Structures in Business - Redundancy Procedures in Kenya.

The Importance of Structures in Redundancy Processes

Redundancy is a difficult yet necessary part of business. At times, a company may be forced to confront tough decisions, particularly in times of economic downturn, restructure, or technological advancements. However, redundancy is not about making cuts. It is about ensuring that the process is handled fairly, transparently, and legally.

Fortunately, the legal framework is provided under Section 40 of the Employment Act, Cap 226 of the Laws of Kenya. These provisions outline the basic steps that an employer must follow to declare redundancy. Establishing structured processes around these legal requirements is important for legal compliance. It protects both the company's reputation and the dignity of the employees to be affected.

Why Are Structures Important?

Redundancy, if not handled carefully, can easily lead to disputes, claims of unfair termination, and even reputational damage. With structures in place, an organization can manage redundancy in a way that is fair, transparent, and predictable, reducing the risk of costly legal battles. Let’s break down the essential reasons why establishing formal structures is critical in this process.

1. Compliance with Legal Requirements

Kenyan law mandates clear steps that employers must follow when carrying out redundancies. For instance, Section 40 of the Employment Act requires employers to give one month’s written notice to both the employee and the labor officer, and in unionized settings, the relevant trade union must also be informed.

Employers must also pay severance packages and any accrued benefits such as unpaid leave. Without formal structures in place to ensure these steps are followed, employers risk breaching the law, which could lead to lawsuits or claims for unfair dismissal.

Established redundancy structures ensure that no steps are missed and that the organization adheres to all legal stipulations. This helps employers avoid legal pitfalls while protecting their employees’ rights.

2. Fair Selection Criteria

Redundancies often affect multiple employees, and the decision-making process can easily be perceived as arbitrary or biased if there is no clear system in place. Kenyan law requires employers to use objective criteria when selecting employees for redundancy. Factors such as seniority, skill, ability, and reliability must all be considered.

A well-established structure provides clear, fair selection process that ensure the most suitable employees are retained while protecting the company from accusations of favoritism or discrimination. Structured selection based on these fair criteria satisfies legal requirements and minimizes bitterness and potential grievances among employees.

3. Transparency and Trust

Without a proper structure, communication during redundancy can be chaotic. Employees need to understand why they are being laid off and the benefits they are entitled to. Structures allow for transparent communication, ensuring that both management and employees are on the same page throughout the redundancy process.

To have a set protocol, employers can communicate redundancy decisions and their rationale in a way that minimizes confusion and mistrust. For example, explaining the legal notice periods, the calculation of severance pay, and the reasons for selecting specific employees fosters a sense of transparency, which helps retain trust even in difficult times.

4. Protection of Employee Dignity

Redundancies are not just about cutting costs; they are about people—employees who may have dedicated years to the company. A structured process enables employers to treat departing employees with the dignity and respect that they deserve. It includes terminal benefits like severance pay, notice pay, and leave pay all correctly calculated and paid to employees promptly.

A clear and structured exit process shows that the company values its employees even during tough times. This helps the company maintain a positive relationship with departing employees and preserves its reputation as a fair employer.

5. Avoiding Disputes and Legal Risks

Failure to follow the correct procedures could result in legal action from employees who feel that their termination was unjust. Disputes can arise from perceived unfairness, lack of communication, or failure to adhere to the legal steps in redundancy. A formal structure helps mitigate these risks by ensuring that all legal obligations are met, including notice requirements, consultation with employees, and fair treatment of union and non-union employees alike.

Compliance with the law along with fairness throughout the redundancy process and structures help to reduce the likelihood of disputes. It keeps the company out of court. In the event that a legal dispute does arise, having followed a structured process will provide the company with a firm defense.

6. Consistency Across the Organization

Structured redundancy processes ensure that decisions are consistent across the organization. When layoffs occur in different departments or regions, consistency is crucial to ensure that no group of employees feels singled out or unfairly treated.

With structures, all departments and managers follow the same set of rules, creating a uniform experience for all affected employees. This minimizes the risk of discrimination or bias and ensures that the company maintains a professional, fair approach to redundancy, no matter where or when it happens.

Why this is A Basic Business-need

Redundancy is never an easy decision. Clear structures, provide mechanisms to ensure the process is conducted fairly and legally. The Employment Act in Kenya provides a strong framework for redundancy, and it is up to employers to follow these guidelines carefully. Structured redundancy processes not only protect businesses from legal risks but also maintain transparency, trust, and employee dignity.

In the end, businesses that handle redundancies with care and consistency will be better positioned to recover from tough times with their reputation as fair and responsible employers preserved.

About the Writer

Makori VA is a founding and managing partner at Atandi & Co. Advocates, based in Kenya. His expertise spans a broad range of legal fields, including litigation, commercial law, corporate law, and intellectual property. He holds a Master's Degree in International Commercial Law and certifications in security, protection, and data protection.

Makori is also an advocate for human rights, public participation, and the inclusion of marginalized communities in governance. His firm emphasizes providing trusted and personalized legal services(atandi & Co. Advocates).