https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/1559

Chamiachi Hotel Limited v Musyoka (Employment and Labour Relations Appeal E009 of 2024) [2026] KEELRC 1559 (KLR) (28 May 2026) (Judgment) Neutral citation: [2026] KEELRC 1559 (KLR) Republic of Kenya In the Employment and Labour Relations Court at Mombasa Employment and Labour Relations Appeal E009 of 2024 K Ocharo, J May 28, 2026 Between Chamiachi Hotel Limited Appellant and Chule Musyoka Respondent (Being an appeal against the Judgment of Hon. R N. Akee in ELRC Cause No 612 of 2021, delivered on 6th December, 2023 at the Chief Magistrates Court of Kenya at Mombasa) Judgment 1.Asserting that at all material times he was an employee of the Appellant, whose employment was terminated unfairly, the Respondent sued the Appellant in the above-mentioned matter seeking compensatory remedies, thus;(a)2 months’ salary in lieu of notice - Kshs. 140,000 =(b)Severance pay for 5 years worked - KShs. 175,000/=(c)Compensation for 16 leave days earned but not utilised in 2019 - KShs. 37,328/=(d)Compensation for 10 leave days earned but not utilised in 2020 - Kshs. 23,330/=(e)12 days’ salary [ 19th June - 30th June,2020]- Kshs.27,996/=(f)6 months’ salary for 1st July - 31st December,2020 - Kshs.420,000/=(g)6 months' salary for 1st January - June,2021 - Kshs.420,000/=(h)19 days’ salary for 1st July-19th July,2021 - Kshs.44,327=(i)Compensation for unfair and unlawful Termination @12 months' salary - Kshs.840,000/=(j)Costs of this Claim and interest 2.The Appellant challenged the Respondent’s case through the Reply to Memorandum of Claim dated 30th September, 2021. While admitting that at all material times the Respondent was its employee, it denied that his employment was unlawfully terminated and that he was entitled to the reliefs sought. 3.Upon hearing the parties on their respective case, and considering their evidence and submissions, the learned trial Magistrate found for the Respondent, awarding him various reliefs, in her state judgment. Respondent’s case in the lower Court 4.It was the Respondent’s case that he was employed by the Appellant on 23rd March 2015 as a Manager and was later promoted to the position of General Manager, earning a monthly salary of Kshs. 70,000. 5.He stated that he worked diligently until 12th May 2020, when the Appellant sent him on six weeks’ unpaid leave. According to him, after the lapse of the six weeks, the Appellant failed to communicate the status of his employment despite his enquiries, including through his letters dated 12th May 2021 and 8th June 2021. 6.He further stated that on 7th June 2021, he was removed from the Appellant’s official WhatsApp groups and official emails by the Appellant’s Director without any justification. He attributed the actions to differences he had with the Director over how she operated the company, and stated that she had previously threatened to terminate his services. 7.He later received a redundancy notice on 19th July 2021, but contended that the redundancy was not genuine because the Appellant had already appointed Richard Kiema as General Manager in June 2021, and he was declared redundant on the same date. Appellant’s case in the lower court 8.The Appellant’s witness, Nicodemus Mutua, the Appellant’s Chief Accountant [RTW1], stated that the Appellant was employed on or about 1st April 2015 as an Apartments Manager/Sales and Marketing employee. 9.The witness stated that the Respondent’s business was significantly affected by the COVID-19 outbreak in Kenya in March 2020, together with the accompanying government restrictions and the nationwide lockdown. These restrictions compelled the Respondent to cease operations for approximately one year, resulting in considerable financial hardship. 10.It was further asserted that, owing to an economic downturn beyond the Appellant’s control, it was compelled to undertake restructuring measures and to declare certain positions redundant. The employees affected by these decisions included the Respondent, Chule Musyoka; Margaret Kwamboka, a procurement officer; and Joyce Makuta, employed in housekeeping management. 11.The witness stated that prior to the Respondent resorting to declaring those employees redundant, it had exhausted all efforts to avoid this outcome, including placing them on paid leave and subsequently on unpaid leave. Nevertheless, the action became unavoidable. 12.The witness contended that the termination of the Respondent’s employment was not unlawful, but arose from a genuine redundancy process caused by restructuring and reorganisation due to the Appellant’s strained financial position. It maintained that an employer is entitled to reorganise its business and declare redundancy where circumstances justify it, and urged the court to dismiss the claim with costs. 