Introduction
1. By a Memorandum of Appeal dated 18th April 2024, the Appellant challenges the Judgment and Decree of the Learned Principal Magistrate in the cause mentioned above, on the principal grounds that he erred in law and fact;
[a] In holding that the termination of the Appellant’s employment was on account of redundancy.
[b] When he failed to analyse the pleadings, evidence and submissions before him, it showed that the Respondent had failed to comply with mandatory legal provisions for redundancy.
[c] By finding that the disputed redundancy notice dated 9th May 2012 was lawful without interrogating its validity, sufficiency and compliance with section 40[1][b] of the Employment Act.
[d] By failing to award unpaid leave and reaching a conclusion in error that the annual leave served simultaneously with the impugned redundancy notice was valid.
[e] By upholding the disputed Discharge Voucher despite evidence that the service period did not correctly indicate the Appellant’s 15 years of service.
[f] By upholding the disputed severance pay, KShs. 92, 033 despite evidence that the severance pay was not correctly calculated as per the Appellant’s 15 years of service.
[h] By dismissing the claims in the statement of claim.
[g] By directing the Appellant to pay costs to the Respondent.
[i] By rendering a judgment which was contradictory and manifestly unfair to the Appellant. When he awarded the Respondent KShs. 37,505 as compensation for unutilized leave days despite the evidence that leave was taken.
[d]. When he allowed the Respondent’s claim for underpayments and awarded KShs. 192, 635.
[e]. When he applied the wrong principles when awarding the Respondent KShs 208,958.88 as compensation for unfair termination.
[f]. When he applied the wrong principles when awarding the Respondent KShs 403,241.76 as compensation for overtime.
[h]. When he failed to consider the Appellant’s submissions in the matter.
[g]. When he awarded the Respondent the costs of the suit.
2. The Appellant consequently seeks that: -
1) This Appeal is allowed.
2) That the Judgment of the subordinate Court delivered on 29th February 2024, be set aside, and this court dismisses the lower court suit.
3) The costs of this Appeal are to be awarded to the Appellant.
3. This appeal was canvassed by way of written submissions.
The case before the Trial Court
4. The Appellant’s case was that he first came into the Respondent's employment on 10 March 2007 as a night Security Guard. He worked continuously and uninterruptedly until 9 May 2022, when the Respondent terminated his employment.
5. On 7th May 2022, he received a call from his supervisor, who informed him not to report for the night shift that day, as the Respondent had directed that all employees attend their offices to receive termination letters.
6. The Supervisor informed him that the Respondent had decided to hire other employees in their place.
7. On May 9, 2022, the Human Resource Manager, while handing them termination letters, informed them that the Respondent had terminated their employment due to reduced work.
8. After terminating his employment, the Respondent failed to correctly compute and pay his severance pay and payment in lieu of leave.
9. He asserted that the Respondent’s action breached his labour rights under Article 41 of the Constitution. The termination violated the mandatory provisions of section 40 of the Employment Act. The Respondent did not issue the statutory notices contemplated under the section.
10. Upon the premises, he held that he was entitled to
a) Compensation for earned but untaken 13 leave days, KShs 11. 822.98.
b) Severance Pay, 15 days' pay for every year worked [2007-2022], KShs. 204, 628.50.
c) Damages for unlawful redundancy, twelve months’ gross salary, KShs. 283, 752.00.
d) Costs
e) Interest on [a]-[d] above.
11. The Respondent asserted that it employed the Appellant on June 26, 2010, at a monthly salary of KShs. 23, 646. His employment was terminated on the 10th June 2022, on account of redundancy, as they wanted to strengthen their operations after suffering an economic downturn.
12. 12. By means of a letter dated 9th May 2022, he was apprised of the forthcoming declaration of redundancy and the consequent termination of his employment. Accordingly, the Appellant was issued with a month’s notice.
13. Upon being served with the notice, the Appellant decided to take the leave days that were pending utilisation. His application for the same was granted. Before his termination, his terminal dues, which consisted of severance pay, were computed in his presence, and it was mutually agreed that he would be paid KShs. 92,033 in three instalments. He acknowledged the calculation of the terminal dues and signed a discharge voucher on 23rd June 2022.
14. He received the 1st Instalment of KShs. 32,033, paid through his bank account, but decided to file the instant suit.
15. They urged the trial Court to dismiss the claim. They saw it as a bid by the Appellant to enrich himself, and one that lacked substance unjustifiably.
The Judgment by the Lower Court.
16. After hearing the parties on their respective cases, the Learned Trial Magistrate found the Appellant’s claim lacking and dismissed it with costs.
The Appeal.
17. The Appellant, aggrieved by the decision of the Trial Court, filed the present Appeal on the grounds set out hereinabove.
