Streamlining The Workforce: The Journey to Redundancy in Kenya

Introduction

Redundancy is a difficult and stressful experience for both the employer and employees. It can be even more difficult if you are not familiar with the redundancy process in Kenya. This article will provide you with an overview of the redundancy process, your rights, and duties as either an employer or an employee, and what you can do to prepare for redundancy.

This article provides the information needed to navigate redundancy by looking into the legal framework guiding redundancy in Kenya, to wit the Employment Act, 2007, and the position our Courts have taken when making determinations that touch on redundancy. We do this by looking at:

1. Justification for Redundancy;
2. The Redundancy Procedure;
3. Timelines to Consider in Redundancy; and
4. Exposures of a Company in Redundancy, if any.

Justification for Redundancy

It is important to restate that redundancy in Kenya is governed by the provisions of the Employment Act, 2007 and the International Labour Organization Conventions ratified by Kenya as per Article 2 of the Constitution of Kenya. Therefore, for redundancy to be justified, it must be in line with these laws.

The Employment Act defines 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 the services of an employee are superfluous and the practices commonly known as abolition of office, job or occupation and loss of employment.”

This definition brings out two elements that must be fulfilled for a redundancy process to be justified, being:

1. The loss of employment in redundancy must be by involuntary means and at the initiative of the employer.

The Court of Appeal in Kenya Airways Limited v Aviation & Allied Workers Union Kenya & 3Others (2014) eKLR (hereinafter ‘the Kenya Airways case’) explained this element to mean a situation where there is 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 consequence of which will be the inevitable loss of employment.

1. The loss of employment must be at no fault of the employee and the termination arises “where the services of an employee are superfluous” through “the practices commonly known as abolition of office, job or occupation and loss of employment.”

The Court in the Kenya Airways Case held that this element is satisfied by answering the question as to whether the employer abolished the offices, jobs or occupations of the affected employees resulting in their services being superfluous hence their loss of employment. 

The Redundancy Procedure

In Kenya, an employer has the statutory right to declare redundancy if it is justified. The procedure for redundancy is spelt out in Section 40 of the Employment Act.  To terminate the employees’ contracts of service on account of redundancy, an employer needs to:

1. Give one month’s notice of declaration of redundancy to a Labour Office.
2. Give one month’s notice of the declaration of redundancy to the affected employees. The Court of Appeal in the Kenya Airways Case stated that this notice, which runs concurrently with the notice to the labour office, must be of Thirty (30) calendar days.
3. Have due regard for seniority in time and to skill, ability, and reliability of each employee in selection of employees to be declared redundant.
4. Have meaningful consultations with the employees on the proposed redundancy. The Court of Appeal in Thomas De La Rue (K) Ltd v David Opondo Omutelema [2013] eKLR held that consultations must be with an open mind. The employees affected by the redundancy should be encouraged to express their views individually. You should therefore carefully consider the feedback from all employees before giving the final termination notice. This position was supported by the Court of Appeal in the Kenya Airways Case.

These consultations between an employer and the employees, being that the redundancy is inevitable, are geared towards coming up with measures that will lessen the hardship caused to the employees.

• The employer is then required to pay the leave due to all employees who are to be declared redundant; and
• The employer then is required to pay severance pay of not less than fifteen days’ pay for each completed year of service by the employees declared redundant.

Once all these requirements are met satisfactorily, then the employer can proceed to issue employment termination notices to the employees. The notice of termination should come after all other processes have been exhausted, and a decision made.

Exposures a Company in Redundancy

From the analysis of the law and decided cases, it is notable that common complaints in view of redundancy concern:

1. Failure to inform the required persons of the intention to make a redundancy declaration;
2. Failure to conduct, or conducting unmeaningful, consultations;
3. Unfair selection of employees to be declared redundant; and
4. Failure to consider alternative employment for an employee declared redundant.

Every employer therefore needs to adhere to each and every aspect of the outlined redundancy procedure, to avoid exposing themselves to any adverse claims. Further, being that redundancy is inevitable due to change in market and business needs, then the notices of the proposed redundancy and consultations stemming from the notices should prove that a redundancy is justified.

Conclusion

The upshot of the above analysis is that a proposed redundancy needs to be justified. An employers needs to:

1. Issue a 30 days’ notice of the proposed redundancy to both the labour office and the employees;
2.  Conduct meaningful consultations on the proposed redundancy with the affected employees;
3. Pay any leave days due to the employees; and
4. Issue termination of employment notices to the employees at the expiry of the redundancy notices, upon conclusion of the consultations.  

By:

Kehonji T. kehonji@alakonyalaw.co.ke

Otieno R.  otieno@alakonyalaw.co.ke

This Article is provided free of charge for information purposes only; it does not constitute legal advice and should be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary as set in the article should be held without seeking specific legal advice on the subject matter. If you have any query regarding the same, please do not hesitate to contact us on info@alakonyalaw.co.ke