A Kenyan court has raised the legal bar for employers seeking to lay off workers, a decision that could have far-reaching implications for startups, which have used redundancies to slow cash burn amid a funding slowdown.
The Employment and Labour Relations Court on June 25 ruled that companies cannot use restructuring or reorganisation to justify job cuts. They must prove that a genuine operational change has made a role unnecessary, meaning employers will face greater scrutiny if workers challenge layoffs in court.
The judgment came in a case involving Nokia Solutions and Networks Kenya, which was ordered to pay former employee Byron Otega KES 9.8 million ($76,000) after the court found his redundancy was unfair and unlawful.
While the dispute involved a multinational telecommunications company, the ruling applies to all employers in Kenya, including venture-backed startups that have shed jobs over the past four years as funding dropped and investors shifted focus to profitability.
Originally published by TechCabal.