Analysis and Determination
18. 18. It is now a well-accepted principle that the function of a first Appellate Court is to subject the evidence and materials presented before the trial Court to a fresh examination, as though conducting a de novo hearing, and to derive its independent findings and conclusions. However, it is crucial to recognize that the Appellate Court does not see or hear the parties or their witnesses testify, and therefore must afford appropriate consideration to this fact. When the Appellate Court departs from the findings and conclusions of the trial Court, it is required to articulate the reasons for such departure. This position was thoroughly elucidated in the case of Selle -vs- Associated Motor Boat Co. [1968] EA 123) where the Court held: -
“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 necessarily bound 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 materially to estimate the evidence or if the impression based on the demeanor of a witness is inconsistent with the evidence in the case generally (Abdul Hameed Saif v Ali Mohamed Sholan (1955), 22 E.A.C.A. 270)”.
19. In 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 held that: -
“A first appeal is a valuable right of the parties and, unless restricted by law, the whole case is open for reconsideration both on questions of fact and law. The judgment of the appellate court must reflect this court’s conscious application of its mind and record findings supported by reasons, on all the issues arising along with the contentions put forth, and pressed by the parties for decision of this Court. The first appellate court has jurisdiction to reverse or affirm the findings of the trial court. While reversing a finding of fact the appellate court must come into close quarters with the reasoning assigned by the trial court and then assign its own reasons for arriving at a different finding. A first appellate court is the final court of fact ordinarily and therefore a litigant is entitled to a full, fair, and independent consideration of the evidence at the appellate stage. In addition, we bear in mind that we, unlike the ELRC, did not have the benefit of seeing the witnesses testify. (See Kenya Ports Authority v Kuston (Kenya) Limited (2009) 2EA 212).”
20. I have carefully analysed the record of appeal, and the submissions filed herein by Counsel for the parties, and conclude that the instant appeal can be resolved under two broad issues;
a) Whether the termination of the Appellant’s employment on the alleged account of redundancy was fair.
b) Whether the trial Court fell into error when it didn’t grant the Appellant the relief he had sought.
21. Both section 2 of the Employment Act 2007 and section 2 of the Labour Relations Act define redundancy as: “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 services of an employee are superfluous and practices commonly known as abolition of office, job or occupation and loss of employment”.
22. The locus classicus on redundancy under Kenyan Law is Kenya Airways Limited and Aviation and Allied Workers Union Kenya & 3 others (2014) eKLR, cited by counsel for the parties herein, where the Court of Appeal stated: “There are two broad aspects of this definition. The first one is that the loss of employment in redundancy cases has to be by involuntary means and at the initiative of the employer; it should not be a contrived situation. It has to be non-volitional. I understand this to refer to a situation, in most cases, an economic downturn, brought about by factors beyond the control of the employer, which leaves the employer with no option but to take an initiative, the consequences of which will be inevitable loss of employment………”
23. In the case of Showkat Hussein Badat v Oshwal Education & Relief Board, [2022] KEELRC 157 [KLR], this Court stated:
“50. The defining characteristic of termination on account of redundancy is a lack of fault on the employee. It is a species of “no fault termination. One cannot be off mark to state that it is for this reason that the Employment Act places particular obligations on the employer, most of which are directed towards ensuring that those employees to be dismissed are treated fairly”.
24. Undoubtedly, the law does not recognise a right to lifelong employment. However, the social balance established within the framework of a constitutional regime, wherein the right to fair Labour practices is considered a fundamental right, ensures that an employee is afforded protection against unfair dismissal. Simultaneously, it grants the employer the right to terminate an employee's contract for just cause, provided that appropriate procedures are followed.
25. In a dispute like the instant one, where the fairness in the termination of an employee’s employment on account of redundancy is challenged, the onus is on the employer to satisfy the court that there was a genuine redundancy situation, and therefore a fair and valid reason to terminate the employee’s employment.
26. The Appellant’s pleadings and the evidence presented before the trial court indicate that he was contesting both the justification for the termination of his employment and the fairness, along with the statutory compliance of the procedure utilised by the Respondent to effectuate the termination.
27. I have conducted a thorough examination of the analysis pertaining to the issues presented before the Learned Trial Magistrate, as elucidated in his judgment, and I would like to point out that he, in error, failed to take into account the substantive fairness aspect of the employment termination that was under dispute.
28. In my opinion, it is insufficient for an employer to merely assert that a financial downturn or a right-sizing of its human resources occurred, resulting in the redundancy of certain positions. Employers are expected to provide reasonable details, and this expectation becomes more pronounced when the redundancy is challenged by the employee, who perceives it as unjustified.
29. The financial downturn of an enterprise, the downsizing of human capital, and the declaration of redundancy are processes. They are not events that simply occur. One could, in circumstances as are in the instant case, reasonably expect to see evidence from the employer regarding when the idea to right-size was conceived; the reasons for this idea; the dates when deliberations on the concept were undertaken; the date when a decision was made about the restructure; and discussions on the steps to be followed through the restructure leading to the exit of those affected. For an allegation of financial downturn, statements of account demonstrating the economic status could be anticipated.
