In Ecobank Kenya Ltd v Ngina, Court of Appeal, Civil Appeal No. 4 of 2020, the Court upheld a finding that a genuine, substantively justified redundancy was nonetheless unfair because a general restructuring communication is not the personalised notice that section 40 of the Employment Act demands.
Here is what the Court held, why it matters, and where the compliance risk now lies
INTRODUCTION
In Ecobank Kenya Ltd v Ngina, the Court of Appeal (Karanja, Achode & Muchelule JJ.A) confronted a scenario where an employer restructures in good faith, communicates the change widely to staff, and then finds itself defending a redundancy it genuinely believed was lawful.
The Court accepted that the restructuring was real and that the respondent’s position had genuinely been abolished and still held the redundancy unfair.
This update distils what the Court decided, why it matters, and where the compliance risk now sits.
A GENUINE RESTRUCTURING, A SUBSTANTIVELY JUSTIFIED REDUNDANCY
The respondent, a Customer Service Resolution Officer of seven years’ standing, was declared redundant after her role was absorbed into a new, more advanced customer experience function during a phased reorganisation of the bank’s operations.
The Court found the restructuring neither manufactured nor pretextual: the function had genuinely been reconfigured, first into a Customer Service Quality unit, then into a more strategic Customer Experience Management function and the new role demanded competencies the respondent did not possess. She had applied for it and been unsuccessful. The redundancy was therefore substantively justified: the position was validly abolished, and the respondent was not suitable for redeployment.
THE FATAL DEFECT: A CIRCULAR IS NOT A SECTION 40 NOTICE
The email the appellant relied upon as proof of notice was titled “Domestic Bank Reorganisation”, was addressed to a distribution list, and made no mention of redundancy at all, still less that the respondent’s own position was under threat. The Court held that this could not satisfy section 40(1)(b), which requires that an employee who is not unionised be notified personally, in writing, of the reasons for and the extent of the intended redundancy.
General awareness that restructuring was happening somewhere in the organisation, even applying for a newly created role, is not the same as being told, individually, that one’s own job is on the line.
Takeaway: A restructuring announcement, however widely circulated, is not a redundancy notice. Each affected employee must be notified personally, in writing.
NOTICE TO THE LABOUR OFFICE: TIMING IS NOT NEGOTIABLE
The appellant’s notice to the Labour Office was dated after the respondent’s last working day, meaning the statutory requirement of at least one month’s prior notice to the Labour Officer was not met at all. The Court treated this as a serious and independent defect, not a curable technicality, rejecting the argument that the delay was a mere technical lapse that ought not to be fatal to an otherwise genuine redundancy.
Takeaway: A Labour Office notice issued after the fact — even where the substantive decision was sound — will not cure the defect.
THE MANNER OF EXIT COUNTS
The Court was equally troubled by how the respondent left: no explanation of the selection criteria applied, no opportunity to be heard, and an employee “treated rudely, and escorted out of the compound like a criminal,” her system access disabled before she could even clear her desk. These matters featured directly in the Court’s assessment of fairness and of the compensation ultimately due.
Takeaway: The dignity of the exit, hearing, selection criteria, premises and systems handling, is part of the fairness inquiry, not an afterthought.
REMEDIES: SECTION 49 DISCRETION AND THE NOTICE-PAY VARIATION
Taken together, these findings drove the Court to the same conclusion the trial court had reached: the redundancy was fair in substance but unfair in process. The five months’ compensation awarded under section 49 was upheld as a proper exercise of the trial court’s discretion.
The Court did, however, reduce the notice-pay award from two months to one, having found that a later, signed employment letter providing for one month’s notice superseded the earlier document on which the respondent had relied for three, a quiet reminder that terminal-dues computations turn on which contractual document actually governs.
IMMEDIATE ACTION POINTS
| Action Item | Who Should Act | Legal Basis |
| Issue a personalised written redundancy notice to each affected employee, specifically identifying that redundancy is intended, the reasons for it, and its extent, a restructuring circular or town-hall does not suffice. | HR; in-house counsel | s.40(1)(b) |
| Serve notice on the Labour Officer at least one month before the intended termination date. A notice dated after the last working day is an independent, incurable defect. | HR; in-house counsel | s.40(1)(b), |
| Document the selection criteria applied and give affected employees an opportunity to be heard on them before termination takes effect. | HR; line management; counsel | s.40(1)(c); |
| Plan a dignified exit: avoid abrupt escorting from the premises and premature disabling of system access, the manner of exit feeds directly into the fairness assessment and compensation. | HR; security; IT | s. 49 |
| Verify which contractual document governs notice pay before computing terminal dues, a later, signed letter will supersede an earlier one. | HR; payroll; counsel | Contract terms |
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About the author
Caxstone specializes in civil, employment and labour disputes, constitutional law, family law and succession, and environment and land matters. He has amassed a wealth of knowledge and experience in litigation which is evident in the successes obtained for clients. He is an active member of the Employment and Labour Relations Court Bar-Bench committee.
Frankline M. Otieno is a dispute resolution associate, recommended professional and committed to offering sustainable client-centred solutions to legal issues.Frankline is astute in commercial litigation, securities law, banking law, intellectual property litigation, public procurement, land law litigation, Judicial Review and Administrative law litigation, sports law, tax litigation, administrative law, consumer protection law, competition law and constitutional litigation.
Denis Mutugi specializes in Commercial Litigation and Alternative Dispute Resolution.
Denis graduated with a Bachelor of Laws, LLB (Hons) from The University of Nairobi in 2021 and was admitted to the Roll of Advocates of the High Court of Kenya in the year 2023.
Denis has amassed a considerable wealth of experience in conducting legal research on various complex legal matters touching on Commercial, Insurance, Employment and Insolvency law and bankruptcy.
