Personal Finance

How Covid-19 pandemic has affected layoffs

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Employees consulting. FILE PHOTO | NMG

Summary

  • The recent redundancy statement by Kenya Airways revealed the truth, which will become a reality for a majority of employers in the coming weeks.
  • The job, working environment, business and market that employees left to work from home or proceed on unpaid leave will be completely different in many cases to the one they return to in the future.
  • Big corporations and small and medium enterprises (SMEs) will need to plan for this new reality, and even the best-intentioned employers may need to break its promise to keep jobs open.

The Covid-19 pandemic has sparked a health crisis and disrupted businesses.

The recent redundancy statement by Kenya Airways revealed the truth, which will become a reality for a majority of employers in the coming weeks.

The job, working environment, business and market that employees left to work from home or proceed on unpaid leave will be completely different in many cases to the one they return to in the future.

Big corporations and small and medium enterprises (SMEs) will need to plan for this new reality, and even the best-intentioned employers may need to break its promise to keep jobs open. As such it is likely redundancies will, unfortunately, become necessary; if not in the immediate then potentially while employees are on unpaid leave. This raises several legal issues to consider.

Trying to ensure that a redundancy process is carried out correctly is difficult enough when businesses are operating as usual. What process needs to be followed during the Covid-19 pandemic? Employers should bear in mind that the usual rules including what constitutes a genuine redundancy situation and the fair process will apply.

However, the question of whether a genuine redundancy situation has arisen or employers are practically able to abide by the procedures under section 40 of the Employment Act 2007 is subject to debate. For example, the requirement that a position that was previously held by an employee should disappear will be a legal landmine for employers who may want to hire new employees to fill vacant positions once things have improved.

This could be in a month or a year but proving for purposes of redundancy that the said position has disappeared would present a challenge to employers.

Another key consideration in any redundancy process is the criteria by which employees are selected for redundancy.

To be fair, the selection must involve the application of objective selections, which by practice employers have applied the last in the first-out rule.

Subsequently, the law provides that an employer should, in the selection of employees to be declared redundant, have had due regard to seniority in time and to the skill, ability and reliability of each employee of the particular class of employees affected by the redundancy before terminating them on grounds of redundancy.

Employers will have to ensure that the criteria used in selecting a particular class of employees are not directly or indirectly discriminatory. This is because selecting employees for redundancy purely on the basis that they have been affected by the impending redundancy could be problematic.

The third requirement and perhaps the most critical is that an employee who is rendered redundant is entitled to a redundancy payment.

The purpose of the payment is not necessarily to give the employee a financial cushion until he or she finds another job but simply to compensate one for a loss of right one had in the job which has now disappeared.

The pay includes severance not less than 15 days for each completed year, leave earned but not utilised and one month in lieu of notice in instances where the employee is not required to serve the notice period.

Although this may not present a major legal problem to employers, there is no doubt that redundancy in itself is an expensive affair for any business.

The last requirement is the notice. Section 40(1) provides that an employer shall not terminate a contract of service of an unionised employee on account of redundancy unless the employer has notified the trade union to which the employee is a member, of the impending redundancy followed by another notice to the labour officer in charge of the area where the employee works.

The notice must state the reasons for and the extent of, the intended redundancy.

The two notices must be given not less than a month before the date of the intended termination on account of redundancy. Further, where an employee is not a member of a trade union, the employer must notify the employee personally in writing and the labour office. It is also important to prepare the employee psychologically to mitigate the ramification of unplanned loss of income.