https://new.kenyalaw.org/akn/ke/judgment/kemc/2026/811

**REPUBLIC OF KENYA** **IN THE CHIEF MAGISTRATES COURT AT MOMBASA** **MAGISTRATES COURT CIVIL** **MCELRC CAUSE NO. E298 OF 2024** **BAKARI DZUMBE CHEVA..........................................................................CLAIMANT** **VERSUS** **PAN AFRICA LOGISTICS LIMITED.........................................................RESPONDENT** **JUDGEMENT** **Introduction** 1. The Claimant, Bakari Dzumbe Cheva, instituted these proceedings against his former employer, Pan Africa Logistics Limited, challenging the termination of his employment and seeking various terminal dues, compensation and other consequential reliefs. 2. The original Memorandum of Claim was filed on 29th May 2024 and was subsequently amended on 29th October 2024. The Claimant’s case is substantially that, after serving the Respondent for several years, he was unilaterally placed on unpaid leave for six months from February 2023 and was thereafter terminated without a lawful and procedurally compliant process. He contends that the Respondent sought to characterise the separation as redundancy without complying with the mandatory requirements of the Employment Act. 3. The Respondent admits the employment relationship but maintains that the Claimant’s employment ended lawfully through redundancy on 30th September 2023, necessitated by serious financial difficulties arising principally from the effects of the COVID-19 pandemic on its logistics and transport business. It further contends that the Claimant received all terminal dues due to him. 4. The matter was heard on 11th May 2026, following which the parties filed written submissions. The Claimant’s submissions are dated 21st June 2026, while those of the Respondent are dated 27th July 2026. **The Claimant’s case** 1. The Claimant pleaded that he had been employed by the Respondent from December 2011 until 11th October 2023, serving continuously in its Welding and Fabrication Department. At the material time, he was earning KShs. 26,565 per month. 2. The documentary record, however, contains a written Letter of Employment dated 28th November 2012. The Respondent also consistently relied on that date as the commencement date. I shall return to that discrepancy later. 3. It was the Claimant’s case that on 31st January 2023, he reported for work and was informed that the Respondent was experiencing financial difficulties and had decided to place him on unpaid leave for six months. 4. The Respondent's letter dated 31st January 2023 indeed informed the Claimant that, with effect from 1st February 2023, he would be placed on unpaid leave for six months while the company reorganised its operations. The letter provided, inter alia, that recall would depend on the Respondent's recovery and its operational and financial position. The Claimant signed an acknowledgment on the letter on the same date. The document further required him to return company property by 31st January 2023. 5. According to the Claimant, the six months elapsed without the Respondent recalling him as anticipated. On 29th September 2023, he wrote to the Respondent seeking assistance and clarification regarding his employment because he was experiencing financial hardship. 6. He contended that instead of restoring him to regular employment, the Respondent eventually presented him with a backdated clearance form and treated his employment as terminated. 7. He maintained that no fresh redundancy notice was issued to him in 2023; there was no contemporaneous notice to the Labour Officer; he was never shown the criteria employed in selecting him for redundancy; and there was no consultation process directed specifically towards his termination in September 2023. 8. He further sought payment for alleged unpaid annual leave, leave travelling allowance, unpaid salary, house allowance, contractual gratuity, severance pay, unremitted Bandari SACCO deductions and the resultant interest and penalties. 9. In his final submissions, he also sought compensation equivalent to twelve months' salary for unfair termination. **The Respondent’s case** 1. The Respondent denied that the Claimant was unlawfully dismissed. It pleaded that he was employed under renewable two-year contracts and that his employment eventually ended through redundancy. 2. The Respondent's written contract dated 28th November 2012 provided for a starting consolidated salary of KShs. 13,800, one month's notice of termination, 21 days' annual leave, and expressly stated that the consolidated salary took the employee's housing requirements into account. The contract further provided for gratuity of one month's salary for every completed year of service, save where employment terminated through summary dismissal. 3. Its witness, Mr. Lawrence M. Mugavana, the Respondent's CEO and Managing Director, testified that the Claimant commenced employment on 28th November 2012, initially as a turn man, and was subsequently promoted to Workshop Assistant. He acknowledged that the Claimant was a diligent employee and that the cessation of employment was not attributable to misconduct or disciplinary proceedings. 4. The Respondent attributed its difficulties to the severe economic effects of COVID-19 upon its clearing, forwarding, logistics and transportation business. 5. It produced an Auctioneers' Notice of Proclamation dated 24th March 2022, showing that its property had been proclaimed pursuant to default in financial obligations. 