Kenya Airways Vs Its Retrenched Workers

Post date: Tue, Dec 4, 2012
Category: General
By: IEA Kenya,

At the Institute of Economic Affairs (IEA-Kenya), we have always proclaimed that the central issue in economic policy for the country is the issue of employment creation. That is a position that many people find controversial, though there is far less agreement and creativity in how to ensure that real growth in employment occurs. Looking at this article in the web edition of Business Daily, I notice that the High Court has made a decision compelling the management of Kenya Airways to restore to full employment 447 employees that the firm had intended to retrench. With respect to all court decisions, the IEA-Kenya considers that this decision is not only unjust, but harms the ability of private firms to create the employment problem in Kenya for reasons given below.

To begin with, the decision to provide employment to any individual should remain as a right that the employer and employee agree upon. What this implies is that even under the employment laws, the employer may not compel an employee to continue in employment and perform tasks and under circumstances that any employee does not wish to take. For similar reasons, the court should ask itself whether an employer should be compelled to keep any employee that the firm does not wish to keep. In defense of economic rights for both parties, the courts should merely ensure that the terms of that separation are consistent with the law and respect the contractual terms under which employment was assumed in the first case. With respect to that, no single job should be considered sacrosanct with orders issued to maintain it irrespective of consequences to a firm.

Secondly, this judgment goes out to alert employers that it is far better to provide employment under terms of casual labour or not to freeze employment. This posture will be strategic because it implies that the employer will henceforth lose the discretion to keep or dismiss an employee because the courts would reverse any decision. Given the fact that the public sector in Kenya is not capable of expanding employment, this new situation will ensure that employers will forever be hesitant to employ workers because it is not possible to dismiss them.

Thirdly, firms take to employing individuals out of the expectation that some value will be created to enable that employment to be justified. While it may appear so, it is not possible that a large firm such as Kenya Airways would retrench workers for frivolous reasons. As has been reported in the press, the firm has had a difficult year and has been adjusting business strategy in order to work its way back towards profitability. The court decision means that the firm has no flexibility and will have an even more difficult time to work and ensure that costs are controlled. The court decision that appears to protect 447 workers is not sensible because it puts another over one thousand workers in danger by ensuring that the firm is unable to shed some workers and keep those that fit with its strategy.

This situation shows that while the constitution has provided an expansion in Economic rights, the interpretation and understanding of those rights will depend on the extent to which Kenyans and legislative officers understand the right principles of an open economy. An employment contract like other commercial contracts should allow either party an opportunity to leave provided the observance of the terms is reasonable. To my mind, Kenya Airways ought not to have to justify its strategy to courts but merely ensure that in letting staff to leave; it should compensate them reasonably as required by law and the contracts under which employees were hired. To compel any firm, whether struggling or not, to keep employees that its management considers to be a surplus is unjust. Kenya Airways is right to appeal this decision. The economics and good policy is obviously on their side. Let’s hope that the appeals court is too.

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