13.The Appellant’s 2nd witness, Jacqueline Kavuo Chamia, one of the Respondent Company’s Directors, stated that the Respondent was first employed by the Appellant on or about 1st April 2015 as an Apartments Manager/Sales and Marketing employee. Under his contract of employment, he was entitled to a monthly consolidated salary of KShs. 65,000, inclusive of a house allowance, a weekly marketing allowance of Kshs. 2,000, and medical cover. His duties included marketing the hotel, ensuring its smooth running, managing staff, overseeing daily operations, and performing duties assigned by management. 14.She further stated that although the Respondent initially worked diligently, his performance later deteriorated. She accused him of failing to follow instructions; failing to supervise the housekeeping, restaurant, bar, purchasing, front office and accounts departments; failing to bring in new clients despite receiving a marketing allowance; intimidating staff; failing to train and motivate employees; poaching clients; disclosing confidential financial reports; and misappropriating funds. She stated that the Respondent had received oral warnings and was later issued a written warning letter dated 21st September 2018. 15.She further stated that over the years, the Respondent was issued with several oral warnings that he never heeded, prompting the Appellant to issue him with warning letters on various days. 16.She further stated that the Appellant’s hotel business was severely affected by the pandemic, forcing it to shut down for about one year. The hotel was operating at a loss, and she had to inject her own funds to sustain operations. 17.According to her, the Appellant lawfully undertook a redundancy exercise under section 40 of the Employment Act, informed the Respondent in writing of the redundancy, notified the labour office, calculated his dues, including severance pay, and offered one month’s salary in lieu of notice because the redundancy had to take effect immediately due to financial constraints. 18.In determining which employees to let go on account of redundancy, the Appellant considered seniority, skill, ability and reliability. She further stated that the Respondent’s previous duties were redistributed, with some taken over by less qualified staff at reduced levels, some taken over by her, and some roles combined with other employees’ roles. Some specialised functions, such as marketing, were to be handled through service contracts. 19.As a consequence of the numerous changes occurring within the organisation over time, the scope and responsibilities of the Respondent's role were significantly diminished. Consequently, the position no longer qualified as a managerial role. Judgment 20.After hearing the parties on their respective cases, the learned trial Magistrate found the termination of the Respondent’s employment substantively justified but procedurally unfair, and awarded him notice pay [KShs. 70,000], Compensation for unfair termination, twelve months’ gross salary [KShs. 840,00], and severance pay [ KShs. 175,000]. Appeal 21.The Appellant herein, being dissatisfied with the judgment appealed on the following grounds: -1.That the Learned Trial Magistrate erred in law and in fact by finding that the Respondent was unlawfully terminated when no unlawful termination was proved by the Respondent.2.That the Learned Trial Magistrate erred in law and fact by failing to fully appreciate that the Respondent's employment was terminated in accordance with fair procedure outlined in Section 40 (1) of the Employment Act.3.That the Learned Trial Magistrate erred in law and in fact in discounting the fact that the Appellant, prior to the notice being issued, had already communicated to the Respondent its intention to declare him redundant and discussed the effect of the impending redundancy.4.That the Learned Trial Magistrate erred in law and in fact in disregarding the fact that the Respondent was issued with a Notification of Redundancy dated 19th July 2021.5.That the Learned Trial Magistrate erred in law and in fact by failing to appreciate the fact that the redundancy notice itself was very clear about the reason for declaring the Respondent redundant.6.That the Learned Trial Magistrate erred in law and in fact in overlooking the fact that the Respondent acknowledged the letter of redundancy to the effect that he had read, understood and accepted the terms and conditions as stated in the letter.7.That the Learned Trial Magistrate erred in law and in fact by failing to appreciate the fact that in the redundancy notice, the Respondent's job scope and dimension had