How auto firm Transafrica Motors Ltd faked redundancy to fire ‘unwanted’ employee
Mr Abdulrahman was on March 11, 2022, issued with a notice of intention to terminate his contract on grounds of redundancy due to alleged financial hardships facing the company.
Swaleh Baakeer Abdulrahman was employed by Transafrica Motors Limited, a large Mombasa-based auto dealer, as an accountant on July 10, 2014, and worked until April 11, 2022, when the company terminated his contract in circumstances he felt were unfair.
He was issued with a job contract with duties of management of accounts, tabulating taxes, analysing business operations, and reporting to management on company finances.
Mr Abdulrahman had full access to the financial records of the company that stocks trucks and machinery brands such as Chinese First Automobile Works (FAW), Japanese TCM (Unicarriers) Forklifts, FAWDE Generators, EP Forklifts, SANY machinery, and Honda brands, and the returns were good.
But in a surprise twist, Mr Abdulrahman was on March 11, 2022, issued with a notice of intention to terminate his contract on grounds of redundancy due to alleged financial hardships facing the company and summoned to the firm’s management office.
Exactly a month later on April 11, 2022, he was served with another letter terminating his job on the same grounds—prompting him to challenge the decision in court in a suit that exposed a dirty scheme by the company dressed up as a fake redundancy just to get rid of the unwanted employee in breach of the Employment Act of 2007.
The suit further exposed a desperate employer who went the extra mile to break the law by introducing misconduct claims in a redundancy scheme that shouldn’t have anything to do with an employee’s fault or actions.
“Discrimination at the workplace is outlawed. Such practices negate the very essence of legal protections at the shop floor in terms of Section 5(7) (c) of the Act,” Employment and Labour Relations Court Judge Monica Mbaru said in a judgment.
The illegal retrenchment earned Mr Abdulrahman symbolic damages amounting to Sh173,451, being his three months’ gross salary. The employee was last earning Sh57,817 per month and had worked for Transafrica Motors for over seven years.
The basis for Mr Abdulrahman’s claim of a discriminative layoff is that he was maliciously victimised and targeted for redundancy despite doing his work well and that the company's financial returns were good and it made huge profits hence there was no reason to lay him off.
He testified that upon employment he took charge of the auto dealership’s financial department and had a bird’s eye view of all its operations and tax returns and that the company was generating huge profits.
Tax returns
Mr Abdulrahman said he noticed some concerns with the car dealership’s tax returns and reported them to his supervisor in charge of operations but was told “to do his work”.
Submissions in court said the red flags raised by the employee were not taken well and without prior notice or any need to lay him off, Mr Abdulrahman was served with a redundancy notice.
Transafrica Motors in its defense, however, claimed that the Covid-19 pandemic disrupted its operations and as a result could not meet financial obligations hence the decision to lay off the employee alongside six others in the accounts department thus reducing its workforce to 23 from 30.
A bodaboda rider passes next to the Transafrica Motors Limited office gates in Miritini area in Mombasa County on June 4, 2023.
The motor dealership said that on February 11, 2022, it wrote to the Labour minister giving notice of the intended redundancy, and Mr Abdulrahman was informed of the decision on March 11, 2022, and his employment later terminated through a notice dated April 11, 2022.
Transafrica Motors said no new employees were recruited to replace the retrenched accountant adding that his record of service was tainted having been issued with several warning letters concerning his conduct. The company stated that on February 18, 2019, it paid heavy fines to tax officials due to shortfalls occasioned by Mr Abdulrahman.
In its response memorandum, Transafrica Motors also claimed that the aggrieved employee had too been issued with several warning letters regarding reporting late to work.
A court assessment of the auto dealership’s submissions, however, unearthed massive anomalies that proved discrimination against its ex-employee.
First, while the firm claimed that a total of seven employees were affected by the redundancy, its notice to the Labour minister only covered Mr Abdulrahman. No other employee was addressed in the redundancy notice.
“A redundancy cannot be called and applied against a single employee. To do so is both discriminatory and unfair labour practice. Upon the claimant pleading that he was discriminated against, the burden of proof shifted to the respondent to prove that there was no such matter,” Justice Mbaru said.
“The court finds the respondent discriminated against the claimant for no good cause and by picking him out of other employees to lay him off under the guise of a redundancy, such was unlawful and damages are due,” she added.
The Judge also took issue with Transafrica Motors for declaring Mr Abdulrahman redundant on grounds of alleged misconduct contrary to the law.
“Whereas termination of employment on account of redundancy is lawful and allowed in terms of Section 40 of the Act, the employer is not allowed to abuse such provisions to cover up other reasons leading to termination of employment so as to address alleged misconduct or gross misconduct,” Lady Justice Mburu said.
Section 2 of the Employment Act defines redundancy as the loss of employment, occupation, job, or career by involuntary means through no fault of an employee and involving termination of employment at the initiative of the employer.
“A redundancy is, therefore, not about the conduct of the employee but due to an operational requirement leading to a situation that the office held by the subject employee is abolished or it is no longer required,” Lady Justice Mbaru said.
“The Act hence appreciates the parameters of Section 40 of the Act as separate and distinct with those of Section 41 which relates to misconduct, poor performance and incapacity of the employee and further where there is gross misconduct, that this is addressed under the provisions of Section 44 of the Act. To then interplay redundancy in a case that should otherwise be of alleged misconduct, this is to engage in unfair labour practices,” she added.
The judge said provisions of Section 40 of the Employment Act are separate and distinct from those of Section 41, which relates to misconduct, poor performance, and incapacity of the employee and further noted that matters on gross misconduct are addressed under the provisions of Section 44 of the Act.
Redundancy
“To then interplay redundancy in a case that should otherwise be of alleged misconduct, this is to engage in unfair labour practices. Part of the considerations required to be taken into account under Section 40 of the Act when selecting employees affected in a redundancy, misconduct, or gross misconduct is not part of them. Had this been the case, the drafters of the law should have applied the provisions of Section 41 directly under Section 40 of the Act which is not the case,” Lady Justice Mbaru said.
“This in my humble view is deliberate. This is to allow an employer who genuinely finds an operational requirement the latitude to lay off some employees for good cause is not tied and is able to proceed and do so within the law. To fail to address any form of misconduct and then couch a redundancy as a solution is unlawful in view of the due process requirements under Section 41 of the Act,” she added.
