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JudgmentMULI NZENGE & 12 OTHERS VS HARIA UNIFORMS LTD15 min read

MULI NZENGE & 12 OTHERS VS HARIA UNIFORMS LTD

Employment and Labour Relations Court at Nairobi Employment and Labour Relations Court (ELRC) · · J. N. Abuodha

Summary

The Appellants appealed against a judgment in Milimani Chief Magistrates Court, arguing that the learned magistrate erred in finding no case for unlawful termination, failing to calculate damages from employment start dates, not honoring the Collective Bargaining Agreement, and failing to award gratuity. The Appellants claimed the Respondent violated the Employment Act by not following redundancy procedures, and the CBA provisions were unlawfully capped at 2016. The Respondent countered that the trial court upheld the redundancy process and CBA compliance, and the Appellants' claims lacked merit.


  1. Through the Memorandum of Appeal dated 26th April, 2021, the Appellants appeal against the Judgment of Honourable E. Wanjala(Miss) delivered on 26th March, 2021 in Milimani Chief Magistrates Court ELRC Cause No. 361 of 2020.
  2. The Appeal was based on the grounds that:
    1. The Learned Magistrate erred in fact and law in finding that there was no case for unlawful termination thus dismissing the claim.
    2. The Learned Magistrate erred in fact and law in failing to find that damages to the Claimants including dues should be calculated from the time of employment and not from the year 2016.
    3. The Learned Magistrate erred in fact and law in failing to find that the Collective Bargaining Agreement was never honoured by the Respondent, contrary to the evidence on record.
    4. The Learned Magistrate erred in fact and law in failing to award gratuity contrary to the provisions of the Collective Bargaining Agreement.
    5. The Learned Magistrate erred in fact and law by failing to take in to account the evidence of the appellant witnesses.
    6. The Learned Magistrate erred in fact and law in failing to consider the submissions of he appellant counsel together with the case law in support.

  1. The Appellant prayed that the appeal be allowed and the Judgment of 26th March, 2021 be set aside as a whole and be substituted with an order allowing the Appellant’s appeal dated 26th April, 2021 and costs of the Appeal and proceedings be awarded to the Appellants.
  2. The Appeal was disposed of by written submissions.

