https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/2349

Haripharm Pharmacy Limited v Mwangangi (Employment and Labour Relations Appeal E342 of 2024) [2026] KEELRC 2349 (KLR) (29 July 2026) (Judgment) Neutral citation: [2026] KEELRC 2349 (KLR) Republic of Kenya In the Employment and Labour Relations Court at Nairobi Employment and Labour Relations Appeal E342 of 2024 DKN Marete, J July 29, 2026 Between Haripharm Pharmacy Limited Appellant and Amos Kamonzi Mwangangi Respondent Judgment 1.This matter was originated by way of a Memorandum of Appeal dated 22nd February, 2024. The appeal arises from a judgment delivered on 23rd September, 2024 at Milimani in MCELRC No. E735 of 2022. 2.It comes out as follows;1.The Learned Principal Magistrate erred in law and in fact by finding that the Respondent's termination was on account of redundancy despite insufficient evidence to support this conclusion.2.The learned Principal Magistrate erred in law and in fact by awarding housing allowance in the absence of sufficient evidence to demonstrate that the Respondent's salary was not consolidated. The Appellant contended that the salary was inclusive of all allowances and the Court failed to properly consider the respondent's lack of evidence to substantiate the assertion that housing allowance was excluded from the agreed remuneration package. The Appellant's evidence established that the consolidated payment structure inherently encompassed all remuneration due, with no provision for additional allowances beyond the agreed salary. This oversight resulted in an erroneous finding and an unjustified award.3.The learned Principal Magistrate erred in law and in fact by awarding compensation for public holidays without requiring the Respondent to produce specific evidence such as attendance records or work schedules, to substantiate the claim of having worked on those days. The trial court improperly shifted the burden of proof to the Appellant, contrary to the established legal principles.4.Learned Principal Magistrate erred in law and in fact by awarding annual leave pay without requiring the Respondent to provide substantive evidence to establish that he was denied the opportunity to take annual leave during the course of his employment. The trial court failed to consider the absence of proof that the Respondent sought or was denied leave, or that he did not utilize the annual leave days to which he was entitled under the terms of his employment. This oversight contravenes established legal principles requiring the Respondent to discharge the burden of proof in demonstrating entitlement to the award.5.Learned Principal Magistrate erred in law and in fact by failing to consider the Appellant's compliance with statutory obligations, including adherence to documentation requirements, leave policies, and findings of the Labour Inspection audit conducted in May 2022. Despite these verifications, the court proceeded to grant awards for housing allowance, public holidays and annual leave which were unsupported by sufficient evidence. This oversight led to an unfair and disproportionate judgment against the Appellant, disregarding the substantiated compliance efforts presented in the proceedings.6.Learned Principal Magistrate erred in law and in fact by misapplying the burden of proof, improperly shifting obligation onto the Appellant to disprove the Respondent's assertion rather than requiring the Respondent to establish entitlement to the disputed amounts. This misapplication contravenes established legal principles that place the initial burden of proof on the party asserting a claim.7.Learned Principal Magistrate erred in law and in fact by failing to take into account and give due consideration to the Appellant's submissions and documentary evidence.8.In all circumstances of the case, the findings of the Learned Principal Magistrate are unsupported in Law or on the basis of the evidence adduced. 3.The Appellant prays as follows;a)The Appeal be allowed.b)The Judgment in favour of the Respondent be set aside.c)The Order made by the Learned Principal Magistrate in the Lower Court as to interest and costs be set aside. 4.It is the Appellant’s case and submission, both before the trial court and on appeal, that the Respondent was never terminated from employment but abandoned his duties. The Appellant contends that the Respondent pleaded a case of redundancy but did not lead any evidence establishing the elements of redundancy under Section 40 of the Employment Act, 2007 and that the trial court erred in treating the termination as redundancy in the absence of such proof. 5.On the monetary awards, the Appellant submits that the Respondent led no evidence of the specific allowances, leave entitlements or public holidays claimed, and that the trial court erred in awarding these heads without an adequate evidential foundation. The Appellant further submits that the trial court erred in awarding the Respondent both service pay and compensation for unfair termination, which it contends constitutes double recovery. 6.The Respondent’s case and submission is that he was employed by the Appellant from September, 2014 as a rider delivering pharmaceutical products, and that on or about 4th July, 2022 he was verbally informed by the Appellant’s director that his services were no longer required. This was because the Appellant had lost the contract with its principal client and the volume of work had dried up. The Respondent’s account was corroborated at trial by CW-2, a former co-worker who testified to witnessing the director make this announcement to the Respondent. On the monetary awards, the Respondent submits that the Appellant, as custodian of employment records under Sections 74 and 10(7) of the Employment Act, 2007 bore the burden of demonstrating compliance and produced no records to discharge it. 7.After a considered look and scrutiny of the Memorandum of Appeal, the Record of Appeal, the proceedings and evidence on record and the submissions of the parties, the issues for determination therefore become;1.Whether the termination was unlawful and unfair.2.Whether the awards for house allowance, annual leave and public holidays were properly made.3.Whether the award styled as service pay was made under the correct statutory provision.4.Who shall bear the costs of this appeal. 