-fault terminations. The employer typically initiates it without any fault or action on the part of the employee. In my view, this explains why the legislature considered it essential to include a section in the Employment Act, 2007, that provides detailed procedures and conditions the employer must follow and consider when contemplating and executing such a termination.
29 The Claimant’s Counsel submitted that Section 40 of the Employment Act dicates that any employer desirous of engaging in the redundancy process must issue the requisite notices, namely;
I. A general notice of intention of redundancy to the employees; and
II. A notice to each affected employee notifying them of the intention to declare their jobs redundant. Like the general notice the also subsists for a minimum period of one [1] month.
30 To support this point, reliance was placed on the decision in Kenya Airways Limited vs Allied Workers Union of Kenya and 3 others [2014] eKLR and Thomas De La Rue [k] Ltd vs David Opondo Omutelema [2013] eKLR.
31 The Respondent’s Counsel submitted that in compliance with Section 40 of the Act, the Respondent issued a general redundancy notice to employees dated 1st May 2020, a notice to the Labour Officer dated 8th May 2020, and a redundancy notice dated 11th May 2020.
32 Counsel further submitted that after the notices were issued, consultations between the Claimant and the Respondent followed. As such, the termination was procedurally fair.
33 Both Counsel for the Claimant and the Respondent, in their submissions, tend to suggest that two redundancy notices must be issued under section 40, a general redundancy notice to the affected employees and a specific redundancy notice to individual employees.
34 At this point, it becomes imperative to state that the Section provides;
“40. Termination on account of redundancy
(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.
(2) Subsection (1) shall not apply where an employee's services are terminated on account of insolvency as defined in Part VIII in which case that Part shall be applicable.
(3) The Cabinet Secretary may make rules requiring an employer employing a certain minimum number of employees or any group of employers to insure their employees against the risk of redundancy through an unemployment insurance scheme operated either under an established national insurance scheme established under written law or by any firm underwriting insurance business to be approved by the Cabinet Secretary.”
35 A clear reading of the provision will certainly reveal that issuance of notice is provided for under subsection (1) (a) and (b). Whether issuable under sub-section [1] [a] or sub-section[b], depends on the circumstances of each case, that is, whether the affected employee is a member of a trade union or not. Between sub-sections [c] – [f], there is no provision for issuance of any other notice besides the 30-day notice contemplated under sub-sections 1[a] and [b]. There isn’t any room available for an inference that there is a requirement for issuance of a second notice.
36 I am cognizant of the fact that in practice, there has been confusion as regards whether the section contemplates the issuance of two different notices at different intervals, and indeed, there have been decisions suggesting that the contemplation of the provision is to the effect.
37 In my view, the confusion has since been settled. The law on the requisite notices issued under Section 40 of the Act is now trite. In the case of Cargill Kenya Limited v Mwaka & 3 others [2021] KECA 115 [KLR] the Court of Appeal held;
“In this respect, it is notable that a plain and contextual reading of subsection 1[f] shows that its express objective and purpose is the payment required to be made to employees affected by redundancy, and not the issuance of notice. It is also notable that the legislative intention from the arrangement and content of the enactments in Section 40 sub-section [1][d] to [g] was the provision of payments to be made to affected employees in redundancy, and section 1[f] can only be continued in that context.
Lastly, it would be illogical to give a literal meaning to the sub-section of payment of one month’s notice, and it would also be straining it too far to give it a meaning of one month’s notice of termination before redundancy, in trying to resolve any grammatical ambiguity in the subsection.
It is our finding that the above interpretive factors discount a construction that a termination notice is required by subsection [1][f], or within the timelines held by the trial Judge. While such notice may eventually require to be given in a termination on account of redundancy, it is definitely not one of those conditions to be met under section 40 subsection [1][f], before the redundancy ”
38 Equally, in the case of The German School Society & another v Ohany & another (Civil Appeal 325 & 342 of 2018 (Consolidated) [2023] KECA 894 (KLR) (24 July 2023) (Judgment), the Court of Appeal emphasised that Section 40 of the Employment Act contemplates one notice. Consequently, to assert that two notices are supposed to be made, as did counsel for the parties, is a misstatement.
39 The Respondent argues that it issued a redundancy notice under its letter dated 11th May 2020. There isn’t any doubt that the letter was indeed issued to the Claimant. The question that springs up is whether it was truly in the character of a notice contemplated under subsection [1][b] mentioned above. The letter read in part:
“The evolving COVID -19 pandemic has greatly impacted the business actualization of its budgets despite efforts made to contain the situation, we have experienced a significant drop on new vehicles sales as well as aftersales business.
Given the above, and after intensive deliberations with senior management and the parent company, it has been decided that there is no other viable option but to reorganise in line with business needs. For this reason, we wish to notify you that your role has been declared redundant with effect from 31st May 2020.