6. The Respondent also produced evidence of redundancy consultations that had commenced in 2021. Its documents included a notice of intended redundancy received by the Claimant on 4th October 2021, a letter to the County Labour Officer, internal memoranda, staff attendance sheets and minutes of meetings. 7. The Notice of Intended Redundancy addressed to the Workshop Team indicated that the Respondent intended to eliminate approximately 27 positions in the Workshop and Operations Team as part of restructuring and cost-saving measures. 8. The Respondent additionally produced minutes of a meeting held at the workshop on 1st October 2021. The minutes demonstrate that management discussed both possible redundancies and unpaid leave with staff. They state that some employees would be declared redundant while others might be placed on unpaid leave for six months, with further consultations contemplated. 9. The Respondent maintained that the redundancy process initiated in 2021 remained legally effective until 2023 and that there was no requirement in law compelling an employer to complete redundancy within a specified maximum period. 10. It further stated that the Claimant was recalled after unpaid leave and worked in August and September 2023, for which he was paid. 11. At termination, it says it computed and paid his salary for the recalled period, leave balance and one month's salary in lieu of notice. 12. The Respondent produced a Staff Clearance Computation dated 30th September 2023. That document reflects: salary for 61 days – KShs. 53,275.56; earned leave balance of 6.25 days – KShs. 5,458.56; one month's salary in lieu of notice – KShs. 26,565; gross earnings – KShs. 85,299.12; deductions – KShs. 21,283.09; net payroll dues – KShs. 64,016.03; outstanding SACCO refund – KShs. 188,036; outstanding pension staff contribution – KShs. 34,528; outstanding pension company contribution – KShs. 34,528; and outstanding gratuity balance – KShs. 75,472.50. The document gives total dues of KShs. 396,580.53. 13. The Respondent also produced bank payment evidence. A Standard Chartered transaction reflects payment of approximately KShs. 64,016 to the Claimant on 1st November 2023, while another reflects payment of KShs. 188,036 to him on 9th November 2023 in relation to the Bandari SACCO amount. **Issues for determination** 1. Having considered the pleadings, testimony, documentary evidence and parties' submissions, the issues that arise are: 2. What was the Claimant's period of service? 3. Whether the termination of the Claimant's employment constituted a lawful redundancy. 4. Whether the Claimant is entitled to the individual monetary and other reliefs pleaded. 5. Who should bear costs. **Analysis and determination** Period of employment 1. The Claimant pleaded that his employment commenced in December 2011. The Respondent disputed that allegation and produced the written employment contract dated 28th November 2012. 2. The Respondent's witness similarly testified that employment commenced on 28th November 2012. The 2014 promotion letter relied upon by the Claimant is consistent with employment already being in existence by that stage but does not establish commencement in 2011. I therefore find, on a balance of probabilities, that the proved period of employment was 28th November 2012 to 30th September 2023. 3. The Claimant therefore served for approximately ten years and ten months, or 10 completed years for purposes of statutory computations expressly based upon completed years. Whether there was a genuine redundancy situation 1. Redundancy is defined in section 2 of the Employment Act as an involuntary loss of employment at the initiative of the employer where the services of an employee become superfluous and encompasses abolition of office, job or occupation. 2. Redundancy is therefore not merely an employer's administrative label. Both the underlying operational justification and the statutory procedure must be established. 3. In Kenya Airways Limited v Aviation & Allied Workers Union Kenya & 3 Others [2014] eKLR, cited by both parties, the Court of Appeal emphasised that termination by redundancy must be substantively justified and procedurally fair. 4. There is credible evidence that the Respondent experienced genuine financial difficulties. Its correspondence from 2021 onwards consistently refers to declining business and financial constraints. The auction proclamation of March 2022 lends independent documentary support to the contention that its financial situation was strained. I therefore accept that the Respondent was experiencing financial difficulties. That finding, however, does not by itself determine whether the particular termination before the Court satisfied the statutory concept of redundancy. 5. Of particular importance is the Respondent's own written submission that: the circumstances did not warrant declaring the Claimant's position superfluous or no longer in existence; rather, the Respondent could simply no longer afford to sustain him in that position and pay his salary and other emoluments. That is the Respondent's own characterisation of the situation. 6. More significantly, the Claimant had remained in employment long after the 2021 redundancy process and was eventually recalled to work in August and September 2023 immediately before termination. The Respondent itself says it paid him KShs. 53,275.56 for those two months. 7. Those facts do not mean that an employer undergoing financial difficulties can never subsequently abolish a position. They do, however, make it necessary for the employer to demonstrate the operational decision that rendered the particular employee's services redundant at the material time. 8. No organisational structure, establishment report, staffing comparison, restructuring report or other contemporary evidence was produced showing what changed in September 2023, which positions were abolished then, how many employees remained in comparable roles, or why the Claimant's particular services became superfluous. 