30. No evidence was placed before the trial magistrate on the abovementioned matters. The Respondent just asserted an economic downturn and a need to downsize. In my view, this wasn’t enough to discount the Appellant’s testimony that his employment and that of his colleagues was to enable the Respondent to employ afresh.
31. By reason of the premises foregoing, I am persuaded by the Appellant that the termination of his employment was not for a fair and valid reason. The Respondent didn’t establish that the redundancy was genuine.
32. In the case of Kenya Airways Ltd v Aviation and Allied Workers Union Kenya and 3 others (2014) eKLR, the Court of Appeal held and I draw “ inspiration therefrom, that:
“Redundancy is a legitimate ground for terminating a contract of employment provided there is a 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 ………………. what the Phase means, in my view, is that while there may be underlying causes leading to a true redundancy situation, such as reorganisation, the employer must nevertheless show that the termination is attributable to the redundancy- that is that the services of the employee has been rendered superfluous or that redundancy has resulted in abolition of office, job or loss of employment.’’
33. The material and evidence presented to the trial court show that some employees were discharged due to redundancy, while others were retained. The court will examine the retained and declared redundant employees to determine whether redundancy existed. The test involves assessing whether the affected employee should have been selected compared to those who remained in the same department or level. This can only happen if the employer provides material to the court to facilitate the comparison. An adverse inference is unavoidable when the employer withholds material from the court. In this case, the Respondent did not present any material regarding the selection criteria before the trial court.
34. There was no dispute that the Appellant’s employment was terminated through a letter dated 9th May 2022, which read in part;
“Re: Termination of Employment on account of Redundancy.
We are downsizing the number of staff to strengthen our operations due to bad economy the country is facing and the delays while delivering consignment to the East African countries which has generally affected the transport industry at large.
In view of the above as management we have no alternative but to give you one month notice with effect from 9th May 2022 to 10th June 2022………………………………...”
35. In Onesmus Kinyua Magoiya v Prudential Life Assurance Kenya [2022] eKLR, this Court stated;
“The respondent totally failed to place before this court evidence related to the items I have mentioned hereinabove, to enable me gauge the validity and fairness of the reason for the termination(redundancy). The provisions of section 43 and 45 of the Employment Act, set in against the Respondent. Reviewing the evidence by the respondent, one develops the uncomfortable feeling that the rue reason for the termination was not an operational requirement of the respondent. I have considered the submissions by counsel for the respondent on section 40 of the Act on substantive fairness, let me say that it is not enough for the employer to terminate the employee’s service. Validity of the reason must be demonstrated. In the capsule of validity, one must see, candidness, fairness, forthrightness and good faith. To just state the reason like “organizational restructure” is not enough to enable the court to gauge the statutory measure of validity, justice and equity. As was held in Super Group supply Chain Partners V Arthur Dlamini & Another [JA77/10] cited by counsel for the Respondent for an employer to successfully dismiss an employee for its operational requirements, it is obliged to have a bonafide economic reason. In my view, this would only be demonstrated by detailed and or cogent evidence, not unsupported assertions”
36. Section 40 of the Employment Act elaborately provides for what an employer who decides to terminate an employee’s employment on account of redundancy must do. The section provides:
“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.’’
37. The Counsel for the Appellant submitted that the Respondent was obliged under the relevant section to issue two statutory notices to the Appellant; however, only one notice was issued. Consequently, the termination, allegedly due to redundancy, was procedurally unfair. For an extended period within the legal practice, there has existed confusion regarding whether the provision mandates the issuance of two independent notices to the affected employee or merely one. This confusion originated from misinterpreting a statement in the Kenya Airways case [supra]. With the utmost respect, the Counsel for the Appellant appears to be ensnared in this confusion. The stance concerning the number of notices to be issued to the affected employee was elucidated in the case of Cargill Kenya Limited v Caroline Mutuna Mwaka & 3 others [2021] KECA 115[KLR].
38. In the case mentioned above, the Court of Appeal held;
“There have been no definitive findings that a second notice was required to be issued under section 40(1)(f) of the Employment Act before a redundancy, as urged by the respondents. The Court of Appeal did not make any specific finding as regards a second notice being required under section 40(1)(f) of the Employment Act in Barclays Bank of Kenya, Barclays Africa Group (S.A.) Ltd vs Gladys Muthoni & 2 Others (2018) eKLR and in Kenya Airways Limited v Aviation & Allied Workers Union Kenya & 3 others [2014] eKLR. The findings in those matters were made in relation to section 40(a) and (b), which required notice of the intended redundancy to be given to the employees likely to be affected and the labour officer for the area where the employer’s business was situated. The finding was that the notice to be given to employees declaring them redundant was to be given after the conclusion of consultations on all issues arising from the redundancy, and was not pegged to, nor made in the context of section 40(1)(f) of the Employment Act. Therefore, a notice of termination before declaring a redundancy was not a requirement or condition under section 40(1)(f) of the Employment Act.
