Articles

UNDERSTANDING THE REDUNDANCY PROCESS IN KENYA

Introduction

Redundancy can be a difficult and often misunderstood process both for employers making tough organizational decisions and for employees facing job loss. In Kenya, redundancy is not simply a matter of terminating an employee’s contract. It is a regulated legal process governed by the Employment Act, 2007, which outlines strict procedural and substantive requirements to protect workers’ rights.

Whether you're an employer considering restructuring or an employee affected by a redundancy notice, understanding the legal framework is essential.

What Is Redundancy?

Redundancy is defined under Section 2 of the Employment Act as the loss of employment due to the employer’s decision to reduce the workforce because the services of certain employees are no longer required. This can occur for various reasons, including:

• Business restructuring
• Mergers or acquisitions
• Automation or adoption of new technology
• Economic downturns
• Closure of a business or department

It's important to note that redundancy is not due to employee misconduct or poor performance. Rather, it's based on operational needs.

Legal Procedure for Declaring Redundancy

To declare a redundancy legally in Kenya, an employer must strictly adhere to Section 40 of the Employment Act, 2007. The steps include:

1. Justification for Redundancy

The employer must demonstrate genuine and valid reasons for redundancy. These reasons must be based on operational, economic, or technological factors and must not be discriminatory or arbitrary.

2. Notification

The employer must issue written notice of the intended redundancy to the following:

• The employee(s) affected – at least one month in advance.
• The labour officer – also one month before the redundancy takes effect.

This notice must explain:

• The reasons for redundancy
• The categories of employees affected
• The selection criteria used

Failure to notify the labour office renders the process procedurally flawed.

3. Selection Criteria

The employer must use fair and objective criteria to determine which employees are to be declared redundant. Common criteria include:

• Seniority or length of service
• Skill, ability, and experience
• Disciplinary record
• Last-in, first-out (LIFO) principle

The criteria used must be non-discriminatory and applied consistently.

4. Consultation

While not expressly provided in the Act, case law emphasizes the importance of genuine consultations with affected employees or their representatives before redundancy is implemented.

5. Payment of Redundancy Benefits

Employees declared redundant are entitled to the following payments:

• Notice pay
• Severance pay: Not less than 15 days’ pay for each completed year of service
• Accrued leave
• Any other contractual benefits

Legal Risks for Employers

Non-compliance with redundancy procedures may expose employers to:

• Claims for unfair termination under Section 45 of the Employment Act
• Financial liability for compensation and damages
• Negative reputation or disruption of labour relations
• Employers are advised to document the entire process and seek legal guidance to mitigate these risks.

Employee Rights During Redundancy

If you are an employee facing redundancy:

• You have a right to receive formal written notice and be consulted.
• You are entitled to redundancy pay, notice pay, and accrued benefits.
• You may challenge the redundancy if due process was not followed.
• You can lodge a complaint with the Labour Officer or file a claim with the Employment and Labour Relations Court.

How BIK Advocates LLP Can Help

At B.I.K Advocates LLP, we provide comprehensive legal support on both sides of the redundancy process:

• For Employers: We assist with compliance, drafting notices, consultation strategies and preparing settlement agreements.
• For Employees: We review redundancy notices, advise on entitlements and represent clients in disputes or negotiations.

Conclusion

Redundancy is a sensitive and highly regulated process. Done correctly, it can help organizations adapt to changing circumstances. Done incorrectly, it can lead to legal battles, damaged reputations, and strained workplace relations.

If you are considering or facing redundancy, don’t navigate it alone. Reach out to B.I.K Advocates LLP for tailored, practical legal guidance.