Equal Rank, Unequal Pay – Court Rules on Pay Discrimination
By John Kisigwa Senior Associate, Dispute Resolutions Department
Introduction
The Employment and Labour Relations Court in Nairobi in Employment and Labour Relations Cause E598 of 2022 delivered a judgment on 9th April 2025 in favour of Tom Oduor Ogila (Claimant) against Dawa Life Sciences Limited (Respondent) holding that he was subjected to unfair and discriminatory labour practices and his termination from employment based on redundancy was procedurally unfair.
A total of Kshs. 3,877,166.00 together with costs of the suit and interest at court rates from the date of the judgment until payment in full.
Background
i. Claimant’s Case
The Claimant was employed by the Respondent in the position of Production Development Manager from 1st December 2015 earning a monthly salary of Kshs. 180,554.00. Around February 2016, he began acting as the Production Manager following his predecessor’s departure, however he alleged he was not remunerated for 22 months.
The Claimant compared his payslip to that of his predecessor’s which illustrated his predecessor earned a monthly salary of Kshs. 509,829.00 prompting the claim for discrimination. On 28th December 2021, the Claimant received a redundancy notice, followed later by a termination notice dated 27th January 2022 on grounds of redundancy.
He contested the process, arguing the notice was issued during his Christmas leave without his knowledge. He also claimed his annual leave entitlement was unlawfully reduced from 25 to 21 days, with only 7 days allowed to carry forward to the following year. The Claimant sought declarations of unfair termination, discrimination, damages, and terminal dues totaling Kshs. 25,128,639.61.
ii. Respondent’s Case
The Respondent denied every allegation raised by the Claimant stating that he accepted the terms of employment as a Product Development Manager and that in February 2016, the Claimant was still on probation and not the acting Production Manager.
Regarding the roles, the Respondent stated that the Claimant’s predecessor was a Senior Production Manager with a different job description and the claim for 22 months of non-remuneration in the cadre of a Product Manager was time barred.
On the issue of leave days, the Respondent cited company policy allowing only 7 unused leave days to be carried forward into the next year. The Respondent also denied any discrimination complaints maintaining that due redundancy procedures were followed, with 14 managerial roles including the Claimant’s being declared redundant on account of financial losses.
Issues for Determination by the Court
i. Whether the Claimant’s termination was unfair and unlawful.
The Court outlined the conjunctive test for any termination under redundancy as having to be substantially justified and procedurally fair. On the substantive limb, the Court averred the Respondent undertook an organizational restructuring that declared the Claimant and 13 other positions redundant. It noted that in the new organizational structure, the Claimant’s immediate former position of Production Manager was non-existent. Therefore, on a balance of probabilities, there was a valid and fair reason for declaring the Claimant redundant.
With respect to procedural compliance, Section 40(1)(a) and (b) of the Employment Act imposes a statutory obligation on the employer to issue written notice of the intended redundancy to both the labour officer and the affected employee.
- On the notice to the employee, the Court was satisfied that the Respondent had issued the requisite notice to the Claimant.
- However, the Notice to Declare Redundancies sent out to the County Labour Office was short of the statutory 30-day period and it did not indicate the extent of the redundancies and category of employees affected. In addition, the Respondent did not hold pre-redundancy consultations as required under the Employment Act.
Therefore, the Claimant’s termination by way of redundancy was procedurally unfair.
ii. Whether the Claimant was subjected to discriminatory labour practices?
The Court noted that the pay slips adduced as evidence indicated that the Claimant was employed as a Production Manager while his predecessor a Senior Production Manager.
The court averred these were two separate positions with distinct roles hence the claim for discrimination could not hold based on the payslips.
However, the Court noted that internal correspondence revealed the Claimant was the lowest paid senior manager before September 2020, earning less than the average Kshs. 350,000.00 paid to his counterparts. Notably, the Claimant’s salary was only adjusted after this was acknowledged, indicating he had been treated differently without justification.
The Court rejected the Respondent’s argument that the Claimant had accepted the earlier contractual terms despite his new role, holding that this did not absolve the employer of its duty to promote equal opportunity and eliminate discrimination. As no valid justification was provided for the disparity in pay, the court deemed the treatment discriminatory.
iii. What reliefs the Claimant is entitled to?
The Court held that the Respondent unlawfully reduced the Claimant’s leave entitlement. The Court reasoned that the internal memo capping leave at 21 days conflicted with the 25 days stipulated in the Claimant’s contract and was also in contravention of Section 28(4) of the Employment Act regarding the retention of only 7 untaken leave days in the new year.
Further, the Respondent had breached Section 10(5) by failing to consult the Claimant or provide evidence of a formal contract variation on the number of leave days.
The Claimant was ultimately awarded Kshs. 3,877,166.00 encompassing compensatory damages for unfair termination (equivalent to four months’ salary); unpaid leave of 40.9 days; and compensation for breach of his right to equality and freedom from discrimination.
Way forward
Even though every employer has the right to employ any person they deem fit when the need arises or restructure their business to remain profitable, which may necessitate job losses by way of redundancies, these must be done in strict conformity with the dictates of the Employment Act to ensure a lawful end to the employeremployee relationship.
Strict compliance with statutory procedures helps to minimize the exposure of financial losses incurred through judgments that find the termination procedure to be unlawful.