You are expected to communicate the handover of any Company property in your possession to your respective Line Manager, Medical Insurance Cards for yourself and your family members [if any] to the respective Departments and thereafter contact Human Resources for payment of your terminal due, which will be tabulated as follows……………….
On behalf of the Management of this Company we would like to acknowledge the invaluable services that you have provided to the company in the past 4.35 years and take this opportunity to wish you well in ………………….”
40 I have carefully read the letter, and what it was communicating. In my view, it communicated two things;
a. That a decision had been made to declare the Claimant redundant as the Respondent was no longer able to retain her.
b. Her last day of work was 31st May 2020.
41 Clearly, the letter didn’t communicate an intention to carry out a redundancy process, but a decision that had been made to terminate her employment on the grounds of redundancy. I take the clear view that the letter dated 11th May 2020 was not a notice of an intended redundancy but a termination notice.
42 This Court hasn’t lost sight of the fact that prior to issuing the Claimant with the notice dated 11th May 2020, the Respondent had issued the Labour Office with a Notice through its letter dated 8th May 2020. The letter read:
“The evolving COVID-19 pandemic has greatly impacted the business in the actualization of its budgets despite efforts made to contain the situation, we have experienced a significant drop on new vehicle sales as well as aftersales business.
Due to the above, and the intensive deliberations with senior management and the parent Company, it has been resolved that it is necessary for the company to re-organize itself in line with its business needs.
In line with this, the company will need to reduce its staffing levels to meet its business needs. A number of positions will also cease to exist. This means that it will become necessary to declare Twenty-Eight [28] employees redundant.
In declaring the employees redundant, every measure will be taken to ensure compliance with the requirements of Section 40 of the Employment Act, the individual contracts of employment and the Collective Bargaining Agreement with the Amalgamated Union of Kenya Metal Workers.
Pursuant to section 40[1][b] of the Employment Act of 2007, whereby notify you that we intend to implement a redundancy programme which will be carried out within this month.
We hope that this correspondence clarifies our intentions to right size given the exceptional economic reasons occasioned by the pandemic as earlier highlighted. ………………..”
43 This sounded like a true redundancy notice contemplated under section 40[1], only that it wasn’t copied to the Claimant.
44 A true redundancy notice should be that which births a consultative process on the intended redundancy, between the employer and the employee[s] to be affected. No doubt, the purported notice dated 11th May 2020, did not allow space for any consultations. In its tone, it didn’t set the stage for consultation which is a vital component of a fair redundancy process. On the nature of a redundancy notice as a stage setter for consultations; that consultation in a redundancy process is a legal imperative in Kenya; and the purpose of consultation, the Court of Appeal held in The German Society School (Supra), stated thus;
“56. A notice to the employee/trade union/labour officer opens up the door for a consultative process with the key stakeholders. The Court of Appeal in Kenya Airways Limited v Aviation & Allied Workers Union Kenya & 3 Others (2014) eKLR held:
a) Consultation is implicit in the Employment Act under the principle of fair play;
b) Consultation gives an opportunity for other avenues to be considered to avert or to minimize the adverse effects of terminations;
c) Consultations are meant for the parties to put their heads together and is imperative under Kenyan law;
d) Consultations have to be a reality not a charade;
e) Opportunity must be given for the stakeholders to consider;
f) Stakeholders must have and keep an open mind to listen to suggestions, consider them properly and then only then decide what is to be done; and
g) Consultation must not be cosmetic.
57. In essence, consultation is an essential part of the redundancy process and ensures that there is substantive fairness. The employer should ensure that it carries out the process as fair as possible and that all mitigating factors are taken into consideration. A reading of the record shows that the respondent was served with a redundancy notice and asked to proceed for a one month’s leave. The trial court found that the redundancy was unfair and irregular for failure to give adequate notice and thereby not giving consultation a chance.
60. However, on the question whether the notice gave consultations and dialogue a chance, we find that while the requirement for consultation is not expressly provided for in section 40 of the Employment Act, this requirement is implied, as the main reason and rationale for giving the notices in section 40(1) (a) and (b) to the unions and employees of an impending redundancy where applicable.”
45 In his evidence, the Respondent contended that there were consultations before the Claimant was let go. The Claimant refused to accept an alternative role that was offered to her. I have carefully considered the evidence, and there isn’t anything that suggests the presence of the alleged consultations. One cannot tell when the consultations took place. If indeed they took place, then it would be expected that they did before the letter of 11th May 2020 was served on the Claimant, and the letter could reasonably refer to the consultations.
46 The Claimant stated that on handing the letter to her, the Respondent offered her another position on a contract basis, but never actualised the offer as they didn’t give her a contract of employment. According to her, the offer didn’t flow from any consultations. The Respondent didn’t provide any evidence to show that it was a product of consultations, and that the reason the offer was not actualised was because the Claimant refused to accept the same.