A plain and contextual reading of section 40(1)(f) of the Employment Act showed that its express objective and purpose was the payment required to be made to employees affected by redundancy, and not the issuance of a notice. It was also notable that the legislative intention from the arrangement and content of the enactments in section 40(1)(d) to (g) was the provision of payments to be made to affected employees in redundancy, and subsection 1(f) could only thus be construed within that context.”
39. The position was affirmed 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) [2023] KECA 894 (KLR)
40. In light of the foregoing, I conclude that lengthwise, the notice that was issued by the Respondent dated 9th May 2022 conformed with the provisions. However, as to whether it was issued to serve, it served the purpose envisaged under the law, shall be interrogated shortly hereunder.
41. A redundancy notice, which I have concluded was issued and served in the instant matter, brings about the event of consultation before a redundancy is declared. In the Kenyan context, consultation must be undertaken. This was emphasised by the Court of Appeal in the Barclays Bank of Kenya Ltd & Another v Gladys Muthoni & 20 others, thus:
“37. We have carefully examined that case, which, unlike this case, involved unionable employees of a collective bargaining agreement and oral evidence tested in cross-examination. In the end, we are persuaded that the dicta of Maraga and Margor JJA regarding consultation prior to declaration of redundancy resonate with our constitution and international laws, which have been domesticated by dint of Article 2(6) of the constitution”
42. The purpose of consultation in a redundancy process cannot be downplayed. The purpose was aptly captured by Maraga JJA (as he then was) in the Kenya Airways case (supra). The Respondent did not tender any evidence here that there were consultations prior to the termination. The Appellant’s submissions that there wasn’t are convincing.
43. In the upshot, I come to the conclusion that had the Learned Trial Magistrate critically considered the provisions of the law and obtaining judicial precedents on redundancy, he could have found that the termination of the Claimant’s employment on the alleged account of redundancy was substantively and procedurally unfair. The Learned Magistrate erred in dismissing the Appellant’s case.
Where the relief is grantable
44. Having found that the termination of the Appellant’s employment was substantively and procedurally unfair, the provisions of section 49[1][c] of the Employment Act set in. The section gives the court the authority to grant compensatory relief for an employee who has successfully challenged the termination of his employment or his summary dismissal from employment for being unfair or wrongful, respectively. However, it is essential to note that the authority is exercised discretionarily depending on the circumstances of each case.
45. I have thoroughly examined the circumstances surrounding the termination of the Appellant’s employment, the Respondent’s failure to comply with explicit and binding legal provisions, the length of service of the Appellant, which is 12 years, and the absence of any proven contribution by the Appellant to the termination of employment. Consequently, I determine that the Appellant is entitled to compensatory relief equivalent to 8 months of gross salary.
46. The Respondent contended that the Appellant entered their employment on 26th July 2010. The Appellant, on his part, asserted that he was first employed on 10th March 2007. Determining when the Appellant joined the Respondent’s workforce was necessary, as it would inform the extent of the statutory benefit of severance pay. I note that the Respondent tendered as an exhibit a letter of appointment dated July 26, 2010, to prove the terms and conditions of the Appellant’s employment. The Appellant did not challenge the document in any manner, nor tender any documentary evidence to support his assertion as regards the date of employment. Going by the letter of appointment, which I have no reason to disbelieve, the Appellant was in the service for 10 years. Based on these years, the assessment of severance pay was not improper. The Learned Trial Magistrate didn’t err in finding so.
47. The Appellant claimed that as of May 9, 2022, he had 13 earned but unutilised leave days and sought compensation for them. The Respondent resisted the claim and tendered a leave form, which the Appellant executed on 10th May 2022, taking 13 days. I am persuaded that the Appellant took the 13 outstanding days in light of the unchallenged document. The Appellant didn’t come out clearly, why he wanted to be compensated for the days. Section 40 [f] refers to situations where there are earned but untaken leave days at the date of termination. That wasn’t the case in this matter. The Learned Trial Magistrate rightly declined the relief.
48. Having found that the Respondent issued a notice under section 40 of the Act, which was conforming in duration, I cannot hold that the Learned Trial Magistrate erred in law by rejecting the relief sought under the head, notice pay.
49. The Appellant’s appeal succeeds to an extent, in the upshot. The Learned Trial Magistrate’s finding that the termination of the Appellant’s employment was fair is hereby set aside; instead, a determination that the termination was both procedurally and substantively unfair is made. Consequently, a compensatory award pursuant to the provisions of section 49[1] is granted to the Appellant to the extent mentioned above, amounting to eight [8] months’ gross salary, KShs. 189,168. Costs of the lower court suit shall be in favour of the Appellant, based on the awarded figure.
50. Each party is to bear its own costs of this appeal.
51. Orders accordingly.
Read Signed and Delivered this 8th Day of May 2025.