been substantially reduced, thus leaving the Respondent with no duties to discharge.8.That the Learned Trial Magistrate erred in law and in fact in discounting the fact that the redundancy notice was duly served upon the labour office on 20th July 2021 in line with the provisions of Section 40 of the Employment Act, 2007.9.That the Learned Trial Magistrate erred in law and in fact in overlooking the fact that the Claimant was aware that there was restructuring because the Company was not doing well due to the COVID-19 pandemic.10.That the Learned Trial Magistrate erred and misdirected herself by not appreciating that the Appellant was forced to undergo a redundancy exercise that not only affected the Respondent but also the Appellant's four other employees11.That the Learned Trial Magistrate erred in law and in fact in disregarding the fact that the Appellant had, in the selection of employees to be declared redundant, had due regard to seniority in time and to the skill, ability and reliability of each employee of the particular class of employees affected by the redundancy.12.That the Learned Trial Magistrate erred in law and fact by failing to appreciate that the Appellant had, as the employer, also sought to pay the Respondent one month's wages in lieu of the short notice issued to him.13.That the Learned Trial Magistrate erred in law and in fact in ignoring the fact that the Appellant had sought to pay the Claimant severance pay at the rate of not less than fifteen days' pay for each completed year of service.14.That the Learned Trial Magistrate erred in law and fact by finding that the Respondent's salary at the material time was KShs. 70,000.00.15.That the Learned Trial Magistrate erred in law and fact by proceeding to award the Respondent KShs. 1,085,000.00.16.That in all the circumstances of the case, the findings of the Learned Trial Magistrate are insupportable in law and fact. Analysis and determination 22.As this is a first appeal, this Court is under a duty to reconsider and re-evaluate the evidence placed before the trial court and to arrive at its own independent conclusion. In doing so, the Court must bear in mind that it did not have the advantage of seeing and hearing the witnesses testify. This is the settled principle in Selle & Another v Associated Motor Boat Co. Ltd & Others [1968] EA 123. 23.I have considered the record of appeal, the judgment of the lower court, the grounds of appeal, the evidence tendered before the trial court and the Appellant’s submissions. 24.Before I proceed to more fully identify the issues for determination, I hold that it would be remiss for this court not to recognise that the learned trial Magistrate articulated her judgment in a manner that contravenes the fundamental principles of judgment composition, including systematically presenting the evidence submitted by the parties, outlining any submissions made, clearly identifying the issues for determination, and providing a reasoned decision on each of these issues. 25.The key principles of judgment writing, setting out the parties’ evidence, capturing their submissions, identifying the issues for determination, and giving reasons for the decision, serve a critical purpose in the administration of justice. They are not mere matters of form, they are the very instruments through which judicial accountability, transparency, and fairness are achieved. 26.A proper exposition of the parties’ evidence demonstrates that the court has carefully considered the factual foundation upon which the dispute rests. This fosters confidence in the judicial process and dispels any perception that the court reached its conclusion arbitrarily. 27.The identification of issues for determination performs the important function of narrowing the controversy and defining the questions that require adjudication. It provides a logical roadmap for the judgment, ensuring that the court addresses the real dispute between the parties rather than peripheral matters. 28.Most importantly, the duty to give reasons lies at the heart of judicial decision-making. Reasons demonstrate that the court’s conclusions are founded on the evidence, law, and rational analysis rather than personal preference or caprice. They enable the parties to understand why they have succeeded or failed, facilitate meaningful appellate review, promote consistency in the development of the law, and reinforce public confidence in the integrity and legitimacy of the judicial process. 