47 I am persuaded there were no consultations that ensued after the Respondent issued the letters mentioned hereinabove at any time at all.
48 Under section 40 of the Employment Act, the notice period required for notices to the employee, the employee’s trade union, and the Labour officer is 30 days. None of them observed this requirement.
49 Based on the above premises, I conclude that the Claimant’s employment was terminated unfairly. The letter dated 11th May 2020 served as a notice of termination, not a redundancy notice as defined under section 40 [1][b] of the Employment Act. Additionally, the notices given to both the Claimant and the Labour Officer did not comply with the required 30-day statutory notice period.
50 I now turn to consider whether the termination was substantively fair. The Court in Kenya Airways Ltd and Aviation & Allied Workers Union of Kenya & 3 Others Civil Appeal No. 46 of 2013 held that even in instances of termination of employment due to redundancy, the employer must have a valid and fair reason and follow fair procedures in line with Section 45 of the Act. The Court stated: -
“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 have been rendered superfluous or that redundancy has resulted in the abolition of the office, job or loss of employment—”.
51 The above holding indicates that all provisions of the Employment Act concerning substantive fairness in employee termination apply even in cases of redundancy. Specifically, this includes Section 43, which requires proof of the reasons for termination; Section 45(2), which demands demonstration that the reason for termination was valid and fair; and Section 47(5), which states that the termination must be lawful and justified.
52 In the present case, the Respondent asserted that the redundancy arose from the alleged decline in new vehicle sales and aftersales business. In a situation where the substantive justification for terminating the Claimant’s employment was heavily contested, the Respondent failed to provide any evidence demonstrating that sales of new motor vehicles and after-sales services had dwindled to such an extent that her continued employment was no longer tenable. What they were selling initially and what they sold after COVID-19 emerged are vital questions that the Respondent failed to answer. Consequently, I am not convinced that her termination was fair and valid.
53 The letter to the Labour office indicated that 28 roles would be affected by the redundancy. No specifics about those roles were provided. The pleadings and evidence from the Respondent also remained silent on which roles were allegedly impacted. This unexplained silence, especially considering that the notification to the Labour Officer typically aims to involve the Office in seeking ways to avoid or mitigate the redundancy's impact on the affected employees—along with the employees and the employer—leads this Court to be persuaded by the Claimant that she was individually targeted and that the alleged redundancy was a sham.
54 If indeed there were 28 roles affected, what was the criterion for selecting the affected? What was the criterion for choosing the Claimant? The Respondent didn’t bring out any evidence before this Court to demonstrate the same.
55 For the foregoing premises, I find that the termination of the Claimant’s employment on account of redundancy was substantively unfair.
(b) Whether the Claimant is entitled to the reliefs sought.
56 Having held that the Claimant’s employment was unfairly terminated, I now turn to consider the matter of the reliefs sought.
57 The Claimant only seeks damages for unfair termination, and submits that an award of twelve (12) months’ gross salary as compensation would be sufficient.
58 The Respondent submits that the Claimant is not entitled to an award of compensation equivalent to 12 months’ gross salary as the termination of his employment was both substantively and procedurally fair, and he was capable of securing alternative employment.
59 Under Section 49 (1) (c) of the Employment Act 2007, this Court is granted the authority to award compensatory relief to an employee who has successfully challenged the employer's decision to terminate their employment on the ground that it was unfair. However, it is important to note that the exercise of this power is discretionary and depends on the circumstances of each case.
60 I have carefully considered how the Claimant’s employment was terminated and to be specific with non-conformity with the dictates of procedural and substantive fairness in matters, termination of employment on grounds of redundancy, therefore ignorance of the fact that as the termination was under the category of no-fault terminations absolute fairness was required; the length of his service being approximately 4.35 years; and that the termination was not a result of her fault, and hold that he is entitled to the compensatory relief, six (6) months’ gross salary.
61 The Claimant asserted that at all material times, the Respondent didn’t pay her house allowance, and sought compensation for the same. The Respondent argued that the unpaid house allowance is a continuous injury claim and therefore time-barred under Section 90 of the Employment Act.
62 Section 90 of the Employment Act provides;
“Notwithstanding the provisions of Section 4[1] of the Limitation of Actions Act, no civil action or proceedings based or arising out of this Act or a contract of service in general shall lie or be instituted unless it is commenced within three years next after the act, neglect, or default complained of or in the case of a continuing injury or damage within twelve months next after the cassation thereof.”
63 Undeniably, a claim anchored on a continuing injury must be filed within 12 months after cessation of the Injury per Section 90 of the Employment Act. See GS Security Services [k] Limited v Joseph Kamau&468 others [2018] eKLR. However, the question that arises in this matter, which requires determination, is whether the non-payment of a house allowance by an employer over time constitutes a continuous injury.