1. By a Memorandum of Appeal dated 18th April 2024, the Appellant challenges the Judgment and Decree of the Learned Principal Magistrate in the cause mentioned above, on the principal grounds that he erred in law and fact;
[a] In holding that the termination of the Appellant’s employment was on account of redundancy.
[b] When he failed to analyse the pleadings, evidence and submissions before him, it showed that the Respondent had failed to comply with mandatory legal provisions for redundancy.
[c] By finding that the disputed redundancy notice dated 9th May 2012 was lawful without interrogating its validity, sufficiency and compliance with section 40[1][b] of the Employment Act.
[d] By failing to award unpaid leave and reaching a conclusion in error that the annual leave served simultaneously with the impugned redundancy notice was valid.
[e] By upholding the disputed Discharge Voucher despite evidence that the service period did not correctly indicate the Appellant’s 15 years of service.
[f] By upholding the disputed severance pay, KShs. 92, 033 despite evidence that the severance pay was not correctly calculated as per the Appellant’s 15 years of service.
[h] By dismissing the claims in the statement of claim.
[g] By directing the Appellant to pay costs to the Respondent.
[i] By rendering a judgment which was contradictory and manifestly unfair to the Appellant. When he awarded the Respondent KShs. 37,505 as compensation for unutilized leave days despite the evidence that leave was taken.
[d]. When he allowed the Respondent’s claim for underpayments and awarded KShs. 192, 635.
[e]. When he applied the wrong principles when awarding the Respondent KShs 208,958.88 as compensation for unfair termination.
[f]. When he applied the wrong principles when awarding the Respondent KShs 403,241.76 as compensation for overtime.
[h]. When he failed to consider the Appellant’s submissions in the matter.
[g]. When he awarded the Respondent the costs of the suit.
2. The Appellant consequently seeks that: -
1) This Appeal is allowed.
2) That the Judgment of the subordinate Court delivered on 29th February 2024, be set aside, and this court dismisses the lower court suit.
3) The costs of this Appeal are to be awarded to the Appellant.
3. This appeal was canvassed by way of written submissions.
The case before the Trial Court
4. The Appellant’s case was that he first came into the Respondent's employment on 10 March 2007 as a night Security Guard. He worked continuously and uninterruptedly until 9 May 2022, when the Respondent terminated his employment.
5. On 7th May 2022, he received a call from his supervisor, who informed him not to report for the night shift that day, as the Respondent had directed that all employees attend their offices to receive termination letters.
6. The Supervisor informed him that the Respondent had decided to hire other employees in their place.
7. On May 9, 2022, the Human Resource Manager, while handing them termination letters, informed them that the Respondent had terminated their employment due to reduced work.
8. After terminating his employment, the Respondent failed to correctly compute and pay his severance pay and payment in lieu of leave.
9. He asserted that the Respondent’s action breached his labour rights under Article 41 of the Constitution. The termination violated the mandatory provisions of section 40 of the Employment Act. The Respondent did not issue the statutory notices contemplated under the section.
10. Upon the premises, he held that he was entitled to
a) Compensation for earned but untaken 13 leave days, KShs 11. 822.98.
b) Severance Pay, 15 days' pay for every year worked [2007-2022], KShs. 204, 628.50.
c) Damages for unlawful redundancy, twelve months’ gross salary, KShs. 283, 752.00.
d) Costs
e) Interest on [a]-[d] above.
11. The Respondent asserted that it employed the Appellant on June 26, 2010, at a monthly salary of KShs. 23, 646. His employment was terminated on the 10th June 2022, on account of redundancy, as they wanted to strengthen their operations after suffering an economic downturn.
12. 12. By means of a letter dated 9th May 2022, he was apprised of the forthcoming declaration of redundancy and the consequent termination of his employment. Accordingly, the Appellant was issued with a month’s notice.
13. Upon being served with the notice, the Appellant decided to take the leave days that were pending utilisation. His application for the same was granted. Before his termination, his terminal dues, which consisted of severance pay, were computed in his presence, and it was mutually agreed that he would be paid KShs. 92,033 in three instalments. He acknowledged the calculation of the terminal dues and signed a discharge voucher on 23rd June 2022.
14. He received the 1st Instalment of KShs. 32,033, paid through his bank account, but decided to file the instant suit.
15. They urged the trial Court to dismiss the claim. They saw it as a bid by the Appellant to enrich himself, and one that lacked substance unjustifiably.
The Judgment by the Lower Court.
16. After hearing the parties on their respective cases, the Learned Trial Magistrate found the Appellant’s claim lacking and dismissed it with costs.
The Appeal.
17. The Appellant, aggrieved by the decision of the Trial Court, filed the present Appeal on the grounds set out hereinabove.
