In the current economic climate, restructuring is often a business necessity due to unavoidable circumstances. But for many Kenyan employers, the path to downsizing is littered with hidden legal tripwires that can expose businesses to significant risk if not properly managed. 

While many SMEs believe they are safe by simply issuing a 30-day notice, Kenyan courts have made it clear that procedural shortcuts in redundancy processes are often invitations to a costly lawsuit. The following outlines how to defuse the risk and ensure your restructuring remains a strategic move, not a legal liability. 

1. The Primary Test: Does the Role Still Exist? 

A fundamental mistake employers make is using the redundancy to solve a performance problem. In the case of Jane I Khalechi V Oxford University Press E.A. Ltd [2013] KEELRC 578 (KLR), the court underscored the principle that, in a redundancy, it is the position that becomes redundant, not the individual. 

Redundancy is a structural abolition of a role within an organisation. Where an employer terminates an employee and hires a replacement for the same role shortly after, the process is not a redundancy and is likely a contrived dismissal. In the eyes of the court, this distinction is the primary test for substantive fairness. 

2. The Compliance Trap in Redundancy Exercises 

Many companies rely on a superficial reading of Section 40 of the Employment Act, 2007. However, true compliance goes far deeper. According to the Court of Appeal in Kenya Airways Limited Vs Aviation Allied Workers Union Kenya & 3 Others [2014] eKLR (Civil Appeal No. 46 of 2013) (Supra), a valid redundancy must be: 

• Involuntary: Rooted in business restructuring beyond the employer's control. 

• Superfluous: The job function must truly no longer be required for the business to operate. 

Justice M. Mbaru in Gladys Muthoni Mwangi & 20 others v Barclays Bank of Kenya Limited & another [2016] KEELRC 1186 (KLR) emphasized that any termination must be based on genuine, valid, and fair reasons. If the employer cannot prove substantial justification, the law regards the termination as unfair by default. 

3. Consultation: Your Best Defence. 

Perhaps the most significant misstep is the failure to conduct genuine consultation. While often overlooked, Article 2(6) of the Constitution ratifies the ILO Convention No. 158 and Recommendation No. 166, thereby making consultation a mandatory procedural pillar. This is also inferred in Section 40 (a) and (b) of the Employment Act. 

As established in the cases mentioned above, the purpose of a redundancy notice is not just to inform, but to elicit consultation. Specifically, in the Kenya Airways Case, Murgor JA was also of the opinion that the consultations must: 

“Be conducted with candor, reasonableness and commitment towards addressing the concerns of both management and the employees and focused on reaching solutions.” 

This means the court expects more than just a meeting, it expects a mandatory dialogue aimed at: 

This consultation process ensures the redundancy is grounded in objective business requirements. Proactively exploring alternatives like redeployment or reduced hours establishes a transparent record of fairness, helping to validate the necessity of the restructure and minimize the risk of legal challenges. 

Skipping consultation makes the process procedurally unfair, often leading to damages regardless of how necessary the layoffs were. 

Is your process legally sound? Use our Redundancy Consultation Audit Table below to find out. 

How CM-SME Can Help Shield Your Business 

At CM SME Club, we provide valuable legal advice and guide businesses on the redundancy procedures including advising on the obligations of employers and conducting legal risks assessments to shield you from claims of unfair dismissal or discrimination. We will also help you come up with clear and comprehensive redundancy policies and procedures for your company. Subscribe today at https://cmsmeclub.com/   

Cut the wires on legal liability today. Don't let a court summons be the first sign that your redundancy process has exploded. 

Get in touch with us via email or call +254 745 342 125. 

Contributors  

Maureen Odongo - Senior Associate Mujahid Mithwani - Legal Trainee 

Email: modongo@cmadvocates.com           Email: mmithwani@cmadvocates.com 

Published on Sept. 1, 2026, 5:09 p.m.