64 In the case of The German School Society [supra], the Court of Appeal stated;
“36. Locally, there appears to be no paucity of court decisions defining the phrase “continuing injury”. The Employment Act does not define the phrase. We are alive to the dictate in Article 259 of the Constitution, which requires courts to advance the development of the law. We shall attempt to judicially define what constitutes " a continuing injury.’’
37. The principles underlying continuing wrongs and recurring/ successive wrongs have been applied to service law disputes. “A continuing wrong” refers to a single wrongful act which causes a continuing injury. Recurring / successive wrongs are those which occur periodically, each wrong giving rise to a distinct and separate cause of action. The Supreme Court of India in Balakrishna S.P. Waghmare v Shree Dhyaneshwar Maharaj Sansthan, AIR 1959 SC 798, explained the concept of continuing wrong [in the context of the Indian Limitation Act]as follows:
“ It is the very essence of a continuing wrong that it is an act which creates a continuing source of injury and renders the doer of the act responsible and liable for the continuance of the said injury. If the wrongful act causes an injury which is complete, there is no continuing wrong even though the damage resulting from the act may continue. If, however, a wrongful act is of such a character that the injury caused by it itself continues, then the act constitutes a continuing wrong. In this connection, it is necessary to draw a distinction between the injury caused by the wrongful act and what may be described as the effect of the said injury.”
65 Considering the foregoing decision of the Court of Appeal and the decisions it cited from other jurisdictions, I am convinced that a continuous non-payment of house allowance to an employee falls under the realm of ‘continuing injury.’’ For purposes of Section 90 of the Employment Act, the cessation of the injury in the context of the instant matter occurred on 31st May 2020. The Claim herein wasn’t filed within twelve months of this date. As a result, I hold that the claim for house allowance was time-barred.
66 In the upshot, judgment is hereby entered for the Claimant in the following terms: -
a. A declaration that the termination of the Claimant’s employment on account of redundancy was unfair.
b. Compensation for unfair termination pursuant to Section 49[1][c] of the Employment Act, KShs, 1,406,604.
c. Interest on (b) above at court rates from the date of this Judgment until payment in full.
d. The Respondent shall bear the costs of this suit.
Read, signed, and delivered virtually in Mombasa on July 17, 2025.
1 At all material times, the Claimant was an employee of the Respondent as a Sales Manager until her employment was terminated in May 2021. Contending that the termination was unfair and unlawful, she sued the Respondent herein seeking the reliefs:
I. A declaration that the termination of her employment by the Respondent violated Section 40 of the Employment Act and was therefore unfair and unlawful.
II. Salary for the month of June,2020, KShs. 234,434.00.
III. Twelve months’ salary compensation for wrongful/illegal termination, KShs. 2,813,208.00.
IV. An order for the Respondent to issue the Claimant with a certificate of service.
V. House allowance at KShs. 1,311,750.00.
VI. Costs of the suit.
VII. Interest.
2 The Respondent resisted the Claimant’s claim, through a statement of response by which it denied the Claimant's cause of action and entitlement to the reliefs sought.
3 Per this Court’s Procedure Rules, the Claimant filed a Reply to the response by the Respondent. At the close of pleadings, the matter became ripe for hearing.
4 After hearing the parties on their respective cases, this Court directed them to file written submissions. They obliged. The submissions are on record.
The Claimant’s case.
5 The Claimant adopted her witness statement herein filed as part of her evidence in chief, and produced the documents under the list dated 3rd August 2021 as her documentary evidence.
6 She stated that she first entered the employment of the Respondent on 5th January 2017, as a Sales Manager, with a monthly salary of KShs. 434.
7 On 15th May 2020, she received a letter dated 11th May 2020 from the Group Human Resources Manager informing her that her position in the Company had been declared redundant.
8 In the termination letter, the Respondent undertook to pay her terminal dues, calculated as salary for May, one month's pay, and severance pay for her completed years of service.
9 On the same day she received the termination letter, she was offered a job by the Respondents with higher pay. According to the job offer, she was to work as a Project Manager for transformation on a six-month contract. The job description for this role included the same responsibilities and duties as those she had while employed by the Respondent in her previous role.
10 She signed the termination letter, confident she would remain employed on contract by the Respondents. However, this never happened because the Respondent never issued an official letter.
11 The alleged redundancy wasn’t genuine; if her position was truly redundant, how could she then be offered a new role on a contract basis with the same responsibilities and duties?
12 The Respondent’s action was driven by bad faith. After her employment was terminated due to redundancy in February 2021, the Respondent hired PG [initials of name] for her previous position at a monthly salary of KShs. 800,000.
13 The termination was not in conformity with the procedural requirements of the Employment Act. The notice issued was less than that prescribed under the Act. There was no valid criterion used to justify her termination of employment due to redundancy.
14 Throughout her employment, the Respondent neither provided her with reasonable accommodation nor paid her house allowance.
