Mitigating the Impact of the Pandemic on Employment Relationships

The COVID 19 pandemic has necessitated revision of employment terms. An employer ought to be mindful of the legal framework on fair labour practices, specifically as stipulated in the Constitution of Kenya and The Employment Act, 2007, when reviewing the said terms.  

 

Termination on account of redundancy

Redundancy is defined as loss of employment, through no fault of the employee. It involves termination of employment at the initiative of the employer. The services of an employee are considered superfluous leading to abolition of office.

Redundancy may arise due to the following circumstances:

  1. When an organization closes down its operations. In such a case, the employees are entitled to pay unless their contract permits the employer to move them and wishes to transfer them elsewhere. Should the employee refuse to be transferred under such circumstances, the employer is at liberty to dismiss such an employee.
  2. Where the employer is downsizing the organization.
  3. Where an employer is reorganizing the business to have fewer employees. This may include change of job description for employees. It is key for the nature of job to appear changed for redundancy to be distinguished from constructive termination (unfair termination).

Procedure for termination on account of redundancy

The basic statutory right of every employee who has been dismissed by reason of redundancy is to a payment from the employer. This is not necessarily to provide a cushion to the employee as he or she finds another job but simply to compensate one for a loss of right he had in the job which has now disappeared. These payments include the severance pay (at least 15 days’ pay for each year worked), accrued leave, salary and any other contractual payments.

 The law dictates that an employer shall not terminate a contract of service of a unionised employee on account of redundancy unless the employer has notified the trade union to which the employee is a member, of the impending redundancy followed by another notice to the labour officer in charge of the area where the employee is based.

If an employee is not a member of any trade union, the employer must notify the employee and the labour office. The employer also needs to notify in writing all employees who are likely to be affected by the redundancy exercises. This notice must clearly state the reasons for and the extent of, the intended redundancy.

The two notices must be given not less than a month before the date of the intended termination on account of redundancy.

The notice is intended to open up the consultation process with the employees concerned to give the parties an opportunity to discuss measures to avoid the intended termination.

In David Omutelema v Thomas De La Rue, the industrial court advised that the parties need to maintain open minds and the employer should carefully consider the feedback from all stakeholders before making the decision.

The selection criteria should be fair and procedural.  Regard should be given to seniority in time and skill, ability and reliability of each employee or class of employees to be affected by the exercise. The employer should be careful not to discriminate employees on the basis of nationality, race, colour, sex, pregnancy, language, religion, political or other opinions, ethnic or social origin, disability, marital status or HIV status. The criteria should be objective, not subjective.

Unpaid leave

The legal framework governing employment relationships does not make any provision for unpaid leave although it can be taken into consideration at the time of drafting employment contracts or the human resource policy.

Before an employer requests its employees to take unpaid leave, it must ensure that employees exhaust their annual leave. However, under Kenyan law, the consent of the employees to be granted leave should be first sought before an employer can require its employees to take their outstanding leave days.

The law requires employers to consult with their employees where any term and condition of employment changes and to notify the employees of the change in writing. In light of this, an employer should document the consent of the employees and the reasons for proceeding on unpaid leave.

While the right to be paid while on leave is protected by statute and can be said to be also protected by the right to fair labour practice under the Constitution, it is arguable that the right can justifiably be limited in view of the prevailing circumstances. The Constitution allows the limitation of rights if the limitation is reasonable and justifiable. Limiting the right to be paid here means sending employees on unpaid leave during this period.

An employer, while asking employees to take unpaid leave, needs to explain the reason for it, the employees need to be consulted about it and their consents documented. The employees need not be pressured, coerced or forced into taking unpaid leave.

Salary reduction

Employees are entitled to remuneration regardless of the nature of their job and whether they can work remotely due to COVID -19 or physically at their place of work. Where there are changes in respect of an employee’s benefits, the employer shall in consultation with the employee revise the employment contract to reflect the change in question. This is the case with all other variations to employment terms.

In the event that an employer wishes to vary or reduce the employee’s remuneration, it is important for the employer to provide reasons and obtain a written consent from the employee as such variation amounts to fundamental variation of the employment contract.

The law does not provide options available to the employer in the event that the employee refuses to consent to variation of the terms of the employment contract. However, one of the options available to the employer would be to restructure the business and in turn terminate the employee’s services whose role would no longer be within the structure. In this case, the legal procedure for redundancy will apply.

In the alternative, the employer and the employee can agree to mutually terminate the employment relationship, in which case the employee will be entitled to severance pay, accrued leave and other contractual payments.

Conclusion

The variations of the employment terms during these unprecedented times are contingency measures to reduce the effect of business disruption and therefore should be temporary in nature.

In the prevailing circumstances we advise that the employer analyse all the available options and weigh the rights of employee vis a vis the financial burden facing the employer. Further, the employer needs to clearly communicate to the employees the impact of COVID 19 to the business before engaging and consulting them before settling on a particular action.

It is important to note that the proposed changes to the existing employment relationships should be fair, human and aimed at preserving a good employment relationship.