Termination in lieu of notice

Termination of employment is regulated by the Employment Act. An employee may be terminated after the serving of due notice or paying in lieu of notice.

Section 35 of the Employment Act deals with termination in lieu notice. Pursuant to Section 35 (1) (c) of the Act provides that where the contract is to pay wages or salary periodically at intervals of or exceeding one month, a written notice period of 28 days should be issued.

The employer has an obligation ensure that the employee understands the notice.  However, such receipt of notice does not affect the rights of an employee to dispute the legality or fairness of the termination in accordance with section 46 of the Act which provides for grounds which do not constitute fair reasons for dismissal or for the imposition of a disciplinary penalty.

The Notice period runs from the day after it is given, unless a later date is specified.  An employee in long term service is entitled to service pay for every year worked on terms that shall be fixed.  However, Section 35 (6) of the Act underpins that the provisions of terminations by notice do not apply to employees whose contracts are stated to be permanent and pensionable, or those who are members of the Retirement Benefits Act, or gratuity or service pay scheme established under a collective agreement or National Social Security Fund any other scheme established and guaranteed by the employer.

Termination by Employer without Payment in Lieu of Notice

Section 36 of the Act allows either parties in an employment contract to terminate without notice upon payment to the party of the remuneration which would have been earned by the other party or paid by him, as the case may be, in respect of the period of notice required to be given.

Redundancy

Redundancy is defined under Section 2 of the Employment Act as the loss of employment, occupation, job or career by involuntary means through no fault of the employee. It involves the termination of employment at the initiative of the employer, where the services of the employee are superfluous.

Redundancy may arise in various circumstances including but not limited to the practices commonly known as abolition of office, job or occupation. The most common examples of these circumstances being:

• During the restructuring of an organization whereupon the organisation is making losses and there is need to restructure.
• Instances where the employer has ceased or intends to cease continuing business.
• Where the requirement for an employee to perform their duties as per the employment contract has ceased or diminished.

Procedure of Termination on account on Redundancy

The substantive and procedural law guiding termination of an employee on account of redundancy is section 40 (1) of the Employment Act. The said provision obligates an employer not to terminate a contract of service on account of redundancy unless the employer complies with the following conditions:

1. Where the employee is a member of a trade union, the employer should notify the union to which the employee is a member and the labour office in charge of the area where the employee is employed of the reasons thereof and the extent of the intended redundancy not less than a month prior to the date of the intended termination on account of redundancy.
2. Where an employee is not a member of a trade union, the employer should notify the employee personally in writing and the labour officer.

• The employer has in the selection of the employees to be declared redundant has 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.

1. Where there is in existence of a Collective Bargaining Agreement (CBA) between the employer and a trade union setting out terminal benefits payable upon redundancy, the employer should not place an employee at a disadvantage for being or not being a member of a trade union.
2. The employer has where leave is due to an employee who is declared redundant, paid off the leave in cash.
3. The employer has paid an employee declared redundant not less than one month’s wages in lieu of notice.

• The employer has paid to an employee declared redundant severance pay at the rate of not less than 15 days pay for each completed year of service.

To establish substantive justification, the loss of employment on account of redundancy has to be by involuntary means and at the initiative of the employer.

The Procedural facet is comprised of two requirements:

• Firstly, the employer must strictly comply with the provisions of section 40 (1) of the Employment Act which requires the issuance of notices in the prescribed manner and period. The rationale of the notice period in principle is to give an allowance to the employer to find subsequent employment and also to give room for consultations between the parties. This is in line with Article 13 of Recommendation No. 166 of the International Labour Convention (ILO) No. 158 – Termination of Employment Convention which Kenya is bound by dint of being a member of ILO. The aforementioned Convention requires for consultations between the employer and employee or their representatives before termination under redundancy.
• Secondly, with regard to the selection criteria, the employer must develop and apply an objective process of identifying employees to be affected by the redundancy. The employees affected must be directly impacted by the reasons of the redundancy.

Alternatively, rather than terminating or declaring staff redundant during times of crisis, the practise by  some employers has been to enter into negotiations with their employee’s unions to negotiate favourable terms until the said crisis subsides.