The Respondent’s Case.
15 The Respondent presented Sarah Kitheka to testify on its behalf. The witness stated that the Claimant was employed in January 2016, and at the termination of her employment, she worked as a Sales Manager
16 In March 2020, the Government of Kenya put in place several measures to contain the spread of COVID-19, which negatively affected businesses all over the country, including the Respondent’s Motor Vehicle business.
17 The Respondent experienced a significant drop in vehicle sales during the period. As a result, it decided to reorganise itself to achieve business efficacy, with the result that some positions were to be rendered redundant.
18 On 1st May 2020, the Respondent issued a Memo to all the employees of the Respondent informing them of the impending redundancy owing to the effects of COVID-19 that would likely affect 28 employees of the Respondent.
19 A notice was subsequently issued to the Labour Officer as required by law. The notice to the employees and the Labour Officer contained the reasons and extent of the redundancies as required by law.
20 The office held by the Claimant [ Sales Manager] was earmarked for redundancy, and being affected, she was effectively consulted through her line Manager and various alternatives explored collectively, including re-assignment to a different post, but the Claimant declined.
21 On 11th May 2020, the Claimant was issued with a redundancy notification, indicating that her position was earmarked for redundancy, effective 31st May 2020. In the notice, the Respondent set out the Claimant’s terminal benefits.
22 The Claimant was effectively declared redundant on 31st May, 2020 and does exist to date. The Respondent never employed any other person to take over her said role.
23 It was asserted that the Claimant’s claim for house allowance is not maintainable as it contravenes the mandatory provisions of section 90 of the Employment Act.
Analysis and Determination.
24 There is no dispute that at all material times, the Claimant was an employee of the Respondent; furthermore, her employment was terminated at the Respondent’s initiative due to redundancy. The Claimant charged that the termination was not procedurally fair, and the reason for it was camouflaged.
25 I have carefully considered the pleadings, oral and documentary evidence, and submissions by both parties, and the following issues emerge for determination:
I. Whether the termination of the Claimant’s employment was fair.
II. Whether the Claimant is entitled to the reliefs sought.
a. Whether the termination of the Claimant’s employment was fair.
26 There is no dispute that the Claimant’s employment was terminated on the grounds of redundancy. However, there is considerable controversy regarding whether it was both procedurally and substantively fair.
27 Redundancy is defined in Section 2 of the Employment Act and the Labour Relations Act, 2007 as:
“The loss of employment, occupation, job or career by involuntary means through no fault of the employee involving termination of employment at the initiative of the employer, where the services of an employee are superfluous, and the practices commonly known as abolition of office, job or occupation and loss of employment.”
28 Termination due to redundancy falls under no-fault terminations. The employer typically initiates it without any fault or action on the part of the employee. In my view, this explains why the legislature considered it essential to include a section in the Employment Act, 2007, that provides detailed procedures and conditions the employer must follow and consider when contemplating and executing such a termination.
29 The Claimant’s Counsel submitted that Section 40 of the Employment Act dicates that any employer desirous of engaging in the redundancy process must issue the requisite notices, namely;
I. A general notice of intention of redundancy to the employees; and
II. A notice to each affected employee notifying them of the intention to declare their jobs redundant. Like the general notice the also subsists for a minimum period of one [1] month.
30 To support this point, reliance was placed on the decision in Kenya Airways Limited vs Allied Workers Union of Kenya and 3 others [2014] eKLR and Thomas De La Rue [k] Ltd vs David Opondo Omutelema [2013] eKLR.
31 The Respondent’s Counsel submitted that in compliance with Section 40 of the Act, the Respondent issued a general redundancy notice to employees dated 1st May 2020, a notice to the Labour Officer dated 8th May 2020, and a redundancy notice dated 11th May 2020.
32 Counsel further submitted that after the notices were issued, consultations between the Claimant and the Respondent followed. As such, the termination was procedurally fair.
33 Both Counsel for the Claimant and the Respondent, in their submissions, tend to suggest that two redundancy notices must be issued under section 40, a general redundancy notice to the affected employees and a specific redundancy notice to individual employees.
34 At this point, it becomes imperative to state that the Section provides;
“40. Termination on account of redundancy
(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.
(2) Subsection (1) shall not apply where an employee's services are terminated on account of insolvency as defined in Part VIII in which case that Part shall be applicable.
(3) The Cabinet Secretary may make rules requiring an employer employing a certain minimum number of employees or any group of employers to insure their employees against the risk of redundancy through an unemployment insurance scheme operated either under an established national insurance scheme established under written law or by any firm underwriting insurance business to be approved by the Cabinet Secretary.”