29.Having said this, I now turn to identify the issues around which the instant appeal revolves. I have carefully considered the grounds of appeal, the evidence placed before the trial court, the parties’ submissions, and the trial court’s over-summarised judgment. The following questions arise for consideration under this appeal: whether there was a genuine redundancy situation leading to the termination of the Respondent’s employment; if the answer is in the affirmative, whether the prescripts of section 40 of the Employment Act were adhered to; and whether the Respondent was entitled to the remedies granted. 30.It is undisputed that at all material times, the Respondent was an employee of the Respondent. Furthermore, his employment was terminated at the Appellant's initiative. The Appellant contended that the termination was due to redundancy. Conversely, the Respondent claimed that the purported reason was a pretext. In any case, the process was neither procedurally nor substantively fair. 31.Redundancy is defined in Section 2 of the Employment Act and the Labour Relations Act, 2007, as;“The loss of employment, occupation, job or career by involuntary means through no fault of the employee, involving termination of employment at the initiative of the employer, where the services of an employee are superfluous, and the practices commonly known as abolition of office, job, or occupation and loss of employment.” 32.Termination due to redundancy falls under no-fault terminations. The employer typically initiates it without fault or action by the employee. In my view, this explains why the legislature considered it essential to include a section in the Employment Act, 2007, that sets out detailed procedures and conditions to be followed when an employer is contemplating and executing such a termination. Also see Kenya Airways Limited v Aviation & Allied Workers Union Kenya & 3 Others [2014] eKLR, and Jane Khalechi v Oxford University Press EA Limited [2013] eKLR. 33.In the case of Kenya Airways Ltd v Aviation & Allied Workers Union Kenya & 3 others [2014] KECA 404 (KLR), the court held that,“Thus, redundancy is a legitimate ground for terminating a contract of employment provided there is a valid and fair reason based on operational requirements of the employer and the termination is in accordance with a fair procedure. As section 43(2) provides, the test of what is a fair reason is subjective.The phrase “based on operational requirements of the employer” must be construed in the context of the statutory definition of redundancy. What the phrase means, in my view, is that while there may be underlying causes leading to a true redundancy situation, such as reorganization, the employer must nevertheless show that the termination is attributable to the redundancy – that is that the services of the employee has been rendered superfluous or that redundancy has resulted in abolition of office, job or loss of employment.” 34.I note that, from the Judgment, the learned trial Magistrate found that the termination on account of redundancy was justified, and that there existed a redundancy situation arising from the COVID-19 pandemic affecting the Appellant’s hotel business. This finding was not challenged by way of a cross-appeal by the Respondent. I have no reason to disturb the finding. 35.Additionally, I have considered wholly the documents that were placed before the trial Court, including the document relating to the suspension of operations [whose existence the Respondent admitted in his oral evidence], and hold that the finding was reasonable. The termination was due to an operational reason. 36.What was heavily contested in the matter before the trial Court, in my view, was whether the dictates of Section 40 of the Employment Act,2007, were adhered to in the process leading to the termination of the Respondent’s employment on account of redundancy. 37.In the case of The German School Society& another vs Helga Ohany [2023] KECA 894 [KLR], the Court of Appeal reaffirmed the procedure to be followed by an employer before declaring a position redundant. Thus;i.Firstly, issue notices to the trade union and labour officer where the employee is a member of a trade union, the employer notifies the union to which the employee is a member and the labour officer in charge of the reasons for, and the extent of, the intended redundancy not less than a month prior to the date of the intended date of termination on account of redundancy.ii.Where an employee is not a member of a trade union, the employer notifies the employee personally in writing and the labour officer.iii.The employer has in the selection of employees to be declared redundant, had due regard to seniority in time and to the skill, ability and reliability of each employee of the particular class of employees affected by the redundancy.iv.Where there is in existence a collective bargaining agreement between the employer and a trade union setting out terminal benefits payable upon redundancy, the employer has not placed the employee at a disadvantage for being or not being a member of the trade union. 