https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/1809

Ndungu v Progressive Credit Ltd (Employment and Labour Relations Appeal E051 of 2025) [2026] KEELRC 1809 (KLR) (26 June 2026) (Judgment) Neutral citation: [2026] KEELRC 1809 (KLR) Republic of Kenya In the Employment and Labour Relations Court at Nyeri Employment and Labour Relations Appeal E051 of 2025 SC Rutto, J June 26, 2026 Between Grace Nyawira Ndungu Appellant and Progressive Credit Limited Respondent (Being an appeal against the Judgment of Hon. E.G Nderitu (C.M) dated 08/10/2025 in Nyeri MCELRC No. E004 of 2024) Judgment 1.This judgment is with respect to both the Appeal and the Cross-Appeal arising from the decision in Nyeri Chief Magistrates' ELRC No. E004 of 2024, Grace Nyawira Ndung’u v Progressive Credit Limited. The Appeal was filed by Grace Nyawira Ndung’u (the Appellant), while the Cross-Appeal was lodged by Progressive Credit Limited (the Cross-Appellant). 2.Before the trial Court, the Appellant pleaded that she was employed by the Cross-Appellant as a Sales Team Leader on or about 4th November 2022. 3.The Appellant averred that she became pregnant in December 2022 and informed the Cross-Appellant of her condition during the fifth month of her pregnancy. She stated that she subsequently applied for maternity leave through the company’s leave management portal and also completed a manual leave handover form. 4.According to the Appellant, approval of her leave application was delayed, prompting her to seek clarification from the Human Resources Officer, Mr. Collins, who verbally advised her to be patient as the application would eventually be approved. 5.The Appellant further stated that in May 2023, her leave application was rejected through the portal, whereupon she escalated the matter to the Cross-Appellant’s Nyeri Branch Manager. 6.She alleged that when the Branch Manager sought clarification from the Head of Human Resources, Ms. Joyce, regarding the status of her application, the latter responded that the Appellant had joined the company while already pregnant and should therefore not be paid during her maternity leave. 7.The Appellant maintained that her expected date of delivery was on or about 2nd September 2023 and that her maternity leave application was never approved through the company’s leave management system. 8.She further averred that in July 2023, she was issued with a letter titled “Change of Role from Sales Team Leader - SME & Corporate to Sales Executive” on account of poor performance. According to the Appellant, she was compelled to sign the letter, which altered her terms of employment by placing her on a commission-based remuneration structure without a fixed salary and requiring her to immediately hand over her duties to the Nyeri Branch Manager. 9.It was the Appellant’s case that the Cross-Appellant rendered her working environment intolerable by unilaterally varying her contract of employment and discriminating against her through the denial of maternity leave. 10.She further contended that she was not paid her salary during the period she was on maternity leave, thereby forcing her to resign from employment. 11.On the basis of the foregoing, the Appellant sought a total of Kshs 3,363,000.00, comprising one month’s salary in lieu of notice, salary allegedly withheld during maternity leave, damages for wrongful dismissal, unpaid house allowance, accrued leave days, exemplary damages, interest, and costs. 12.In its Statement of Response dated 23rd February 2024, the Cross-Appellant admitted the existence of the employment relationship but maintained that the Appellant’s salary was consolidated and inclusive of all applicable allowances. 13.The Cross-Appellant further pleaded that the Appellant’s performance was unsatisfactory and that she recorded an achievement rate of 0% in May, June, and July 2023. 14.It was the Cross-Appellant’s position that Clause 6.2 of the Appellant’s contract required her to give at least 60 days’ written notice before proceeding on maternity leave. 15.The Cross-Appellant further asserted that an employee seeking maternity leave was required to submit an application indicating the proposed commencement and end dates, complete a handover form, and obtain approval from the Quality and Growth Leader before the application could be forwarded to the Human Resources Department. 16.According to the Cross-Appellant, the Appellant failed to comply with the prescribed procedure. It contended that her first application for maternity leave, submitted on 23rd May 2023, was rejected because it had not received the requisite approval from the Quality and Growth Leader, and that the Appellant was aware of both the rejection and the reasons for it. 17.The Cross-Appellant further averred that the Appellant submitted a second application on 12th July 2023, which was similarly rejected because it did not satisfy the stipulated notice period under company policy. 