35 A clear reading of the provision will certainly reveal that issuance of notice is provided for under subsection (1) (a) and (b). Whether issuable under sub-section [1] [a] or sub-section[b], depends on the circumstances of each case, that is, whether the affected employee is a member of a trade union or not. Between sub-sections [c] – [f], there is no provision for issuance of any other notice besides the 30-day notice contemplated under sub-sections 1[a] and [b]. There isn’t any room available for an inference that there is a requirement for issuance of a second notice.
36 I am cognizant of the fact that in practice, there has been confusion as regards whether the section contemplates the issuance of two different notices at different intervals, and indeed, there have been decisions suggesting that the contemplation of the provision is to the effect.
37 In my view, the confusion has since been settled. The law on the requisite notices issued under Section 40 of the Act is now trite. In the case of Cargill Kenya Limited v Mwaka & 3 others [2021] KECA 115 [KLR] the Court of Appeal held;
“In this respect, it is notable that a plain and contextual reading of subsection 1[f] shows that its express objective and purpose is the payment required to be made to employees affected by redundancy, and not the issuance of notice. It is also notable that the legislative intention from the arrangement and content of the enactments in Section 40 sub-section [1][d] to [g] was the provision of payments to be made to affected employees in redundancy, and section 1[f] can only be continued in that context.
Lastly, it would be illogical to give a literal meaning to the sub-section of payment of one month’s notice, and it would also be straining it too far to give it a meaning of one month’s notice of termination before redundancy, in trying to resolve any grammatical ambiguity in the subsection.
It is our finding that the above interpretive factors discount a construction that a termination notice is required by subsection [1][f], or within the timelines held by the trial Judge. While such notice may eventually require to be given in a termination on account of redundancy, it is definitely not one of those conditions to be met under section 40 subsection [1][f], before the redundancy ”
38 Equally, in the case of The German School Society & another v Ohany & another (Civil Appeal 325 & 342 of 2018 (Consolidated) [2023] KECA 894 (KLR) (24 July 2023) (Judgment), the Court of Appeal emphasised that Section 40 of the Employment Act contemplates one notice. Consequently, to assert that two notices are supposed to be made, as did counsel for the parties, is a misstatement.
39 The Respondent argues that it issued a redundancy notice under its letter dated 11th May 2020. There isn’t any doubt that the letter was indeed issued to the Claimant. The question that springs up is whether it was truly in the character of a notice contemplated under subsection [1][b] mentioned above. The letter read in part:
“The evolving COVID -19 pandemic has greatly impacted the business actualization of its budgets despite efforts made to contain the situation, we have experienced a significant drop on new vehicles sales as well as aftersales business.
Given the above, and after intensive deliberations with senior management and the parent company, it has been decided that there is no other viable option but to reorganise in line with business needs. For this reason, we wish to notify you that your role has been declared redundant with effect from 31st May 2020.
You are expected to communicate the handover of any Company property in your possession to your respective Line Manager, Medical Insurance Cards for yourself and your family members [if any] to the respective Departments and thereafter contact Human Resources for payment of your terminal due, which will be tabulated as follows……………….
On behalf of the Management of this Company we would like to acknowledge the invaluable services that you have provided to the company in the past 4.35 years and take this opportunity to wish you well in ………………….”
40 I have carefully read the letter, and what it was communicating. In my view, it communicated two things;
a. That a decision had been made to declare the Claimant redundant as the Respondent was no longer able to retain her.
b. Her last day of work was 31st May 2020.
41 Clearly, the letter didn’t communicate an intention to carry out a redundancy process, but a decision that had been made to terminate her employment on the grounds of redundancy. I take the clear view that the letter dated 11th May 2020 was not a notice of an intended redundancy but a termination notice.
42 This Court hasn’t lost sight of the fact that prior to issuing the Claimant with the notice dated 11th May 2020, the Respondent had issued the Labour Office with a Notice through its letter dated 8th May 2020. The letter read:
“The evolving COVID-19 pandemic has greatly impacted the business in the actualization of its budgets despite efforts made to contain the situation, we have experienced a significant drop on new vehicle sales as well as aftersales business.
Due to the above, and the intensive deliberations with senior management and the parent Company, it has been resolved that it is necessary for the company to re-organize itself in line with its business needs.
In line with this, the company will need to reduce its staffing levels to meet its business needs. A number of positions will also cease to exist. This means that it will become necessary to declare Twenty-Eight [28] employees redundant.
In declaring the employees redundant, every measure will be taken to ensure compliance with the requirements of Section 40 of the Employment Act, the individual contracts of employment and the Collective Bargaining Agreement with the Amalgamated Union of Kenya Metal Workers.
Pursuant to section 40[1][b] of the Employment Act of 2007, whereby notify you that we intend to implement a redundancy programme which will be carried out within this month.
We hope that this correspondence clarifies our intentions to right size given the exceptional economic reasons occasioned by the pandemic as earlier highlighted. ………………..”
43 This sounded like a true redundancy notice contemplated under section 40[1], only that it wasn’t copied to the Claimant.