APPELLANTS’ SUBMISSIONS

  1. The Appellants filed written submissions dated 17th November, 2023.On the issue of whether the learned magistrate erred in fact and law in finding that there was no case for unlawful termination thus dismissing the claim, the Appellants submitted that the Claimants testified on 26th November, 2020 and produced all the documents in support including the letter of termination and pay slips.
  2. It was the Appellants’ submission that the Claimant stated that the decision by the Respondent to terminate their services was arbitrarily, unfair, un-procedural and unlawful as the Respondent did not comply with the redundancy process set out under Section 40(1) of the Employment Act.
  3. It was the Appellants’ submission that it is mandatory for the employer to give an early and detailed information on the proposed redundancy to the affected employee, as well as the local labour officer which was never adhered to by the Respondent.
  4. The Appellants submitted that the issuance of a written notice is not the only requirement and/ or condition that the employer is required to comply with under Section 40(1) of the Employment Act on termination of a contract of service on account of redundancy.
  5. It was the Appellants’ submission that the Respondent never complied with any of the conditions before terminating their employment on grounds of redundancy.
  6. They relied on Section 40(1) (b) of the Employment Act, while submitting that the employer must notify the employee personally and in writing of the reasons and the extent of the redundancy at least one month before the date when the redundancy is to take effect. The Claimants were never issued with any written notification as required under Section 40(1) (b) of the Employment Act.
  7. It was the Appellants’ submission that employers must give notice to employees or their union before making redundancies, allowing for consultation on the decision and its implementation. That the Respondent did not consult with the Claimants or involve them in issuing cheques, as confirmed by the Respondent's witness Mr. Dinesh Shah on 26th November 2020.
  8. The Appellants submitted that they were never informed of the proposed redundancy and never given sufficient and precise information to allow them a reasonable opportunity to respond.
  9. The Appellants submitted that that there being no meaningful consultation prior to the termination on account of redundancy, such termination was unfair and unlawful in the circumstances.
  10. The Appellants submitted that the selection criteria employed by the Respondent in deciding who, amongst the employees, was to be declared redundant was not in conformity with the confines of Section 40(1) (c) of the Employment Act.
  11. The Appellants submitted that the Respondent did not consider seniority, skills, and reliability when selecting employees for redundancy and the Appellants were not given an explanation for why they were chosen for redundancy, the selection process was unfair and unlawful and contrary to Section 40(1) of the Employment Act.
  12. The Appellants submitted that in its pursuit to declare the Appellants redundant, the Respondent has to date refused, ignored and/or failed to pay; one month's wages as notice, redundancy severance pay based on years of service, and unpaid leave days.
  13. In conclusion, the Appellants submitted that the Respondent violated their rights to a fair administrative action as outlined in the Constitution and failing to follow the proper procedure set our under the Employment Act. The learned magistrate therefore erred in fact and law in finding that there was no case for unlawful termination thus dismissing the claim.
  14. On the issue of whether the learned magistrate erred in law and fact in failing to find that damages to the claimants including dues should be calculated from the time of employment and not from the year 2016, the Appellant submitted that the damages to the Claimants /Appellants including dues should be calculated from the time of employment and not from the year 2016 as all the Appellants were employed way before the year 2016, with the oldest one being the year 1975.
  15. On the issue of whether the learned magistrate erred in law and fact in failing to find that the CBA was never honoured by the Respondent, contrary to the evidence on record, the Appellants submitted that it was their testimony that the CBA was never honored by the Respondent and the Appellants' testimony and evidence was never controverted by the Respondent.
  16. It was the Appellant’s submission that the learned magistrate therefore ought to have found that the CBA was never honoured by the Respondent and had no effect.
  17. On the issue of whether the learned magistrate erred in fact and law in failing to award gratuity contrary to the provisions of the CBA the Appellants submitted that they were never paid gratuity and the Respondent never produced proof of payment of such.
  18. The Appellants submitted that the provision of the CBA capping gratuity payment to the 2016 is unlawful and could not be relied upon, as it denies the Appellants payment from the time of employment.
  19. The Appellants submitted that the provision in the CBA, that barred an employee from getting gratuity if terminated for misconduct was unlawful while relying on the case of Katembe Kirongo Mtuwa And Another Vs Steel Makers Ltd (2005) eKLR.
  20. On the issue of whether the learned magistrate erred in law and fact by totally failing to take into account the evidence of the Appellant witnesses; and whether the learned magistrate erred in fact and law in failing to consider the submissions of the Appellant counsel together with the case law in support the Appellants submitted that the learned magistrate failed to take account the evidence of the Appellant witnesses and to consider the submissions of the Appellants.
  21. In Conclusion the Appellant prayed that the appeal be allowed, Judgement of the lower court be set aside and the same be substituted for the judgement of this Honourable court and Costs of the Appeal and proceedings be awarded to the Appellants.
  22. The Appellants relied on the Judgement in case of Kenya Airways Limited V Aviation & Allied Workers Union Kenya & 3 Others [2014] eKLR while submitting that termination of the Claimants on account of redundancy and retrenchment without justification was procedurally wrong amounting to unfair termination.

RESPONDENT’S SUBMISSIONS

  1. The Respondent on the other hand filed its written submissions dated 11th December,2023 and on the issue of whether the redundancy was lawful counsel submitted that appellants contended that the termination of their employment was unfair and unlawful as none of the mandatory requirements under section 40 of the Employment Act,2007 were followed. That they were never given adequate notice, not consulted and selection criteria did not conform with the above provisions.
  2. It was the Respondent’s submissions that the trial court established that the Respondent adhered to the provisions of section 40 of the Employment Act by issuing the Appellants with required notices and a conciliator report of 22nd May,2020 upheld the Respondent’s redundancy procedure.
  3. The Respondent submitted that on selection criteria the same was established by the trial court as being a non-issue since the Appellants were its employees who were to be declared redundant. That the Appellants did not challenge the conciliator’s report upholding the redundancy and the same remains binding.
  4. The Respondent relied on the case of Leonard Chiunda v Msingi East Africa Ltd (2018) eKLR in submitting that the court dismissed a similar claim after finding the redundancy genuine. The Respondent submitted that the reasons and procedure of the redundancy having being upheld by both the conciliator and the trial court the Appellants were not entitled to damages for unfair termination as claimed.
  5. On the issue of whether the Appellants terminal dues were properly computed the Respondent submitted that despite the trial court finding that there was no case for unfair and unlawful termination the court found each Appellant to be entitled to terminal dues in accordance with CBA dated 7th August,2018. The same ranged from severance pay, notice pay, leave days salary for worked days and certificate of service.
  6. It was the Respondent’s submissions that it computed the Appellant’s terminal dues and remitted them to the Appellant’s advocates on 19th April,2021 in compliance with the court’s order to pay the same sums within 30 days of the judgment.
  7. The Respondent submitted that it was the Appellants’ contention that the trial court erred when it found that the terminal dues ought to be calculated from June 2016 to 30th April,2020 being the date when redundancy took place. They alleged the same ought to be calculated from the date of their employment.
  8. The Respondent submitted that the employment was governed by the CBA between the Respondent and the Kenya Union of Commercial Food and Allied Workers dated 7th August, 2018 which provided for payment of terminal dues in the case of redundancy. The Respondent relied on the case of National Bank of Kenya Limited v Pipeplastic Samkolit(K) limited & Another(2001) eKLR to submit that the court cannot rewrite parties contract.
  9. The Respondent submitted that the trial court in awarding severance pay from June 2016 took in to account provisions of CBA clause 20. Respondent also relied on clause 22 on gratuity payable. The Respondent relied on the case of Japhet Nkubitu & Another Vs Regina Thirindi(1998) eKLR to submit on duty of party proving the facts they allege exists.
  10. The Respondent submitted that it already raised inconsistencies with how the Appellant wanted the computation of their dues done and the trial court properly computed the said dues payable to the Appellants as per the CBA.
  11. On the issue of whether the Appellants were entitled to gratuity the Respondent submitted that the same was not specifically pleaded at trial as the same was introduced in the Appellants submissions dated 9th September,2020. The Respondent relied on the case of Daniel Torotich Arap Moi & Another v Mwangi Stephen Murithi & Another(2014) eKLR to submit that submissions do not take place of pleadings.
  12. The Respondent in conclusion submitted that the Appellants did not establish any basis to disturb the finding of the lower court hence the same lacks merit and should be dismissed with costs to the Respondent.

