The Employment and Labour Relations Court (ELRC) has ruled that a genuine redundancy is not and cannot be a convenient repackaging of a stalled disciplinary or performance process.
It further ruled that where an employer cannot account for the coincidence of timing between the two, an adverse inference lies against the genuineness of the redundancy declared.
The ELRC made the decision when it ruled that termination of Mr John Mshenga’s employment (as Relationship Manager, Energy & Hull) by GA Insurance Ltd on account of redundancy was unfair and unlawful, both substantively and procedurally.
This, it said, the respondent (GA Insurance Ltd) having failed to prove a genuine operational cause for the redundancy and failing to accord the claimant (Mr Mshenga) meaningful consultation mandated by Section 40 of the Employment Act, 2007.
The ELRC issued a declaration that the termination of Mr Mshenga’s employment by GA Insurance Ltd on account of redundancy was unfair and unlawful.
It ordered the respondent to pay the claimant Sh2.7 million as compensation for unfair termination of employment, being six months’ gross salary subject to statutory deductions.
GA Insurance Ltd was also ordered to pay Mr Mshenga Sh130,143 and Sh315,000 as compensation for accrued and unutilized leave days, and unremitted employer pension contribution respectively.
The ELRC said that it was satisfied on the totality of evidence that there was no unanimity within GA Insurance Ltd’s own ranks as to whether the claimant's performance warranted termination of his employment and that the redundancy process was resorted to as an expedient alternative route by which to exit him from employment outside safeguards that would have attended a termination founded on capacity or performance.
It also said that the unreliability of the respondent's case was further underscored by the ambiguity surrounding who was affected by the redundancy and on what criteria.
It noted that the respondent’s witness testified under cross-examination that four employees were affected, naming only one, in addition to the claimant, and conceding that no documentation had been produced to show that any of the four exited the company’s employment on that account.
This, the court noted, sits uneasily with the respondent's own written submissions which assert that five roles were impacted and that five employees were declared redundant.
“An employer that cannot, between its pleadings, witness and own submissions, speak with one voice as to how many employees were affected by a redundancy it says it carefully planned, cannot be said to have discharged the burden of proving that the exercise was a genuine, considered operational undertaking, as opposed to an improvised justification for the exit of a single, targeted employee,” ruled the ELRC.
The ELRC also said that it was clear that no consultation was ever extended to the claimant and the respondent’s witness could not point to a single minute, memorandum or record of any consultative engagement with him (claimant) whether before or after the notice of intended redundancy.
“This court finds and holds that the respondent failed to comply with the mandatory procedural requirements of Section 40 of the Employment Act, in particular the requirement of meaningful consultation and that the termination of the claimant's employment was, on that ground alone, procedurally unfair,” ruled the ELRC.
Mr Mshenga sued GA Insurance Ltd contending that his employment was unfairly and unlawfully terminated under the guise of redundancy.
He told the court that respondent treated him unfairly and unreasonably, in a concerted effort to push him out of employment.
The claimant further testified that by a letter, the respondent invited him to a performance hearing, which, after two postponements, was eventually held virtually.
He told the court that the outcome of the hearing was never communicated to him despite numerous follow-up requests, including a written request through email.
The claimant told the court that instead of receiving the outcome of the hearing, he was served with a letter of notice of intended redundancy, three days after his written demand for the outcome of the performance process.
He testified that after service of the notice, he was never engaged further on the intended redundancy, and that on June 22, 2023, he was served, without any prior consultation, with a letter of notice of termination on account of redundancy.
The claimant told the court that the purported redundancy exercise was unprocedural, unlawful, and contrived, being nothing more than a device to oust him from employment.
GA Insurance Ltd denied liability and asserted that the claimant's employment was terminated lawfully and fairly on account of a genuine redundancy occasioned by a staff-streamlining and restructuring exercise which resulted in elimination or modification of positions and roles within its marketing departments.
It told the court that the termination of the claimant's employment was preceded by requisite general and specific notices of the impending redundancy, together with notification to the Labour Officer, issued sequentially.
The respondent also told the court that it took into account all relevant considerations and applied appropriate criterion in determining the employees to be declared redundant.
GA Insurance Ltd also said that it explored and held meaningful pre-redundancy consultations preceding the issuance of specific notices to the claimant and other affected employees as required under the Employment Act.
