Christine Mugenyu and Faith Obunga from law firm Cliffe Dekker Hofmeyr (CDH) unpack the importance of fair selection when redundancy comes into play
Kenyan employers looking to restructure must come to terms with the basic legal requirements for redundancy. In our experience, a key aspect is often overlooked: the process by which employees are selected for redundancy. This is where lawfulness of the procedure can be made or broken.
The Employment Act wholly governs redundancy in Kenya. While employers are typically familiar with their obligations to issue notices, consult the labour office and pay severance, Kenyan courts have consistently held that fulfilling these obligations is not enough. Indeed, employers must go further and ensure redundancy is transparent and fair, particularly when it comes to the selection of affected employees. Be warned, even where genuine reasons for redundancy exist, termination can still be deemed unfair if the procedure is irregular.
The Employment Act refers to the “last-in, first-out” (LIFO) principle which means that when employees are selected for redundancy those who joined the company most recently (the last in) should be first to be let go (first out). However, this principle is not absolute. The Act qualifies it with “subject to all other factors such as skill, ability and reliability”. Employers must therefore apply selection criteria that are objective, job-related and evidence-based. Arbitrary decisions or undocumented assumptions are legally risky and procedurally unfair.
Many employers have fallen foul with arbitrary or undocumented selection criteria. This manifests in the failure to consult properly with employees or unions, disguising redundancies under terms like “retirement” or “retrenchment” and issuing misleading or inadequate notice periods. Generally, we’ve seen that common errors include selecting individuals rather than roles, ignoring performance records or skills when choosing who to let go, rushing the process without meaningful consultation, and failing to retain documentation to justify decisions. These missteps can result in redundancies being ruled procedurally unfair, even where the business reasons are valid.
To ensure legal compliance and fairness, employers should begin by identifying the roles affected by the redundancy, focusing on specific positions rather than targeting individuals. They should then apply fair and consistent selection criteria, such as skills and qualifications relevant to the remaining roles, performance history based on documented appraisals, disciplinary record and attendance, and, if necessary, length of service as a tiebreaker rather than a primary criterion.
Consultation is equally critical. Employees should not simply be informed of the decision. The employer should explain the business rationale, share the proposed criteria and listen to feedback, especially where unions or staff representatives are involved. Courts have repeatedly found that where consultation is missing or superficial, even a valid redundancy may be struck down.
Once decisions are made, employers must explain the basis of selection and issue proper termination notices and statutory dues like severance pay. Where possible, support measures like references or outplacement counselling can help soften the impact and preserve the employer’s reputation.
Ultimately, employers are encouraged to use what we call a selection matrix. This simple tool allows for more consistent scoring of all employees in the affected category. Not only does it ensure decisions are backed by documentation, but it also helps avoid any perceptions of bias. Crucially, it is recommended that the matrix be accompanied by written records such as appraisal reports and disciplinary history.
Equally important is the retention of all relevant documentation, including internal memos, consultation notes, scoring sheets and evidence used for evaluations. In the event of disputes, this documentation becomes the employer’s primary line of defence.
At the end of the day, fair selection is not just good HR practice; it’s a legal requirement. Employers must approach it as a deliberate, consultative and evidence-based exercise. When properly implemented, it safeguards the process from legal challenge, supports employee dignity and demonstrates the employer’s integrity.
Written by Christine Mugenyu and Faith Obunga from Cliffe Dekker Hofmeyr (CDH)