Analysis and Determination
18. 18. It is now a well-accepted principle that the function of a first Appellate Court is to subject the evidence and materials presented before the trial Court to a fresh examination, as though conducting a de novo hearing, and to derive its independent findings and conclusions. However, it is crucial to recognize that the Appellate Court does not see or hear the parties or their witnesses testify, and therefore must afford appropriate consideration to this fact. When the Appellate Court departs from the findings and conclusions of the trial Court, it is required to articulate the reasons for such departure. This position was thoroughly elucidated in the case of Selle -vs- Associated Motor Boat Co. [1968] EA 123) where the Court held: -
“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 necessarily bound 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 materially to estimate the evidence or if the impression based on the demeanor of a witness is inconsistent with the evidence in the case generally (Abdul Hameed Saif v Ali Mohamed Sholan (1955), 22 E.A.C.A. 270)”.
19. In 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 held that: -
“A first appeal is a valuable right of the parties and, unless restricted by law, the whole case is open for reconsideration both on questions of fact and law. The judgment of the appellate court must reflect this court’s conscious application of its mind and record findings supported by reasons, on all the issues arising along with the contentions put forth, and pressed by the parties for decision of this Court. The first appellate court has jurisdiction to reverse or affirm the findings of the trial court. While reversing a finding of fact the appellate court must come into close quarters with the reasoning assigned by the trial court and then assign its own reasons for arriving at a different finding. A first appellate court is the final court of fact ordinarily and therefore a litigant is entitled to a full, fair, and independent consideration of the evidence at the appellate stage. In addition, we bear in mind that we, unlike the ELRC, did not have the benefit of seeing the witnesses testify. (See Kenya Ports Authority v Kuston (Kenya) Limited (2009) 2EA 212).”
20. I have carefully analysed the record of appeal, and the submissions filed herein by Counsel for the parties, and conclude that the instant appeal can be resolved under two broad issues;
a) Whether the termination of the Appellant’s employment on the alleged account of redundancy was fair.
b) Whether the trial Court fell into error when it didn’t grant the Appellant the relief he had sought.
21. Both section 2 of the Employment Act 2007 and section 2 of the Labour Relations Act define redundancy as: “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 services of an employee are superfluous and practices commonly known as abolition of office, job or occupation and loss of employment”.
22. The locus classicus on redundancy under Kenyan Law is Kenya Airways Limited and Aviation and Allied Workers Union Kenya & 3 others (2014) eKLR, cited by counsel for the parties herein, where the Court of Appeal stated: “There are two broad aspects of this definition. The first one is that the loss of employment in redundancy cases has to be by involuntary means and at the initiative of the employer; it should not be a contrived situation. It has to be non-volitional. I understand this to refer to a situation, in most cases, an economic downturn, brought about by factors beyond the control of the employer, which leaves the employer with no option but to take an initiative, the consequences of which will be inevitable loss of employment………”
23. In the case of Showkat Hussein Badat v Oshwal Education & Relief Board, [2022] KEELRC 157 [KLR], this Court stated:
“50. The defining characteristic of termination on account of redundancy is a lack of fault on the employee. It is a species of “no fault termination. One cannot be off mark to state that it is for this reason that the Employment Act places particular obligations on the employer, most of which are directed towards ensuring that those employees to be dismissed are treated fairly”.
24. Undoubtedly, the law does not recognise a right to lifelong employment. However, the social balance established within the framework of a constitutional regime, wherein the right to fair Labour practices is considered a fundamental right, ensures that an employee is afforded protection against unfair dismissal. Simultaneously, it grants the employer the right to terminate an employee's contract for just cause, provided that appropriate procedures are followed.
25. In a dispute like the instant one, where the fairness in the termination of an employee’s employment on account of redundancy is challenged, the onus is on the employer to satisfy the court that there was a genuine redundancy situation, and therefore a fair and valid reason to terminate the employee’s employment.
26. The Appellant’s pleadings and the evidence presented before the trial court indicate that he was contesting both the justification for the termination of his employment and the fairness, along with the statutory compliance of the procedure utilised by the Respondent to effectuate the termination.
27. I have conducted a thorough examination of the analysis pertaining to the issues presented before the Learned Trial Magistrate, as elucidated in his judgment, and I would like to point out that he, in error, failed to take into account the substantive fairness aspect of the employment termination that was under dispute.
28. In my opinion, it is insufficient for an employer to merely assert that a financial downturn or a right-sizing of its human resources occurred, resulting in the redundancy of certain positions. Employers are expected to provide reasonable details, and this expectation becomes more pronounced when the redundancy is challenged by the employee, who perceives it as unjustified.
29. The financial downturn of an enterprise, the downsizing of human capital, and the declaration of redundancy are processes. They are not events that simply occur. One could, in circumstances as are in the instant case, reasonably expect to see evidence from the employer regarding when the idea to right-size was conceived; the reasons for this idea; the dates when deliberations on the concept were undertaken; the date when a decision was made about the restructure; and discussions on the steps to be followed through the restructure leading to the exit of those affected. For an allegation of financial downturn, statements of account demonstrating the economic status could be anticipated.
