The road to redundancy must be fair, transparent and humane

Like many other countries, Kenya has been experiencing a cost of living crisis, record-high inflation and the looming threat of a recession. During a recession, the economy slows down, forcing businesses to investigate ways to stay afloat. Oftentimes, this includes cost and staff reduction plans like retrenchments and redundancy.

Sadly, in the coming years, we must expect more businesses embarking on restructuring considering all the macroeconomic stresses we all face. But it needs to be done right.

Redundancy is challenging for employers and employees. Redundancy can arise due to various reasons such as a change in the business landscape, a shift in the company’s strategy, or economic downturns. Whatever the reason, it is essential that employers to manage the process to ensure the best outcome for all parties.

It is worth noting that the declaration of redundancy is a managerial prerogative driven by business operations and market dynamics. Therefore, the court is reluctant to interfere unless it is sufficiently demonstrated that there was no valid or justifiable reason for the redundancy.

In a recent employment dispute ruling we saw the court ruled in favour of Kenya Power & Lighting Company (KPLC), the employer in the suit. Between 1998 and 2003, KPLC faced several challenges, including a prolonged drought, which significantly affected the organisation’s business operations and led them to restructure the business and reduce costs. Redundancy formed part of the reduction of costs, and consequently, more than 300 employees’ contracts were terminated which led the employees to file a suit against the organisation in 2002.

Employers should note that employees do not become redundant; their positions do. Therefore, when the position becomes redundant, the employee can be redeployed, which means the employee is given another job or retrenched and loses their job. For a redundancy to be considered lawful, an employer must demonstrate that there are valid and justifiable reasons for it and that all procedures provided in the Employment Act of 2007 have been followed.

The redundancy process can be broken down into five distinct steps. Firstly, employers need to notify employees of the intended redundancy. The notice should include the reasons for and extent of the redundancy. Second, the Labour Officer must be notified of the intended redundancy. Following this, the third step involves a consultation process to ensure fairness. The fourth step includes a notice of redundancy, a new appointment, or retention. Lastly, employers need to issue a certificate of service, and on the last day of employment, the employee must be paid their terminal dues.

Although the law can feel like a rigid process, it is important to remember the humanity inherent in this process. Managing redundancies can be a challenging task for employers, but it more often pales in comparison to losing one’s livelihood – especially in these difficult times. That’s why it is paramount that employers successfully navigate the redundancy journey to minimise the impact on their employees by being transparent, providing support and ensuring fairness. 

Ms Mugenyu is senior associate at Cliffe Dekker Hofmeyr