8.The 1st issue for determination is whether the termination was unlawful and unfair. This being a first appeal, this court is enjoined to re-evaluate the evidence on record and draw its own conclusions while remaining alive to the fact that it did not have the advantage of seeing and hearing the witnesses. The Appellant’s central submission is that the Respondent pleaded redundancy but failed to lead evidence of any of the procedural steps required under Section 40 of the Employment Act, 2007. This submission is technically correct as far as it goes, but it does not address the core of the Respondent’s evidence at trial. The Respondent’s case, both pleaded and testified to, was a simple and consistent one: he was told by the Appellant’s director that the volume of work had dried up and his services were no longer needed. He did not use the word redundancy as a legal term, he described what happened to him. 9.The actual contest at trial was therefore correctly identified by the trial court as being whether the Respondent was separated from employment by the Appellant’s act, and if so whether that act was lawful. The Appellant’s own pleaded case shifted markedly from its evidence at trial. The Memorandum of Defence denied the termination and alleged desertion; at trial, RW-1 admitted under cross-examination that the Appellant held no appointment letter for the Respondent, kept no personnel file for him, and could produce no evidence of any attempt to contact him after he allegedly stopped reporting. In Ronald Nyambu Daudi v Tornado Couriers Limited [2014] eKLR, this court held that an employer who pleads desertion but produces no evidence of having investigated the employee’s absence, called him to account, or issued any communication inviting him to resume duty cannot establish the defence. On the Appellant’s own evidence, no such inquiry was ever made. The director’s admission that the company kept no employment records seals the matter under Section 10(7) of the Employment Act, 2007. The 1st issue is answered against the Appellant. This court finds no merit in Ground No. 1 of the appeal and upholds the trial court’s finding that the Respondent’s termination was unlawful and unfair. 10.The 2nd issue for determination is whether the awards for house allowance, annual leave and public holidays were properly made. Sections 74 and 10(7) of the Employment Act, 2007 place the burden of keeping and producing employment records, including payroll, leave records and evidence of statutory compliance, on the employer. The Appellant produced no contract of employment, no payslip itemising allowances, and no leave records for the Respondent’s eight years of service. In the absence of such records, the trial court was entitled to resolve the issues of house allowance and annual leave against the Appellant, and this Court finds no basis to interfere with those awards. 11.The position on public holiday pay requires closer examination since it engages a different evidential threshold. The Respondent was required to establish not merely that he worked on public holidays but that he did so without compensation. The trial court found that the Respondent’s evidence on this point was sufficiently specific, and this Court, having re-evaluated the record and the evidence thereof is not persuaded that the finding was against the weight of the evidence. Grounds 2, 3 and 4 of the appeal are dismissed. 12.The Appellant placed considerable weight on a letter from the County Labour Office dated 24th May, 2022 which it presented as an audit confirming statutory compliance. This court has examined that letter. The audit was conducted at a single point in time, covered a limited scope, and did not address the specific heads in dispute including house allowance, leave, and public holidays across the full period of the Respondent’s employment. It does not displace the trial court’s findings. 13.The 3rd issue for determination is whether the award styled as service pay was made under the correct statutory provision. This court agrees with the Appellant on this narrow but distinct point. Service pay under Section 35(5) of the Employment Act, 2007 is the appropriate remedy where an employee is separated on grounds of redundancy and is not a member of the National Social Security Fund. Service pay under Section 35(6), which provides for payment in lieu of notice at the rate of fifteen days’ pay per year of service, applies to a different category of separation. The trial court awarded what it styled as service pay but applied the Section 35(6) formula in circumstances which, on the trial court’s own finding of redundancy, called for the Section 35(5) formula. Having found that the Respondent’s termination was, on his own pleaded and proved case, one of redundancy, this court substitutes the service pay award with the correct computation under Section 35(5), being fifteen days’ pay per year of service for eight years at the applicable daily rate. The difference in quantum is modest but the legal basis is apt for consideration. Ground 5 of the appeal succeeds to this limited extent. 14.On the 4th issue, the Appellant has succeeded on one narrow ground only. The appeal is accordingly substantially unsuccessful. Costs of the appeal are awarded to the Respondent. 15.I am therefore inclined to allow the appeal to the limited extent of the service pay correction and order as follows;i.The appeal against the finding that the Respondent’s termination from employment was unlawful and unfair is dismissed.ii.The appeal against the award of house allowance is dismissed.iii.The appeal against the award of annual leave pay is dismissed.iv.The appeal against the award of public holiday pay is dismissed.v.The award of service pay made by the trial court is set aside and substituted with an award computed under Section 35(5) of the Employment Act, 2007 at fifteen days’ pay per year of service for eight completed years of service at the applicable daily rate.vi.Save for these ammends in order (v) above, the Judgment of the trial court delivered on 23rd September 2024 in MCELRC No. E735 of 2022 is upheld.vii.The Commissioner for Labour is ordered to, within sixty (60) days to with the liaison of the parties, compute the award under order (v) of this judgment of court.viii.Mention on 14.10.2026 for a report on computation.ix.The costs of this appeal shall be borne by the Appellant.x.Interest on all sums found due shall accrue at court rates from the date of the judgment of the trial court until payment in full. DELIVERED, DATED AND SIGNED THIS 29TH DAY OF JULY 2026.D. K. NJAGI MARETEJUDGEAppearances:1. Mr. Amalemba instructed by Amalemba & Associates Advocates for the Appellant.2. S.B Otieno instructed by S.B Otieno & Company Advocates for the Respondent.