44 A true redundancy notice should be that which births a consultative process on the intended redundancy, between the employer and the employee[s] to be affected. No doubt, the purported notice dated 11th May 2020, did not allow space for any consultations. In its tone, it didn’t set the stage for consultation which is a vital component of a fair redundancy process. On the nature of a redundancy notice as a stage setter for consultations; that consultation in a redundancy process is a legal imperative in Kenya; and the purpose of consultation, the Court of Appeal held in The German Society School (Supra), stated thus;
“56. A notice to the employee/trade union/labour officer opens up the door for a consultative process with the key stakeholders. The Court of Appeal in Kenya Airways Limited v Aviation & Allied Workers Union Kenya & 3 Others (2014) eKLR held:
a) Consultation is implicit in the Employment Act under the principle of fair play;
b) Consultation gives an opportunity for other avenues to be considered to avert or to minimize the adverse effects of terminations;
c) Consultations are meant for the parties to put their heads together and is imperative under Kenyan law;
d) Consultations have to be a reality not a charade;
e) Opportunity must be given for the stakeholders to consider;
f) Stakeholders must have and keep an open mind to listen to suggestions, consider them properly and then only then decide what is to be done; and
g) Consultation must not be cosmetic.
57. In essence, consultation is an essential part of the redundancy process and ensures that there is substantive fairness. The employer should ensure that it carries out the process as fair as possible and that all mitigating factors are taken into consideration. A reading of the record shows that the respondent was served with a redundancy notice and asked to proceed for a one month’s leave. The trial court found that the redundancy was unfair and irregular for failure to give adequate notice and thereby not giving consultation a chance.
60. However, on the question whether the notice gave consultations and dialogue a chance, we find that while the requirement for consultation is not expressly provided for in section 40 of the Employment Act, this requirement is implied, as the main reason and rationale for giving the notices in section 40(1) (a) and (b) to the unions and employees of an impending redundancy where applicable.”
45 In his evidence, the Respondent contended that there were consultations before the Claimant was let go. The Claimant refused to accept an alternative role that was offered to her. I have carefully considered the evidence, and there isn’t anything that suggests the presence of the alleged consultations. One cannot tell when the consultations took place. If indeed they took place, then it would be expected that they did before the letter of 11th May 2020 was served on the Claimant, and the letter could reasonably refer to the consultations.
46 The Claimant stated that on handing the letter to her, the Respondent offered her another position on a contract basis, but never actualised the offer as they didn’t give her a contract of employment. According to her, the offer didn’t flow from any consultations. The Respondent didn’t provide any evidence to show that it was a product of consultations, and that the reason the offer was not actualised was because the Claimant refused to accept the same.
47 I am persuaded there were no consultations that ensued after the Respondent issued the letters mentioned hereinabove at any time at all.
48 Under section 40 of the Employment Act, the notice period required for notices to the employee, the employee’s trade union, and the Labour officer is 30 days. None of them observed this requirement.
49 Based on the above premises, I conclude that the Claimant’s employment was terminated unfairly. The letter dated 11th May 2020 served as a notice of termination, not a redundancy notice as defined under section 40 [1][b] of the Employment Act. Additionally, the notices given to both the Claimant and the Labour Officer did not comply with the required 30-day statutory notice period.
50 I now turn to consider whether the termination was substantively fair. The Court in Kenya Airways Ltd and Aviation & Allied Workers Union of Kenya & 3 Others Civil Appeal No. 46 of 2013 held that even in instances of termination of employment due to redundancy, the employer must have a valid and fair reason and follow fair procedures in line with Section 45 of the Act. The Court stated: -
“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 have been rendered superfluous or that redundancy has resulted in the abolition of the office, job or loss of employment—”.
51 The above holding indicates that all provisions of the Employment Act concerning substantive fairness in employee termination apply even in cases of redundancy. Specifically, this includes Section 43, which requires proof of the reasons for termination; Section 45(2), which demands demonstration that the reason for termination was valid and fair; and Section 47(5), which states that the termination must be lawful and justified.
52 In the present case, the Respondent asserted that the redundancy arose from the alleged decline in new vehicle sales and aftersales business. In a situation where the substantive justification for terminating the Claimant’s employment was heavily contested, the Respondent failed to provide any evidence demonstrating that sales of new motor vehicles and after-sales services had dwindled to such an extent that her continued employment was no longer tenable. What they were selling initially and what they sold after COVID-19 emerged are vital questions that the Respondent failed to answer. Consequently, I am not convinced that her termination was fair and valid.
53 The letter to the Labour office indicated that 28 roles would be affected by the redundancy. No specifics about those roles were provided. The pleadings and evidence from the Respondent also remained silent on which roles were allegedly impacted. This unexplained silence, especially considering that the notification to the Labour Officer typically aims to involve the Office in seeking ways to avoid or mitigate the redundancy's impact on the affected employees—along with the employees and the employer—leads this Court to be persuaded by the Claimant that she was individually targeted and that the alleged redundancy was a sham.