18.The Cross-Appellant further maintained that the Appellant’s role was changed solely on account of her poor performance. 19.In that regard, the Cross-Appellant stated that the Appellant’s performance targets required her to achieve loan disbursements amounting to Kshs 2,000,000.00 within her first three months of employment, failing which her position would automatically revert to that of Sales Executive/Marketer. 20.The Cross-Appellant further contended that the Appellant had been informed of her underperformance and was therefore aware that a change in her role and terms of engagement would follow. It maintained that she accepted the change without objection. 21.The Cross-Appellant further asserted that the Appellant’s last day at work was 29th July 2023 and that she absconded duty from 1st August 2023, prior to the commencement date indicated in her maternity leave application. Consequently, the Cross-Appellant maintained that it was justified in discontinuing payment of her salary from August 2023. 22.The Cross-Appellant denied dismissing the Appellant and instead maintained that she absconded work without lawful justification. To this end, the Cross-Appellant urged the trial Court to dismiss the claim with costs. 23.When the matter proceeded for hearing before the trial Court, the Appellant testified in support of her claim, while the Cross-Appellant called evidence through its Human Resources Manager, Joyce Njoroge. Upon conclusion of the oral hearing, both parties filed written submissions. 24.After considering the pleadings, evidence, and submissions on record, the learned trial Magistrate delivered judgment on 8th October 2025. The Court found that the Appellant had established her claim on a balance of probabilities and that she had been constructively dismissed. Consequently, the Court awarded her compensation equivalent to two months’ salary for unfair termination, one month’s salary in lieu of notice, accrued house allowance, and payment in respect of accrued leave days. 25.Dissatisfied with the judgment, the Appellant filed the present Appeal, while the Cross-Appellant lodged a Cross-Appeal. The Appeal and the Cross-Appeal 26.The Appellant filed a Memorandum of Appeal dated 25th October 2025, challenging the judgment on the following eight grounds.1.That the Learned Magistrate erred in law and fact in failing to find and hold that the Respondent's conduct, particularly the Human Resource's statement that the Appellant “joined the company while pregnant, constituted direct discrimination contrary to Sections 5(3)(a) and 29 of the Employment Act, and Article 27(4) of the Constitution of Kenya, 2010.2.That the Learned Magistrate erred in law and in principle in failing to appreciate that the Respondent's inconsistent reasons for denying the Appellant maternity leave, initially citing procedural non-compliance, and subsequently asserting that she "joined while pregnant" amounted to pretextual discrimination and an unlawful denial of a statutory right.3.That the Learned Magistrate erred in law in finding that a case for exemplary damages had not been made out, despite uncontroverted evidence of oppressive, high-handed, and unconstitutional conduct by the Respondent in subjecting the Appellant to gender and pregnancy-based discrimination.4.That the Learned Magistrate misdirected herself by treating the matter purely as one of constructive dismissal without addressing the constitutional and statutory violations underpinning the dismissal, particularly the breach of the Appellant's right to equality, dignity, and fair labour practices under Articles 27 and 41 of the Constitution.5.That the Learned Magistrate failed to consider and apply established judicial precedent, including GMV v Bank of Africa Kenya Ltd [2013] eKLR, where the court awarded aggravated damages of Kshs. 4,473,006/= for similar pregnancy-based discrimination.6.That the Learned Magistrate erred in fact and law by awarding only two (2) months' salary as compensation, which was manifestly low and incommensurate with the gravity of the discrimination, the Appellant's length of service, and the emotional distress occasioned by the Respondent's conduct.7.That the Learned Magistrate erred in failing to appreciate that the denial of maternity leave, coupled with the HR's discriminatory remarks, rendered the working environment intolerable, thereby constructively dismissing the Appellant in a manner warranting enhanced and aggravated compensation.8.That the Learned Magistrate failed to uphold the constitutional obligation under Article 20(3) to interpret and apply the Employment Act in a manner that advances human dignity, equality, and freedom from discrimination. 