Due to the high production cost, several companies have signalled plans to reduce their workforce to stay afloat. Some have resorted to redundancy to achieve this objective.
However, the latest court decisions reveal that most employers do not understand or they simply choose to ignore the law relating to redundancy. But what is redundancy? Redundancy occurs when an employer reduces the workforce because a position is no longer required.
Section 2 of the Employment Act defines redundancy as “The loss of employment, occupation, job or career by involuntarily means through no fault of the 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.
It only becomes redundancy when that particular position disappears. Where an employee is dismissed and the position is filled by another person, it becomes a dismissal for purposes of unfair termination.
An employee who is rendered redundant has a right to payment. This 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 he had in the job which has now disappeared.
Redundancy may arise under the following circumstances:
Where an organisation closes down its operations but this need not be a permanent closure: This includes the closure of branches. Under such circumstances, the employees are entitled to pay unless their contract expressly or impliedly permits the employer to move them and wishes to transfer them elsewhere.
Should the employee refuse to be transferred under such circumstances, the employer is at liberty to dismiss such employee.
Where the employer is downsizing: this is where an employer no longer needs the service of an employee entirely or at a particular branch.
This means that if the work can be done by independent contractors there is no need to for an employee to do the work and so redundancy arises.
Where an employer is reorganising the business to have fewer employees: This may include a total change in the duties of an employee such that an entirely new job is created and the old job has disappeared. But if new terms are created without changing the basic nature of the job to disguise it as a redundancy, it will fail because redundancy does not arise under such circumstance. Such changes constitute contractive termination, giving rise to an unfair dismissal claim.
In Kenya, the basic statutory right of every employee who has been dismissed by reason of redundancy is to a payment from the employer. However, the employee must prove that there was redundancy and he or she is eligible to bring a claim for the same. Section 40 of the Employment Act, 2007 provides the procedure for termination of employment on account of redundancy.
It states under Section 40(1) 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 is based.
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 staff in writing and the labour office.
Employers who flout redundancy procedure are simply setting the company up for action for unfair termination and or discrimination claims.
The writer is associate, Simiyu Wekesa Advocates.