Redundancy means loss of employment, occupation, job or career by involuntary means through no fault of an employee. It involves termination of employment at the initiative of the employer.
Redundancy is defined under Section 2 of the Employment Act, 2007 as the loss of employment, occupation, job or career by involuntary means through no fault of an employee. It involves termination of employment at the initiative of the employer, where the services of an employee are superfluous. Redundancy may arise under various circumstances including but not limited to the practices commonly known as abolition of office, job or occupation and loss of employment.
Circumstances in which redundancy may include:
- When a company is downsizing
- When a company is restructuring
- Reduction in staff requirements due to inefficiency gains or falling demand.
Law Applicable
Section 40(1) of the Employment Act provides for the substantive and procedural legal requirements that an Employer needs to comply with while effecting a termination on account of redundancy, it provides as follows:
“An employer shall not terminate a contract of service on account of redundancy unless the employer complies with the following conditions:-
- where the employee is a member of a trade union, the employer notifies the union to which the employee is a member and the labour officer in charge of the area where the employee is employed of the reasons for, and the extent of, the intended redundancy not less than a month prior to the date of the intended date of termination on account of redundancy;
- where an employee is not a member of a trade union, the employer notifies the employee personally in writing and the labour officer;
- the employer has, in the selection of employees to be declared redundant 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;
- where there is in existence a collective agreement between an employer and a trade union setting out terminal benefits payable upon redundancy; the employer has not placed the employee at a disadvantage for being or not being a member of the trade union;
- the employer has where leave is due to an employee who is declared redundant, paid off the leave in cash;
- the employer has paid an employee declared redundant not less than one month’s notice or one month’s wages in lieu of notice; and
- the employer has paid to an employee declared redundant severance pay at the rate of not less than fifteen days pay for each completed year of service
For a termination on account of redundancy to be fair and lawful, an employer must adhere to the requirements set out in Section 40(1) of the Employment Act, 2007, unless the parties have entered into an agreement to the contrary with terms greater than the minimum statutory requirements which may be through a contract of employment or Collective Bargaining Agreement (CBA).
Eugene Mweresa Sudi
Advocate