DETERMINATION

  1. I have considered the pleadings by both parties and the submissions by the parties and this being a first Appeal I will proceed to reanalyze the evidence before me as was held in the case of Selle vs Associated Motor Boat Company Limited [1968] E.A 123 thus:-

An appeal to this court from a trial by the High Court is by way of retrial and the principles upon which this court acts in such an appeal are well settled. Briefly put they are that this court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in this respect. In particular, this court is not bound necessarily to follow the trial judge’s findings of fact if it appears either that he has clearly failed on some point to take account of particular circumstances or probabilities……..or if the impression based on the demeanour of a witness is inconsistent with the evidence in the case generally.”

  1. In this case, the Judgment of the trial court was that;

The final orders are that the Claimants claim partially succeeds and I enter judgement for the Claimants as against the Respondent in the following terms:-

      1. That the Respondent computes and pays each of the 13 Claimants terminal dues within 30 days of this Judgment in the following terms.
      2. That computation will be based on each of the Claimant’s respective gross salary.
      3. That each of the 13 Claimant’s is entitled to and is awarded 18 days’ severance pay for each year of service effective June 2016 to 30th April,2020.
      4. That each of the 13 Claimants is entitled to and is awarded two(2) months’ salary in lieu of notice the same to be based on each of the respective ‘s gross salary.
      5. Leave days

Each of the 13 Claimants is entitled to and awarded any accrued leave days if any outstanding as at 30th April,2020 based on the CBA.

      1. Days worked

Each of the 13 Claimants is entitled and awarded any dues for days worked that were outstanding as at 30th April,2020.

      1. The Respondent to forthwith issue a certificate of service to the 13 Claimants as envisaged in clause 12 of the CBA and section 51 of the Employment Act.
      2. The Claim for compensation for unlawful termination is dismissed.
      3. The award to be subject to statutory deductions.
      4. Interest on the liquidated awards at court rates effective 30 days from the date of judgment till payment in full.
      5. Each party to bear their own costs of the suit.
  1. The main issues in this appeal revolve around the trial court determination that the Claimants were lawfully terminated, that the severance pay was to be paid from June 2016 to 30th April,2020 and that the Claimants were not entitled to gratuity.
  2. The Appeal will therefore be analysed in the following three issues;
      1. Whether the trial court erred in finding that the redundancy of the Claimants was lawful hence the termination of the Claimants’ employment was lawful
      2. Whether the trial court erred in finding that the computation of the Claimant’s dues was to be for the period between June 2016 to 30th April,2020.
      3. Whether the Claimants were entitled to gratuity.

Whether the trial court erred in finding that the redundancy of the Claimants was lawful hence the termination of the Claimants’ employment was lawful

  1. The trial court observed that the Respondent followed the process of redundancy set out in section 40 of the Employment Act while the Appellants fault the trial court for this position. Whereas the employer must have a valid reason for termination of employment, redundancy is one way of terminating employment so long as section 40 of the Employment Act is followed.
  2. Redundancy on the other hand has been defined under section 2 of the Employment Act as;

means the loss of employment, occupation, job or career by involuntary means through no fault of an 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.