27.Accordingly, the Appellant prays that:1.That this Honourable Court be pleased to allow the appeal and set aside the trial court's finding that a case for exemplary and/or aggravated damages was not made out.2.That this Honourable Court be pleased to substitute the said finding with an award of aggravated and/or exemplary damages for pregnancy-based discrimination, in addition to the compensation already awarded for constructive dismissal.3.That the total award be enhanced to adequately reflect the violation of Appellant's constitutional and statutory rights.4.That the costs of the appeal and interest be granted to the Appellant.5.That this Honourable Court do grant any other or further relief it may deem just and expedient in the circumstances. 28.On its part, the Cross-Appellant filed a Memorandum of Cross-Appeal dated 10th November 2025, raising the following nine grounds of appeal:6.That the Learned Magistrate erred in law and fact by awarding salary in lieu of notice whereas the Appellant is the one who initiated the termination and thus she is the one who had the obligation to give notice.7.That the Learned Magistrate erred in law and fact by entering judgement in favour of the Appellant who clearly refused to comply with company policy and thereafter absconded from work without justification and thereby allowing the Appellant to benefit from her misdoings.8.That the Learned Magistrate erred in fact and in law by making a finding not supported by evidence on record.9.That the Learned Magistrate erred in fact and in law in filling the gaps left out by the Appellant. 29.In light of the foregoing, the Cross-Appellant has urged the Court to allow the Cross-Appeal, set aside the judgment of the trial Court in its entirety, and substitute it with an order dismissing the claim with costs. 30.The Appeal and the Cross-Appeal were canvassed by way of written submissions. The Submissions 31.While the Appellant’s submissions were uploaded on the online portal, the same were not paid for, hence are deemed not duly filed. 32.On its part, the Cross-Appellant submitted that there was no evidence on record demonstrating that it terminated the Appellant’s employment or that it had approved her leave commencing on 1st August 2023. The Cross-Appellant, therefore, maintained that the Appellant had absconded duty. In support of this position, reliance was placed on the case of GMK v Kenyatta National Hospital [2020] eKLR. 33.Citing the decision in Kenya Union of Sugarcane Plantation and Allied Workers v Othira (Appeal E005 of 2023) [2024] KEELRC 843 (KLR) (18 April 2024) (Judgment), the Cross-Appellant posited that resignation is an essential element of a claim for constructive dismissal. 34.The Cross-Appellant further submitted that the change in the Appellant’s role was effected pursuant to contractual terms of which she was fully aware. It contended that the Appellant had been informed of the performance targets applicable to her position, received training and support, but nonetheless failed to attain the required standards. Consequently, when the change of role was communicated to her, she accepted the same through her conduct, notwithstanding that she did not remain in employment long enough for the change to take effect. 35.The Cross-Appellant further argued that the Appellant’s contention that the change of role was offensive amounted to an invitation for the Court to interfere with and rewrite the parties’ contract. Relying on National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & Another [2001] eKLR, the Cross-Appellant urged the Court to decline that invitation. 36.The Cross-Appellant further contended that there was no nexus whatsoever between the change of role and the Appellant’s pregnancy, adding that no evidence was adduced to establish such a connection. 37.It was further submitted by the Cross-Appellant that the Appellant ceased reporting to work well before the date on which her maternity leave was due to commence. According to the Cross-Appellant, had the Appellant proceeded on maternity leave from 29th August 2023 as indicated in her application, she would have remained an employee during the leave period and would have continued to enjoy all attendant employment benefits. 38.Referencing the case of Bakhoya v Chane & Another (Employment and Labour Relations Petition E147 of 2023) [2024] KEELRC 293 (KLR) (16 February 2024) (Judgment), the Cross-Appellant dismissed the Appellant’s allegation of discrimination as unfounded. It maintained that there was no evidence demonstrating that the Appellant had been treated differently from other employees to her disadvantage. Analysis and Determination 39.As this is a first appeal, this Court is under a duty to reconsider, re-evaluate, and analyse afresh the evidence that was placed before the trial Court and to draw its own independent conclusions. In doing so, however, the Court must bear in mind that it neither saw nor heard the witnesses testify and should therefore give due allowance for that disadvantage. This principle was restated by the Court of Appeal in the case of Selle & Another vs Associated Motor Boat Company Ltd & Others, [1968] EA 123. 