9. The Court does not substitute its business judgment for that of an employer. It must nevertheless be satisfied that the statutory reason relied upon actually existed. Sections 43 and 45 place that evidentiary burden upon the employer. 10. I am therefore satisfied that financial distress existed, but I am not persuaded that the Respondent sufficiently established, by evidence proximate to September 2023, that the Claimant's particular position or services had become redundant within the statutory framework. Procedural compliance with section 40 1. Even had the substantive reason been fully demonstrated, section 40 of the Employment Act prescribes mandatory safeguards. Among them are notice to the affected employee or union and Labour Officer, consideration of seniority, skill, ability and reliability where selection is involved, settlement of accrued leave, appropriate notice or pay in lieu thereof, and severance pay. The Respondent relies heavily upon the redundancy exercise undertaken in September and October 2021. 2. I have no difficulty finding that a redundancy process was contemplated in 2021. There was an internal memorandum, notice to employees, a letter to the Labour Officer, individual communication and consultation. 3. The difficulty arises from what subsequently happened. The Claimant was not terminated pursuant to that process in 2021. He continued working through the remainder of 2021, throughout 2022 and into January 2023. The Respondent therefore retained his position and his services for well over a year after the redundancy notice. In January 2023, it did not terminate him on redundancy. Instead, it placed him on six months' unpaid leave. 4. When that period expired, the Respondent again did not immediately terminate him. It recalled him and permitted him to work in August and September 2023. Those intervening events materially altered the employment situation contemplated in October 2021. 5. The purpose of a redundancy notice is not simply historical notification that an employer once contemplated restructuring. It is intended to notify an employee of an impending termination and facilitate meaningful consultation before that termination occurs. 6. A notice cannot, in my view, operate indefinitely irrespective of material intervening events. Where an employee survives the contemplated exercise, continues serving for nearly two further years and is subsequently recalled into active employment, fairness requires any later redundancy to be related to the circumstances existing at that later time. 7. The Respondent did not produce a fresh notice of intended redundancy issued in 2023, a fresh notice to the Labour Officer, or evidence of a contemporaneous consultation process preceding the Claimant's termination on 30TH September 2023. Neither did the Respondent establish how the statutory selection criteria of seniority, skill, ability and reliability were applied to the Claimant in 2023. 8. The Respondent argued that there is no statutory maximum period for completion of a redundancy process. That may be so in the abstract. What matters, however, is whether the notice and consultations remain causally and temporally connected to the termination ultimately effected. On the evidence before this Court, the 2021 process had been overtaken by the continuation of the employment relationship and the later recall of the Claimant. 9. I therefore find that the Respondent failed to comply with the applicable procedural requirements of section 40 in relation to the termination effected on 30 September 2023. The termination was consequently unfair within the meaning of section 45 of the Employment Act. Reliefs 1. One month's salary in lieu of notice – KShs. 26,565- Although the redundancy procedure was defective, the documentary record establishes that the Respondent included KShs. 26,565 as one month's salary in lieu of notice in the final payroll computation. 2. The computation produced by the Respondent shows gross earnings of KShs. 85,299.12, comprising salary for August and September, accrued leave and notice pay, subject to deductions, giving a net payment of KShs. 64,016.03. The Standard Chartered payment evidence corroborates payment of approximately KShs. 64,016 on 1 November 2023. To award notice pay again would result in double recovery. The claim for KShs. 26,565 notice pay is therefore declined. 3. Salary during the six-month unpaid leave- The Claimant contends that placement on unpaid leave was unilateral and seeks salary for that period. The documentary evidence shows that the letter of 31st January 2023 expressly informed him that the unpaid leave would last six months. It further bears his signature acknowledging that the contents had been explained to him and that he agreed to them. The Court must distinguish between an employer imposing unpaid leave without agreement and a variation which an employee expressly accepts. On the documentary evidence before me, the Claimant signed the unpaid leave arrangement. I consequently find insufficient basis to order payment of salary for that six-month period as though he had remained on full paid duty. Moreover, the evidence establishes that he was recalled and paid for August and September 2023. The claims pleaded as unpaid leave pay and unpaid salary for nine months are therefore dismissed. 