Employers are required to carry out consultations with employees before terminating their jobs through redundancy, the Court of Appeal in Nairobi has ruled, stating that lack of consultation makes the redundancy irregular and unlawful.
In a judgement that is likely to be a respite to workers, the three-judge bench held that giving employees together with their trade unions and the labour office a notice of intended redundancy is not sufficient proof that the affected workers were consulted.
The court further held that consultation must not be cosmetic and that it has to be a reality not a charade.
Additionally, that the one-month notice of redundancy should give consultations and dialogue a chance, before the final decision on termination is made.
"A notice to the employee, trade union and labour officer opens up the door for a consultative process with the key stakeholders. 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," said Justices Hannah Okwengu, Hellen Omondi and John Mativo.
Because a redundancy by its very nature adversely affects employees without any fault or wrongdoing on their part, the court said employees therefore need to be cushioned from the adverse effects of losing job.
The court, however, ruled that it is an employer’s prerogative to make its employees redundant if there is a justifiable business reason for doing so.
The judges said that since the Employment Law does not list specific instances of redundancy, an employer should ensure that the reason is based on operational business requirements.
"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," added the judges.
They explained that consultation on an intended redundancy between the employer and employee is also now specifically required by Article 47 of the Constitution and the Fair Administrative Action Act.
"Article 47 and section 4(3) of the Fair Administrative Action Act provide that where an administrative action is likely to adversely affect the rights or fundamental freedoms of any person, the administrator shall give notice to the person affected by the decision," said the judges.
They were ruling an employment termination dispute between The German School Society and it's former chief accountant Helga Ohany.
The court awarded Ms Ohany Sh2.9 million for unlawful redundancy. The trial court had awarded her Sh5.9 million as compensation of 12 months’ salary but the appellate court reduced the amount saying it was excessive and substituted the award with Sh2.9 million being six-months gross pay.
The judges found that there was no evidence on record or presented to the trial court regarding any consultations undertaken before she was declared redundant in 2014. She was employed in 1995 at a salary of Deutsche Mark (DM) 2,076 per month.
"A reading of the record shows that Ms Ohany 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," said the appellate judges while upholding the High Court's finding.
The judges, however, set aside decision of the High Court to award Ms Ohany damages for discriminatory practice in the sum of Sh5,945,340.
They also set aside award of Sh4.9 million for the back pay, which was the difference between pay earned between 2003 and September 2007.
About the scope of the consultations in a redundancy process, the court held that purpose of the notice is to give the parties an opportunity to consider measures to be taken to avert or to minimise the terminations and measures to mitigate the adverse effects of any terminations on the workers concerned.
In addition, the court said termination of employment through redundancy is also subject to the substantive justification envisaged by Sections 43 and 45 of the Employment Act, 2007 which provides for proof of reason for termination and for unfair termination respectively.
For termination to be fair in the eyes of the law, the court said it has to be both substantively and procedurally fair.