40.This Court is further guided by the well-established principle that an appellate court will not ordinarily interfere with findings of fact by a trial court unless it is demonstrated that such findings are not supported by evidence, are based on a misapprehension of the evidence, or that the trial court applied wrong principles in reaching its decision. This position was articulated in Mwanasokoni v Kenya Bus Service Ltd (1982–88) 1 KAR 278. 41.Being mindful of the role of the Court at this juncture and having considered the Appeal, the Cross-Appeal, the entire Record of Appeal, the parties’ submissions, and the applicable law, the Court has singled out the following issues for determination: -a.Whether the trial Court erred in finding that the Appellant was constructively dismissed;b.Whether the trial Court erred in declining to award exemplary damages to the Appellant; andc.Whether the remedies awarded by the trial Court are sustainable. Whether the trial Court erred in finding that the Appellant was constructively dismissed 42.In its Memorandum of Cross-Appeal, the Cross-Appellant has faulted the trial Court for finding that the Appellant had been constructively dismissed, whereas she intentionally and maliciously failed to abide by the company policy and performed below target and on being questioned, absconded duty without justification. 43.At the trial Court, the Cross-Appellant maintained that the Appellant absconded duty from 1st August 2023 and was not constructively dismissed. 44.In its judgment, the trial Court held that the Cross-Appellant failed to take disciplinary action against the Appellant despite her alleged absence from work from 1st August 2023 and did not demonstrate any efforts to trace her or issue her with a notice to show cause. On that basis, the trial Court concluded that the Appellant had been unfairly and unprocedurally terminated from employment. 45.The record bears that the Appellant did not dispute the Cross-Appellant’s assertion that she ceased reporting to work from 1st August 2023. Indeed, she admitted as much during cross-examination. 46.The Appellant explained that she left employment due to what she described as intolerable working conditions, particularly the unilateral variation of her employment contract and alleged discrimination on the basis of pregnancy following the rejection of her maternity leave application. 47.The Cross-Appellant, on the other hand, contended that under the Appellant’s performance and remuneration structure, she was required to disburse Kshs 2,000,000.00 within the first three months, failing which her position would revert to that of Sales Executive. It further asserted that the Appellant accepted the variation and raised no objection. The Cross-Appellant further maintained that the Appellant failed to comply with its maternity leave policy, which required applications to be submitted at least 60 days in advance. 48.Upon re-evaluating the record, it is evident that the Appellant was employed as a Sales Team Leader, SME & Corporate. It is further apparent that by a letter dated 20th July 2023, her role was changed to that of a Sales Executive with effect from 1st August 2023. This change also altered her terms of engagement, shifting her remuneration structure to a commission-based model. 49.In support of its position, the Cross-Appellant exhibited a Business Remuneration Structure for Sales Team Leaders, which indicated that a team leader was required to disburse Kshs 2,000,000.00 within the first three months in order to continue earning a retainer, failing which the role would revert to that of a marketer. 50.Notably, the Appellant’s signature does not appear on the said Business Remuneration Structure. Similarly, the letter dated 20th July 2023 effecting the change in the Appellant’s role from Sales Team Leader to Sales Executive does not bear her signature. 51.In the circumstances, and contrary to the Cross-Appellant’s position, the evidence on record does not support the assertion that the Appellant was fully aware of, or that she consented to, the variation of her terms or the change in her role. 52.It is evident from the letter dated 20th July 2023 that the Appellant’s remuneration was to be substantially altered to a purely commission-based structure. Given that remuneration is a fundamental term of an employment contract, any variation thereto ought to comply with Section 10(5) of the Employment Act, which provides as follows:(5)Where any matter stipulated in subsection (1) changes, the employer shall, in consultation with the employee, revise the contract to reflect the change and notify the employee of the change in writing. 