38.It is important to note that the notices contemplated in section 40[1] of the Act are intended to prompt a consultation process between the employer and the affected employee to avoid termination on redundancy or to minimise its effects. As such, the notice should not be a termination notice or sound like one. This Court has not lost sight of the fact that a consultation process is not expressly provided for in the Employment Act, nor is it codified as a mandatory, vital process. However, as the Court of Appeal emphasised in the Kenya Airways Limited case [supra], consultation is an implicit requirement under the Act. International conventions and treaties form part of Kenyan law under Article 2[5] of the Constitution. ILO Convention 158 recognizes consultation as a vital and mandatory process. By dint of Article 2[5] of the Constitution, therefore, this recognition and requirement are part of Kenyan labour law. 39.The requirement was affirmed in the German School Society [supra] and in Cargill Kenya Limited v Mwaka & 3 others [2021] KECA 115 [KLR]. A careful reading of the judgment in the Cargill case reveals that consultation in the process is a constitutional imperative, in light of the stipulations of Article 47 of the Constitution of Kenya, 2010. 40.I have carefully considered the “Redundancy Notice” dated 19th July 2021, which the Respondent asserted he received on the same date, and agree with his position that the letter was not a redundancy notice capable of triggering a consultation process for the stated purposes, but a termination letter. It therefore follows that the mandatory notice under Section 40[1][b] was not issued to the Respondent and the labour office, and that there were no consultations between the Appellant and the Respondent before the termination. 41.I have not lost sight of the fact that the evidence of the Appellant’s second witness under cross-examination, read between the lines, reveals this. 42.The Appellant’s Counsel’s submissions that deemphasise the importance of consultations in redundancy processes, in ignorance of the jurisprudence obtaining in the decisions cited hereinabove, comparative jurisprudence, and applicability of international labour standards. 43.The Appellant was expected under Section 40 of the Employment Act to demonstrate an objective criterion they used to arrive at the decision that the Respondent was the one to be let go on account of redundancy. In my view, the evidence presented to the trial court failed to demonstrate this. All that can be seen are generalised assertions that the criteria set out under Section 40 were adopted. 44.In Kenya Airways Ltd [supra], Murgor JA. Stated;“When evidence is considered, it is doubted whether the Appellant’s outlined selection process was followed. I say this, because where an employer adopts a selection criterion, they must be able to show that the criteria was applied systematically and uniformly across board………………..” 45.By reason of the foregoing premises, I find that the trial Magistrate’s finding that the termination was not procedurally fair, without error. It is hereby upheld. 46.Before I consider whether the Respondent was entitled to the reliefs awarded, I need to determine the amount of the Respondent's monthly remuneration. Without documentary evidence, he asserted that he was earning a monthly remuneration of KShs. 70,000. Conversely, the Appellant tendered the employment contract and pointed out that the gross salary added up to KShs. 67,500. The learned Magistrate erred in not recognising the latter amount as the correct one. 47.The Appellant submits that the Court should find that termination was not unlawful and conclude that the Appellant was only entitled to one month’s salary in lieu of notice [ KShs. 65,000] and service pay of KShs. 195,000. 48.The Appellant further argues that, as the termination was not unlawful, there would be no basis to allow the other relief granted by the learned trial Magistrate. Having held that the termination was not in compliance with the stipulations of Section 40 of the Act, and noting that the award of compensatory relief under Section 49[1][c] of the Act, which is a discretionary award, has not been challenged on any grounds known in law, I’d have no basis to disturb the award. 49.In the upshot, the appeal herein fails, as it lacks merit. It is hereby dismissed with costs. However, in computing the amount payable to the Respondent, the salary to be applied should be KShs. 67,500. READ, SIGNED AND DELIVERED THIS 28TH DAY OF MAY 2026.OCHARO KEBIRAJUDGE