30. No evidence was placed before the trial magistrate on the abovementioned matters. The Respondent just asserted an economic downturn and a need to downsize. In my view, this wasn’t enough to discount the Appellant’s testimony that his employment and that of his colleagues was to enable the Respondent to employ afresh.
31. By reason of the premises foregoing, I am persuaded by the Appellant that the termination of his employment was not for a fair and valid reason. The Respondent didn’t establish that the redundancy was genuine.
32. In the case of Kenya Airways Ltd v Aviation and Allied Workers Union Kenya and 3 others (2014) eKLR, the Court of Appeal held and I draw “ inspiration therefrom, that:
“Redundancy is a legitimate ground for terminating a contract of employment provided there is a 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 ………………. what the Phase means, in my view, is that while there may be underlying causes leading to a true redundancy situation, such as reorganisation, the employer must nevertheless show that the termination is attributable to the redundancy- that is that the services of the employee has been rendered superfluous or that redundancy has resulted in abolition of office, job or loss of employment.’’
33. The material and evidence presented to the trial court show that some employees were discharged due to redundancy, while others were retained. The court will examine the retained and declared redundant employees to determine whether redundancy existed. The test involves assessing whether the affected employee should have been selected compared to those who remained in the same department or level. This can only happen if the employer provides material to the court to facilitate the comparison. An adverse inference is unavoidable when the employer withholds material from the court. In this case, the Respondent did not present any material regarding the selection criteria before the trial court.
34. There was no dispute that the Appellant’s employment was terminated through a letter dated 9th May 2022, which read in part;
“Re: Termination of Employment on account of Redundancy.
We are downsizing the number of staff to strengthen our operations due to bad economy the country is facing and the delays while delivering consignment to the East African countries which has generally affected the transport industry at large.
In view of the above as management we have no alternative but to give you one month notice with effect from 9th May 2022 to 10th June 2022………………………………...”
35. In Onesmus Kinyua Magoiya v Prudential Life Assurance Kenya [2022] eKLR, this Court stated;
“The respondent totally failed to place before this court evidence related to the items I have mentioned hereinabove, to enable me gauge the validity and fairness of the reason for the termination(redundancy). The provisions of section 43 and 45 of the Employment Act, set in against the Respondent. Reviewing the evidence by the respondent, one develops the uncomfortable feeling that the rue reason for the termination was not an operational requirement of the respondent. I have considered the submissions by counsel for the respondent on section 40 of the Act on substantive fairness, let me say that it is not enough for the employer to terminate the employee’s service. Validity of the reason must be demonstrated. In the capsule of validity, one must see, candidness, fairness, forthrightness and good faith. To just state the reason like “organizational restructure” is not enough to enable the court to gauge the statutory measure of validity, justice and equity. As was held in Super Group supply Chain Partners V Arthur Dlamini & Another [JA77/10] cited by counsel for the Respondent for an employer to successfully dismiss an employee for its operational requirements, it is obliged to have a bonafide economic reason. In my view, this would only be demonstrated by detailed and or cogent evidence, not unsupported assertions”
36. Section 40 of the Employment Act elaborately provides for what an employer who decides to terminate an employee’s employment on account of redundancy must do. The section provides:
“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.’’
37. The Counsel for the Appellant submitted that the Respondent was obliged under the relevant section to issue two statutory notices to the Appellant; however, only one notice was issued. Consequently, the termination, allegedly due to redundancy, was procedurally unfair. For an extended period within the legal practice, there has existed confusion regarding whether the provision mandates the issuance of two independent notices to the affected employee or merely one. This confusion originated from misinterpreting a statement in the Kenya Airways case [supra]. With the utmost respect, the Counsel for the Appellant appears to be ensnared in this confusion. The stance concerning the number of notices to be issued to the affected employee was elucidated in the case of Cargill Kenya Limited v Caroline Mutuna Mwaka & 3 others [2021] KECA 115[KLR].
38. In the case mentioned above, the Court of Appeal held;
“There have been no definitive findings that a second notice was required to be issued under section 40(1)(f) of the Employment Act before a redundancy, as urged by the respondents. The Court of Appeal did not make any specific finding as regards a second notice being required under section 40(1)(f) of the Employment Act in Barclays Bank of Kenya, Barclays Africa Group (S.A.) Ltd vs Gladys Muthoni & 2 Others (2018) eKLR and in Kenya Airways Limited v Aviation & Allied Workers Union Kenya & 3 others [2014] eKLR. The findings in those matters were made in relation to section 40(a) and (b), which required notice of the intended redundancy to be given to the employees likely to be affected and the labour officer for the area where the employer’s business was situated. The finding was that the notice to be given to employees declaring them redundant was to be given after the conclusion of consultations on all issues arising from the redundancy, and was not pegged to, nor made in the context of section 40(1)(f) of the Employment Act. Therefore, a notice of termination before declaring a redundancy was not a requirement or condition under section 40(1)(f) of the Employment Act.