53.In line with the foregoing statutory provision, the Cross Appellant was under an obligation to obtain the Appellant’s prior written consent before effecting a downgrade of her position from Sales Team Leader to Sales Executive, thereby altering her remuneration. This was not done, as there is no evidence that the Appellant consented to the change either by signing the Business Remuneration Structure or accepting the change of terms as contained in the letter dated 20th July 2023. 54.Indeed, and contrary to the assertions by the Cross-Appellant, there is no evidence that the Appellant was consulted prior to the issuance of the letter changing her designation or that she accepted the revised terms of engagement. 55.In essence, the Cross-Appellant’s unilateral variation of the Appellant’s position from Sales Team Leader to Sales Executive amounted to a repudiatory breach of a fundamental term of the contract, going to the root of the employment contract. 56.In the leading case of Coca-Cola East & Central Africa Limited v Maria Kagai Ligaga [2015] eKLR, the Court of Appeal cited with approval the English decision in Western Excavating (ECC) Ltd v Sharp [1978] 1 CR 222, where Lord Denning held that:“If the employer is guilty of conduct which is a significant breach that goes to the root of the contract of employment or which shows that the employer no longer intends to be bound by one or more of the essential terms of the contract, then the employee is entitled to treat himself as discharged from any further performance. If he does so, then he terminates the contract by reason of the employer’s conduct. He is constructively dismissed. The employee is entitled in those circumstances to leave at the instant without giving any notice at all or alternatively, he may give notice and say that he is leaving at the end of the notice.” 57.Applying the foregoing precedent to the facts of this case, the Court finds that the Cross-Appellant’s unilateral variation of the Appellant’s role, without consultation in line with Section 10(5) of the Employment Act, demonstrates an intention inconsistent with the continuation of the employment relationship. This amounted to a fundamental breach going to the root of the employment contract, thereby entitling the Appellant to treat herself as constructively dismissed. 58.It is this Court’s respectful view that the Cross-Appellant’s argument that there was no constructive dismissal because the Appellant did not formally resign does not hold. I say so for the reason that in cases of constructive dismissal, the Court is principally concerned with the employer’s conduct rather than the formal act of resignation by the employee. 59.My position is fortified by the decision in Western Excavating (ECC) Ltd v Sharp [1978] 1 CR 222 cited in the case of Coca-Cola East & Central Africa Limited v Maria Kagai Ligaga [2015] eKLR, that an employee who considers himself or herself constructively dismissed is entitled to leave employment immediately without notice, or alternatively to give notice indicating that they will leave upon expiry of the notice period. 60.Accordingly, in the present case, the Court finds that the Appellant was entitled to leave the Cross-Appellant’s employment with or without notice. The absence of a formal notice of resignation does not, in itself, defeat a claim for constructive dismissal. 61.In sum, this Court finds no basis to interfere with the trial Court’s conclusion that the Appellant was constructively dismissed. Whether the trial Court erred in declining to award exemplary damages to the Appellant 62.The Appellant has faulted the trial Court for failing to award her exemplary damages in respect of alleged pregnancy-based discrimination, contending that the learned trial Magistrate misapprehended the claim by treating it solely as one of constructive dismissal. 63.On this issue, the trial Court declined to award exemplary damages on the basis that no sufficient foundation had been laid to justify such an award. 64.At the outset, it is noteworthy that in her Statement of Claim, the Appellant did not specifically plead discrimination on the basis of pregnancy, nor did she indicate that the claim for exemplary damages was anchored on the alleged discrimination. 65.Further, it should be appreciated that Section 8(3) of the Magistrates’ Courts Act explicitly precludes a Magistrate’s Court from hearing and determining claims for compensation for loss or damage suffered in consequence of a violation, infringement, denial of a right or fundamental freedom in the Bill of Rights. 66.Accordingly, to the extent that the Appellant sought to pursue a claim for discrimination on the ground of pregnancy under Article 27 of the Constitution and consequently obtain compensation, the proper forum would have been this Court and not the Magistrates’ Court. 