  1. In addition courts have stated severally that even in cases of redundancy the reason ought to be valid under section 43 of the Employment Act and the employee given a right to be heard under section 41 of the Employment Act.
  2. In Kenya Airways Limited VS. Aviation and Allied   Workers Union of Kenya and 3 Others (2014) eKLR, the Court of Appeal pronounced itself as follows:

“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 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 be underlying causes leading to a time redundancy situation such as reorganization, the employer must nevertheless show that the termination is attributable to redundancy – that is that the services of the employee has been rendered superfluous or that redundancy has resulted in abolition of office, job or loss of employment.”

  1. I note from the pleadings herein that the trial court appreciated the reasons behind the Respondent issuing the redundancy notices to the Claimants since the business was going down facing a closure. I also note and agree with the lower court that redundancy notices were issued both to the Claimants in person and their unions as well as labour officer as required.
  2. It was also clear that the trade union declared a trade dispute where a conciliator was appointed and issued a report dated 22nd May,2020 upholding the Respondent’s redundancy process. This is why the Claimants approached the trial court herein.
  3. It came out clearly that the Claimants refused to collect their final dues after the redundancy hence the trial court was right in ordering computation of their dues. I agree with the lower court that the Respondent reserved the right to terminate the services of the Claimants by redundancy when the business was going to the trench.
  4. When it comes to the consultations I note that there were meeting between their union and the Respondent leading to the conciliators report hence the same cannot invalidate the process. On the selection criteria I also note that it came out clearly that the Respondent was closing down and the Claimants did not lead evidence of young employees remaining in the Respondent employ. They confirmed that after redundancy notices they found the business premises closed to show that the business went down and closed down.
  5. In the upshot the Respondent followed the procedure provided for under section 40 of the Employment Act and I agree with the trial court that the Claimants were not unlawfully terminated hence not entitled to damages for unfair and unlawful termination.

Whether the trial court erred in finding that the computation of the Claimant’s dues was to be for the period between June 2016 to 30th April,2020.

  1. The trial court relied on clause 20 note of the CBA to arrive at this position. The CBA clause provided that all severance pay were cleared every year end of May up to 2016. This was the reason the trial court ordered for calculation of severance pay from June 2016.The Appellants have asked this court to order the same provision of the CBA as unlawful as it does not benefit them to be paid severance from June 2016 when they all joined the Respondent’s employment some as early as 1975. Parties were bound by their own agreement the CBA in this case. I agree with the trial court that the severance pay was to be calculated from June 2016 to 30th April,2020 as per the CBA. This court cannot rewrite parties contracts unless the Appellants proved the vitiating aspects of a contract including duress and others.

Whether the Claimants were entitled to gratuity.

  1. The Appellants have alleged that the trial court erred by not awarding them gratuity. That the Respondent did not honour the CBA in 2016. Whereas the Respondent submitted that the same was not specifically pleaded at the trial court that it was brought in at the submission stage. I agree that submissions do not take place of pleadings as was held in the case of Robert Ngande Kathathi v Francis Kivuva Kitonde(2020) eKLR among many other cases that submissions do not amount to evidence unless expressly adopted as such. Even if the same was pleaded the CBA provided for severance pay and not gratuity. This therefore meant the Appellants were only entitled to severance pay and not gratuity upon redundancy. Section 40(1)(f) also provides for severance pay upon redundancy and not gratuity.
  2. In addition, the pay slips attached showed that the Respondent was making the statutory deductions for the Appellants like the NSSF and NHIF hence falling on the exceptions of payment of service/gratuity under section 35(6)(d) of the Employment Act. The Appellants were therefore, not entitled to gratuity pay.
  3. In conclusion the Respondent submitted that it did compute the terminal dues as ordered by court and remitted the same to the Appellants’ advocates on 19th April,2021. The Appellants have not denied this fact and as it is they have been paid their terminal dues as per the trial court orders.
  4. The Appeal is therefore found unmerited and is hereby dismissed with costs no orders as to costs.
  5. It is so ordered.

Dated this …………………………of April, 2024

Delivered this ……………………….. day of April, 2024

Abuodha Nelson Jorum

Judge

    MULI NZENGE & 12 OTHERS VS HARIA UNIFORMS LTD MULI NZENGE & 12 OTHERS VS HARIA UNIFORMS LTD