4. Annual leave- The Claimant initially asserted broadly that he had never proceeded on leave during the entirety of his employment. That assertion is contradicted by numerous leave application forms produced by the Respondent covering several years, including 2015 through 2022.The forms bear applications, approvals, dates and running leave balances. Some also contain references to leave travelling allowance. At termination, the employer's clearance computation identified an outstanding balance of 6.25 days, valued at KShs. 5,458.56, and incorporated that amount into the final payroll dues already paid. Although the Claimant's submissions contend that Mr. Mugavana referred during testimony to 15.75 days, that contention is inconsistent with the contemporaneous termination computation before the Court. The Claimant has not provided a sufficiently particularised computation establishing an additional unpaid balance. I therefore decline the further claim for annual leave. 5. Leave travelling allowance – KShs. 50,000- The Claimant's amended claim seeks KShs. 50,000, calculated on the premise that KShs. 5,000 was due annually for ten years. The Respondent acknowledges operating a KShs. 5,000 leave travel allowance benefit, but contends that it was paid whenever the Claimant proceeded on leave. The produced leave forms contain entries such as “LTA 5,000” and references to petty cash vouchers. The Claimant has not identified the specific years in which the benefit accrued but was not paid, nor has he provided a year-by-year evidential computation capable of supporting the pleaded KShs. 50,000. This head of claim is therefore not proved and is dismissed. 6. House allowance – KShs. 569,819.25- The contract dated 28th November 2012 expressly provided for a consolidated salary and stated that the salary took the Claimant's housing requirements into account. The promotion letter of March 2014 similarly described the Claimant's revised remuneration as consolidated. The Respondent's evidence on this aspect is therefore consistent with the written contractual documents. A separate award for house allowance would amount to rewriting the parties' agreed remuneration package. The claim for KShs. 569,819.25 house allowance is dismissed. 7. Bandari SACCO deductions- This aspect requires careful distinction between the amount deducted but not remitted and the consequential loan liability alleged by the Claimant. The Respondent's own clearance computation acknowledged an outstanding SACCO refund of KShs. 188,036. The Standard Chartered record establishes that KShs. 188,036 was paid to the Claimant on 9th November 2023.I therefore find that, whatever the historical delay in remittance, the admitted outstanding amount of KShs. 188,036 was subsequently settled directly with the Claimant. The Claimant separately seeks KShs. 306,850 as unremitted deductions and KShs. 329,867.41 as penalties and interest. The Bandari SACCO statement produced in evidence does show a loan account with a balance of approximately KShs. 329,867.41. What it does not sufficiently establish is that that entire balance represents penalties and interest caused exclusively by the Respondent's non-remittance. The figure appears in the account as an outstanding loan balance rather than a demonstrated computation exclusively of consequential interest and penalties. No sufficiently particularised reconciliation has been placed before the Court separating: principal loan liability; salary deductions actually made; deductions remitted; deductions not remitted; amounts subsequently recovered by the SACCO from savings or dividends; contractual interest ordinarily payable on the loan; and additional interest or penalties specifically attributable to the Respondent's delay. Special pecuniary losses must be specifically pleaded and strictly proved. I am therefore unable to award the KShs. 329,867.41 as presented. Since the proved outstanding SACCO deduction amount of KShs. 188,036 was subsequently paid, the principal SACCO deduction claim is likewise declined to avoid double recovery. 8. Severance pay- The Respondent terminated the Claimant expressly on account of redundancy. Section 40(1)(g) of the Employment Act requires payment of severance pay at a rate of not less than fifteen days' pay for each completed year of service. Unlike service pay under section 35, severance is a specific statutory consequence of redundancy. Membership in NSSF or a pension scheme does not by itself displace the obligation to pay severance where an employer terminates employment on account of redundancy. The Respondent's clearance computation contains no severance payment. I have found that the proved employment period commenced on 28 November 2012 and ended on 30 September 2023, giving 10 completed years of service. Using the monthly salary of KShs. 26,565: KShs. 26,565 ÷ 30 × 15 × 10 = KShs. 132,825.00. The Claimant is therefore awarded KShs. 132,825 as severance pay. 9. Gratuity- The Claimant's employment contract expressly provided for gratuity of one month's salary for every completed year of service except where employment ended through summary dismissal. The Respondent correctly points out that the Claimant subsequently enrolled in an ICEA Lion retirement scheme. The Personal Retirement Scheme application produced by the Respondent bears his signature dated 26th September 2017. The Respondent's argument that NSSF membership automatically extinguished any contractual gratuity requires qualification. Section 35(6) concerns statutory service pay; it does not, without more, erase an independently