Redundancy under section 40: the selection criteria are where employers lose

Kenyan courts have tightened what counts as a fair redundancy. Genuine operational need is not enough if the process and the selection cannot be evidenced.

Redundancy in Kenya is governed by section 40 of the Employment Act, 2007, which imposes both substantive and procedural requirements. Claims challenging redundancy have grown steadily before the Employment and Labour Relations Court, and the pattern in recent decisions is consistent: employers usually have a genuine commercial reason, and still lose on process.

The procedural requirements

Before terminating on account of redundancy, an employer must issue written notice explaining the reasons for and the extent of the intended redundancy, at least one month in advance. Where the affected employee belongs to a trade union, notice goes to the union and to the labour officer for the area. Where the employee is not unionised, notice goes to the employee directly and to the labour officer. The labour officer must be notified either way.

Courts have placed weight on the statute's use of the words intended redundancy and intended date of termination. That language is deliberate. Notice must issue before the decision to terminate has been made, so that consultation can meaningfully take place. A notice that presents termination as a concluded decision does not comply, however clearly it is written.

Consultation is not optional

The requirement to consult has been treated as implicit in the principle of fair play under section 40(1), reinforced by ILO Recommendation No. 166 to the Termination of Employment Convention, which applies in Kenya through Articles 2(5) and 2(6) of the Constitution.

In a 2025 decision the court found a redundancy unfair where the employee was summoned to a meeting without prior notice, no agenda was circulated, and the employer kept no minutes. The absence of records was fatal. If consultation is not documented, an employer will struggle to prove it happened.

Selection criteria: the current standard

The Court of Appeal in London Distillers (K) Limited v Kenya Union of Commercial Food & Allied Workers [2025] KECA 216 (KLR) addressed selection directly. Employers must give due regard to seniority in time alongside skill, ability and reliability across the class of employees affected. Disregarding these metrics risks the process being characterised as arbitrary and lacking objectivity.

The court's framing is demanding: a criterion that is flawed even to a lesser degree may fail to meet what section 40 contemplates. The consequence of a flawed selection is that the redundancy may be declared invalid or damages awarded.

Restructuring is not a workaround

Two related propositions have been confirmed in recent decisions. Abolishing a position during a restructuring does not remove the obligation to afford notice, consultation and terminal dues. And outsourcing a function does not justify terminating the employees who performed it unless redundancy procedure is followed — outsourcing cannot be used to sidestep the statutory protections.

Awards for non-compliance have been substantial. Employers have been ordered to pay sums well into the millions of shillings where the redundancy was procedurally defective.

A working checklist

• Document the operational case for the redundancy before anything is communicated.
• Issue notice of intended redundancy at least one month before the intended termination date, to the employee or union and to the labour officer.
• Convene consultation with an agenda circulated in advance, and keep minutes.
• Set selection criteria in writing before applying them, covering seniority, skill, ability and reliability, and record how each affected employee was scored.
• Calculate terminal dues on the statutory formula and settle them on time.
• Keep the complete file. Three years later, it is the only evidence you will have.

Our view

The commercial decision to reduce headcount is the employer's to make, and courts do not readily second-guess it. What courts examine is whether the employer treated the process as a genuine consultation or as an announcement dressed up as one. Employers who involve counsel at the point of announcing a redundancy have usually already made the errors that matter. The advice is worth far more before the first notice goes out.

Margaret Kadzo

Partner — IP Law & Litigation

Margaret balances courtroom litigation with property and corporate advisory, focusing on civil and commercial litigation, ADR, employment law and conveyancing.