Redundancy Done Right: Avoiding Unfair Termination Claims Under the Employment Act

Redundancy Done Right Kenya is less about the decision to cut a role and more about the paperwork trail an employer leaves behind while doing it. Section 40 of the Employment Act 2007 sets out a specific sequence employers must follow, and Kenyan courts have shown they will read it closely. Two defects account for most of the redundancies that end up reclassified as unfair terminations: employers who confuse two separate notice obligations, and employers who get the order of consultation backwards.

What Section 40 Actually Requires

Section 40 requires written notice to the employee and, where applicable, notice to the employee’s trade union or a labour officer, of at least one month before the intended date of termination. Selection for redundancy must have regard to seniority in time and to the employee’s skill, ability and reliability, criteria intended to prevent redundancy being used as cover for arbitrary or discriminatory dismissal. The employer must pay accrued leave in cash, pay notice or salary in lieu of notice, and pay severance of not less than fifteen days’ pay for each completed year of service. None of these individual requirements is complicated on its own. Where employers go wrong is in the sequencing and documentation of the process as a whole.

Defect One: Conflating Notification With Termination

Gerrishom Mukhutsi Obayo v DSV Air and Sea Limited [2018] KEELRC 1292 is the clearest illustration of the most common mistake. The employer delivered a single termination letter to a General Manager for Airfreight and treated that as satisfying section 40. The court held that the Act actually requires two distinct communications: an advance notification of intention to make the position redundant, and a separate notice of termination once the process has run its course. Because the employer never issued the standalone advance notification, the redundancy was found unprocedural and unfair, and the court awarded one month’s salary specifically for the missing notification period. The practical lesson is to issue the notification and the eventual termination as two clearly separated documents, not one letter doing double duty.

Defect Two: Getting the Sequence Backwards

Radar Limited v Mwadime & 8 Others [2024] KEELRC 2618 shows a different flavour of the same underlying problem. The employer notified the union of the redundancy seven months after the affected employees had already been terminated, gave no direct notice to the employees themselves, and could produce no evidence of any consultation process. The court found the redundancy unfair under sections 40, 43 and 45, and ordered compensation calculated with reference to the statutory severance formula, together with notice pay and service pay. The case is a reminder that section 40’s obligations run in a specific order, and that a redundancy carried out first and formalised on paper afterward will not survive scrutiny simply because the paperwork eventually exists.

Selection Criteria Are Not Optional Paperwork

Employers sometimes treat the seniority, skill, ability and reliability criteria in section 40 as a formality to be recited rather than a standard to be applied. In practice, courts expect to see how the criteria were actually weighed against the pool of employees whose roles were at risk, not just a statement that they were considered. Where an employer selects one employee for redundancy out of several performing similar roles, the safest position is a documented comparison against the statutory criteria, prepared before the notification is issued rather than reconstructed afterward if the selection is challenged. A redundancy that targets a single employee without a comparator pool invites the inference that the process was not really about the role at all, which is precisely the kind of finding that converts a redundancy into an unfair termination.

Building a Redundancy That Holds Up

A defensible redundancy process, in practice, looks like this: a documented business or operational reason for the redundancy itself, selection criteria applied and recorded against seniority, skill, ability and reliability rather than convenience, a written notification of intention issued at least one month ahead to both the affected employees and any relevant union or labour officer, genuine consultation during that month, and only then a separate termination notice once the process concludes, accompanied by accrued leave, notice pay, and severance calculated at fifteen days per completed year of service. Employers who keep these steps visibly separate, rather than compressed into a single letter issued on the day, are the ones who tend to survive a challenge at the ELRC.