A plain and contextual reading of section 40(1)(f) of the Employment Act showed that its express objective and purpose was the payment required to be made to employees affected by redundancy, and not the issuance of a notice. It was also notable that the legislative intention from the arrangement and content of the enactments in section 40(1)(d) to (g) was the provision of payments to be made to affected employees in redundancy, and subsection 1(f) could only thus be construed within that context.”
39. The position was affirmed 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) [2023] KECA 894 (KLR)
40. In light of the foregoing, I conclude that lengthwise, the notice that was issued by the Respondent dated 9th May 2022 conformed with the provisions. However, as to whether it was issued to serve, it served the purpose envisaged under the law, shall be interrogated shortly hereunder.
41. A redundancy notice, which I have concluded was issued and served in the instant matter, brings about the event of consultation before a redundancy is declared. In the Kenyan context, consultation must be undertaken. This was emphasised by the Court of Appeal in the Barclays Bank of Kenya Ltd & Another v Gladys Muthoni & 20 others, thus:
“37. We have carefully examined that case, which, unlike this case, involved unionable employees of a collective bargaining agreement and oral evidence tested in cross-examination. In the end, we are persuaded that the dicta of Maraga and Margor JJA regarding consultation prior to declaration of redundancy resonate with our constitution and international laws, which have been domesticated by dint of Article 2(6) of the constitution”
42. The purpose of consultation in a redundancy process cannot be downplayed. The purpose was aptly captured by Maraga JJA (as he then was) in the Kenya Airways case (supra). The Respondent did not tender any evidence here that there were consultations prior to the termination. The Appellant’s submissions that there wasn’t are convincing.
43. In the upshot, I come to the conclusion that had the Learned Trial Magistrate critically considered the provisions of the law and obtaining judicial precedents on redundancy, he could have found that the termination of the Claimant’s employment on the alleged account of redundancy was substantively and procedurally unfair. The Learned Magistrate erred in dismissing the Appellant’s case.
Where the relief is grantable
44. Having found that the termination of the Appellant’s employment was substantively and procedurally unfair, the provisions of section 49[1][c] of the Employment Act set in. The section gives the court the authority to grant compensatory relief for an employee who has successfully challenged the termination of his employment or his summary dismissal from employment for being unfair or wrongful, respectively. However, it is essential to note that the authority is exercised discretionarily depending on the circumstances of each case.
45. I have thoroughly examined the circumstances surrounding the termination of the Appellant’s employment, the Respondent’s failure to comply with explicit and binding legal provisions, the length of service of the Appellant, which is 12 years, and the absence of any proven contribution by the Appellant to the termination of employment. Consequently, I determine that the Appellant is entitled to compensatory relief equivalent to 8 months of gross salary.
46. The Respondent contended that the Appellant entered their employment on 26th July 2010. The Appellant, on his part, asserted that he was first employed on 10th March 2007. Determining when the Appellant joined the Respondent’s workforce was necessary, as it would inform the extent of the statutory benefit of severance pay. I note that the Respondent tendered as an exhibit a letter of appointment dated July 26, 2010, to prove the terms and conditions of the Appellant’s employment. The Appellant did not challenge the document in any manner, nor tender any documentary evidence to support his assertion as regards the date of employment. Going by the letter of appointment, which I have no reason to disbelieve, the Appellant was in the service for 10 years. Based on these years, the assessment of severance pay was not improper. The Learned Trial Magistrate didn’t err in finding so.
47. The Appellant claimed that as of May 9, 2022, he had 13 earned but unutilised leave days and sought compensation for them. The Respondent resisted the claim and tendered a leave form, which the Appellant executed on 10th May 2022, taking 13 days. I am persuaded that the Appellant took the 13 outstanding days in light of the unchallenged document. The Appellant didn’t come out clearly, why he wanted to be compensated for the days. Section 40 [f] refers to situations where there are earned but untaken leave days at the date of termination. That wasn’t the case in this matter. The Learned Trial Magistrate rightly declined the relief.
48. Having found that the Respondent issued a notice under section 40 of the Act, which was conforming in duration, I cannot hold that the Learned Trial Magistrate erred in law by rejecting the relief sought under the head, notice pay.
49. The Appellant’s appeal succeeds to an extent, in the upshot. The Learned Trial Magistrate’s finding that the termination of the Appellant’s employment was fair is hereby set aside; instead, a determination that the termination was both procedurally and substantively unfair is made. Consequently, a compensatory award pursuant to the provisions of section 49[1] is granted to the Appellant to the extent mentioned above, amounting to eight [8] months’ gross salary, KShs. 189,168. Costs of the lower court suit shall be in favour of the Appellant, based on the awarded figure.
50. Each party is to bear its own costs of this appeal.
51. Orders accordingly.
Read Signed and Delivered this 8th Day of May 2025.