54 If indeed there were 28 roles affected, what was the criterion for selecting the affected? What was the criterion for choosing the Claimant? The Respondent didn’t bring out any evidence before this Court to demonstrate the same.
55 For the foregoing premises, I find that the termination of the Claimant’s employment on account of redundancy was substantively unfair.
(b) Whether the Claimant is entitled to the reliefs sought.
56 Having held that the Claimant’s employment was unfairly terminated, I now turn to consider the matter of the reliefs sought.
57 The Claimant only seeks damages for unfair termination, and submits that an award of twelve (12) months’ gross salary as compensation would be sufficient.
58 The Respondent submits that the Claimant is not entitled to an award of compensation equivalent to 12 months’ gross salary as the termination of his employment was both substantively and procedurally fair, and he was capable of securing alternative employment.
59 Under Section 49 (1) (c) of the Employment Act 2007, this Court is granted the authority to award compensatory relief to an employee who has successfully challenged the employer's decision to terminate their employment on the ground that it was unfair. However, it is important to note that the exercise of this power is discretionary and depends on the circumstances of each case.
60 I have carefully considered how the Claimant’s employment was terminated and to be specific with non-conformity with the dictates of procedural and substantive fairness in matters, termination of employment on grounds of redundancy, therefore ignorance of the fact that as the termination was under the category of no-fault terminations absolute fairness was required; the length of his service being approximately 4.35 years; and that the termination was not a result of her fault, and hold that he is entitled to the compensatory relief, six (6) months’ gross salary.
61 The Claimant asserted that at all material times, the Respondent didn’t pay her house allowance, and sought compensation for the same. The Respondent argued that the unpaid house allowance is a continuous injury claim and therefore time-barred under Section 90 of the Employment Act.
62 Section 90 of the Employment Act provides;
“Notwithstanding the provisions of Section 4[1] of the Limitation of Actions Act, no civil action or proceedings based or arising out of this Act or a contract of service in general shall lie or be instituted unless it is commenced within three years next after the act, neglect, or default complained of or in the case of a continuing injury or damage within twelve months next after the cassation thereof.”
63 Undeniably, a claim anchored on a continuing injury must be filed within 12 months after cessation of the Injury per Section 90 of the Employment Act. See GS Security Services [k] Limited v Joseph Kamau&468 others [2018] eKLR. However, the question that arises in this matter, which requires determination, is whether the non-payment of a house allowance by an employer over time constitutes a continuous injury.
64 In the case of The German School Society [supra], the Court of Appeal stated;
“36. Locally, there appears to be no paucity of court decisions defining the phrase “continuing injury”. The Employment Act does not define the phrase. We are alive to the dictate in Article 259 of the Constitution, which requires courts to advance the development of the law. We shall attempt to judicially define what constitutes " a continuing injury.’’
37. The principles underlying continuing wrongs and recurring/ successive wrongs have been applied to service law disputes. “A continuing wrong” refers to a single wrongful act which causes a continuing injury. Recurring / successive wrongs are those which occur periodically, each wrong giving rise to a distinct and separate cause of action. The Supreme Court of India in Balakrishna S.P. Waghmare v Shree Dhyaneshwar Maharaj Sansthan, AIR 1959 SC 798, explained the concept of continuing wrong [in the context of the Indian Limitation Act]as follows:
“ It is the very essence of a continuing wrong that it is an act which creates a continuing source of injury and renders the doer of the act responsible and liable for the continuance of the said injury. If the wrongful act causes an injury which is complete, there is no continuing wrong even though the damage resulting from the act may continue. If, however, a wrongful act is of such a character that the injury caused by it itself continues, then the act constitutes a continuing wrong. In this connection, it is necessary to draw a distinction between the injury caused by the wrongful act and what may be described as the effect of the said injury.”
65 Considering the foregoing decision of the Court of Appeal and the decisions it cited from other jurisdictions, I am convinced that a continuous non-payment of house allowance to an employee falls under the realm of ‘continuing injury.’’ For purposes of Section 90 of the Employment Act, the cessation of the injury in the context of the instant matter occurred on 31st May 2020. The Claim herein wasn’t filed within twelve months of this date. As a result, I hold that the claim for house allowance was time-barred.
66 In the upshot, judgment is hereby entered for the Claimant in the following terms: -
a. A declaration that the termination of the Claimant’s employment on account of redundancy was unfair.
b. Compensation for unfair termination pursuant to Section 49[1][c] of the Employment Act, KShs, 1,406,604.
c. Interest on (b) above at court rates from the date of this Judgment until payment in full.
d. The Respondent shall bear the costs of this suit.
Read, signed, and delivered virtually in Mombasa on July 17, 2025.