COMPREHENDING REDUNDANCY IN EMPLOYMENT LAW – KENYA

“Fairness in all forms of termination is the staple of labour law”- Anon

By Quincy Jesse Kiptoo LL.B. (Hons), CPM, Dip in Law

1. The word Redundancy is cited an aggregate of nine (9) times in the Employment Act 2007. It is defined as the loss of employment, occupation, job or career by involuntary means through no fault of an employee, involving termination of employment by 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.
2. Section 40 of the Employment Act outlines the conditions precedent before a position is declared redundant; these conditions are mandatory and are not left to the choice of the employer.
3. Redundancy is a process that involves positions and not employees as the subject. It is not in contest that employers have the prerogative to determine the structures of their business and therefore make positions redundant.
4. Positions and not employees become redundant, thus, when a position becomes redundant, an employee can be redeployed.
5. Re-organization of a business is contemplated by Employment law as a fair termination reason. The provision under Section 45(2) of the Employment Act refers to operational requirements of an employer as constituting a fair reason for termination.
6. In a redundancy, the employees have done no wrong, neither their conduct, nor their capacity is in issue; it is only that in the circumstances, the employer feels that the employees are considered to be a surplus to the needs of the business.
7. Positions may become redundant when and where there is a decrease in business, the operations have been mechanized or there is a necessity to re-organize job descriptions, duties and responsibilities, there is a decline in revenue occasioned by economic difficulties in the market, where there is an extreme high cost of operations, unsustainable employee costs owing to head count salary increments and adjustments
8. In the eyes of the law, the Court must be satisfied that in all circumstances of the case, the decision made by the employer was reasonable. The whole exercise may be rendered invalid if the sole purpose of the exercise is to get rid of an employee.
9. It is gospel truth that fairness in all forms of termination is the staple of labour law. Provided that the decision to render employees redundant is exercised in good faith, the Court is encouraged to not intervene in business decisions of the employer. The Court however, possesses a duty to investigate the facts and circumstances and determine if the exercise of the managerial prerogative was reasonable and in good faith.
10. In finding that a redundancy process was sound, there must be evidence of a fair process. These may include evidence of consultations within the business to ascertain the purpose and need for reorganization resulting in positions becoming unnecessary.
11. It is inescapable that a redundancy affects workers livelihoods and thus the procedure under Section 40 must be mandatorily followed. It can be summarized as follows:

• • • One month’s written notice to Employee and Labour Officer; (if the employee is unionized, trade union must be involved accordingly).
    • Use a criterion of seniority, ability, skill and reliability of each employee.
    • Leave days should be paid in cash.
    • One month notice should be given or one month pay in lieu of notice.
    • Severance pay not less that 15 days for each year of service.

12. The law mandates that a notice of the reorganization should be given to the employee and the local labour officer. The notice to the labour officer serves a dual purpose in that it is meant to elicit advice to the employer on the modalities to be employed and the notice serves as a deterrent against unlawful terminations disguised as redundancy.
13. The loss of employment by redundancy has to be involuntary and at the initiative of the employer. It should not be a contrived situation. In most cases an economic downturn caused by factors beyond the control of the employer leaving no option but to take an initiative whose consequence is an inevitable loss of employment.
14. So long as the employer believes there is a redundancy situation, it is not for the Court or union to substitute their business judgment with that of an employer. The Court considers the financial status of the employer, the foreseeable consequences and any mitigating initiatives employed.
15. It is noted that a precarious financial situation may threaten the immediate, short and long term, and future sustainability of the business. It is evident that suppressed profitability is a reality today due to inflation.
16. An employer contemplating redundancy should issue a notice of the intention to declare redundancy to the employees likely to be affected or their union. The notice should set out the reasons and extent of the intended redundancy. The labour officer of the area should also be notified. It is this notice that will elicit consultations which should be done within the notice period. Upon conclusion of the consultation, a second notice should be issued to the employees affected by the decision to declare them redundant.
17. The employer has a duty to consult which although absent in the Employment Act is codified in recommendation no. 166 of the International Labour Organization Convention No. 158 – Termination of Employment Convention 1982.
18. The purpose of consultations is to accord the parties an opportunity to consider the measures to be taken to avert or to minimize the terminations and measures to mitigate the adverse effects of any terminations on the workers concerned such as finding alternative employment.
19. Consultations are for discussions and negotiations of a way out of the redundancy or the best way of implementing it. Measures should be taken to ensure that as little hardship as possible is caused to the affected employees.
20. Consultation has to be real and not cosmetic. It should not be a charade but a two-way discussion between the employer and employee. It has to be participatory, consultative and informative.
21. The selection criteria required by Section 40(1)(c) should be based on seniority in time, skill, reliability and ability of each employee. Whichever criterion employed by the employer must be applied systematically and uniformly across the board.
22. Termination of employment on account of redundancy should be procedurally fair and substantively justified.

Case Law

• Telkom Kenya Ltd -vs- John Ochanda and 996 others CA Civ Appeal No. 207 of 2012
• Bernard Misawo Obora -vs- Coca Cola Juices Kenya Limited (2015) Eklr
• Thomas De La Rue -vs- David Opondo Omutelema (2013) eKLR
• Fredrick Mulwa Mutiso -vs- Kenya Commercial Bank ELRC Cause No. 2062 of 2013
• Kenya Airways Ltd -vs- Aviation and Allied Workers Union Kenya & 3 others (2014) CA No. 46 of 2013