67.For the foregoing reasons, this Court finds no basis to fault the learned trial Magistrate for declining to award the Appellant exemplary damages. 68.In any event, it is evident from the record that the Appellant left the Cross Appellant’s employment with effect from 1st August 2023 on account of constructive dismissal. This occurred prior to the commencement date of her maternity leave, which was indicated as 2nd September 2023. In the circumstances, it cannot be said that she was unlawfully denied maternity leave during the period she was in employment. 69.I hasten to add that the position would have been different had the Appellant remained in employment up to the date she was due to commence her maternity leave, and her application had been rejected on account of technicalities within the Cross-Appellant’s system or for failure to give the requisite 60 days’ notice. Whether the remedies awarded by the trial Court are sustainable 70.The trial Court, having found that the Appellant had been constructively dismissed, awarded her compensation, salary in lieu of notice, house allowance, and accrued leave. 71.This Court having upheld the finding that the Appellant was constructively dismissed, there is no basis for interfering with the award of salary in lieu of notice and compensation, which is largely discretionary. 72.Regarding accrued leave days, there is no evidence that at the trial Court, the Cross-Appellant produced the Appellant’s leave records, notwithstanding that it is the custodian of such records under Section 74(1)(f) of the Employment Act. In any event, the Cross-Appellant’s only contention was that the Appellant, having absconded, was not entitled to leave. 73.Notwithstanding the manner in which the Appellant left employment, her right to accrued leave was not diminished. In any event, this Court has already found that the Appellant was entitled to leave the Cross-Appellant’s employment on account of constructive dismissal. As such, the award by the trial Court cannot be faulted. 74.With respect to house allowance, it is notable that the trial Court awarded the Appellant this relief upon observing that the employment contract did not expressly indicate that the consolidated salary included any component for house allowance. 75.The finding by the trial Court is at variance with Clause 4.2 of the Appellant’s contract of employment, which indicates expressly that her salary was to be a consolidated gross salary, part of which was intended to cater for rent, commuter expenses, and related costs. 76.It is therefore evident that, contrary to the finding of the trial Court, the consolidated salary included house allowance. 77.In the circumstances, this Court finds that the award of house allowance is not sustainable, and the trial Court erred in granting the same. Orders 78.In the final analysis, the Appeal is disallowed while the Cross-Appeal is partially allowed, and the Court makes the following orders:a.The award of compensation for unfair termination, salary in lieu of notice, and accrued leave is hereby upheld.b.The award of house allowance in the sum of Kshs 7,500.00 is set aside.c.The total award of Kshs 82,500.00 is set aside and substituted with an award of Kshs 75,000.00.d.Interest on the sum of Kshs 75,000.00 shall accrue at court rates from the date of this Judgment until payment in full. 79.Costs in this Court and at the trial Court shall be borne by the Cross Appellant and shall be pegged on the final award. DATED, SIGNED AND DELIVERED AT NYERI THIS 26TH DAY OF JUNE 2026.………………………………STELLA RUTTOJUDGEIn the presence of:For the Appellant Mr. WachiraFor the Cross Appellant Mr. MainaCourt Assistant NdatiORDERIn view of the declaration of measures restricting Court operations due to the COVID-19 pandemic and in light of the directions issued by His Lordship, the Chief Justice on 15th March 2020 and subsequent directions of 21st April 2020 that judgments and rulings shall be delivered through video conferencing or via email. They have waived compliance with Order 21 Rule 1 of the Civil Procedure Rules, which requires that all judgments and rulings be pronounced in open Court. In permitting this course, this Court had been guided by Article 159(2)(d) of the Constitution which requires the Court to eschew undue technicalities in delivering justice, the right of access to justice guaranteed to every person under Article 48 of the Constitution and the provisions of Section 1B of the Civil Procedure Act (Chapter 21 of the Laws of Kenya) which impose on this Court the duty of the Court, inter alia, to use suitable technology to enhance the overriding objective which is to facilitate just, expeditious, proportionate and affordable resolution of civil disputes.