negotiated contractual gratuity entitlement. Nevertheless, the Claimant cannot recover from the Respondent sums already transferred into a pension arrangement pursuant to an agreement and then recover them again under the original gratuity clause. The decisive evidence on this aspect is the Respondent's own Staff Clearance Computation. After accounting for the pension arrangements, it expressly recognised an “Outstanding Gratuity Balance” of KShs. 75,472.50. That is a contemporaneous admission generated by the Respondent's own accounts department. Although the Respondent has produced proof of the KShs. 64,016 payroll payment and KShs. 188,036 SACCO payment, no equivalent payment evidence before the Court demonstrates settlement of this identified KShs. 75,472.50 outstanding gratuity balance. I therefore decline the Claimant's full claim of KShs. 318,780 but award the amount expressly admitted by the Respondent as outstanding. The Claimant is awarded KShs. 75,472.50 as outstanding gratuity. 10. Pension contributions reflected in the clearance computation- The Respondent's own clearance statement additionally records outstanding employee and employer pension contributions of KShs. 34,528 each. Those figures raise legitimate questions concerning the status of the ICEA Lion account. However, the Claimant's pleaded reliefs before the Court are not framed as a specific claim for recovery or remittance of those two pension contribution amounts. The Court will therefore not convert the proceedings into an unpleaded pension-accounting claim. Nothing in this judgment prevents the Claimant from pursuing any statutory or contractual pension benefits through the appropriate fund administrator in accordance with the applicable scheme and retirement-benefits framework. 11. Compensation for unfair termination- Having found that the redundancy process failed the statutory test, the Court must consider compensation under section 49(1)(c). Compensation is discretionary and must be assessed against the circumstances contemplated by section 49(4). I have taken into account that: the Claimant had served the Respondent for almost eleven years; his record was expressly acknowledged by the Respondent's witness to have been diligent; there was no misconduct or disciplinary infraction; the Respondent failed to undertake a contemporaneous redundancy process in 2023; there was no proved application of the statutory selection criteria; the Claimant had in fact been recalled to active work immediately before termination; on the other hand, the Respondent genuinely experienced significant financial difficulty; it had attempted since 2021 to retain employees notwithstanding that difficulty; the Claimant had signed the six-month unpaid leave arrangement; and the Respondent did settle part of the terminal dues following termination. In those circumstances, the maximum award of twelve months sought by the Claimant would be excessive. An award equivalent to six months' gross salary is, in my view, fair and proportionate. Accordingly: KShs. 26,565 × 6 = KShs. 159,390 The Claimant is awarded KShs. 159,390 as compensation for unfair termination. 12. Certificate of service- Section 51 of the Employment Act imposes an obligation upon an employer to issue a certificate of service upon termination of employment. The Respondent states that the certificate is available but was withheld pending clearance and return of company property. Any genuine claim the Respondent may have concerning its property may be pursued through an appropriate legal process. It does not extinguish the statutory obligation to issue the certificate of service. The Respondent shall therefore issue and deliver the Claimant's certificate of service within thirty (30) days of this judgment. **Final determination** 1. In the result, judgment is entered partly in favour of the Claimant as follows: Item Award Severance pay KShs. 132,825.00 Outstanding contractual gratuity KShs. 75,472.50 Compensation equivalent to six months' salary KShs. 159,390.00 **TOTAL KShs. 367,687.50** 1. For avoidance of doubt, the following claims are dismissed: 2. Kshs. 26,565 salary in lieu of notice, the same having been paid; 3. The claim for unpaid salary/unpaid leave pay; 4. Further annual leave pay; 5. KShs. 50,000 leave travelling allowance; 6. KShs. 569,819.25 house allowance; 7. KShs. 306,850 alleged unremitted SACCO deductions, the proved outstanding amount of KShs. 188,036 having subsequently been settled 8. KShs. 329,867.41 alleged SACCO penalties and interest, for want of sufficient proof of the computation and causal nexus; and 9. The balance of the gratuity claim beyond the KShs. 75,472.50 expressly demonstrated by the Respondent's own clearance computation. 10. A declaration is hereby issued that the termination of the Claimant's employment on 30th September 2023 did not comply with the substantive and procedural requirements applicable to redundancy and was consequently unfair within the meaning of section 45 of the Employment Act, 2007. 11. The Respondent shall issue the Claimant with a Certificate of Service within thirty (30) days. 12. The monetary award of KShs. 367,687.50 shall attract interest at court rates from the date of this judgment until payment in full. 13. The Claimant having succeeded on the principal question concerning the legality of termination, though not on all the monetary claims, shall have the costs of the suit. It is so ordered. **DATED, SIGNED AND DELIVERED ONLINE VIA MICROSOSFT TEAMS AT MOMBASA THIS 27TH AUGUST 2026.** **……………………………………………….** **EMILY M. MWAMUYE** **SENIOR RESIDENT MAGISTRATE**