Ashleys Kenya Ltd v Opiyo (Appeal E357 of 2025) [2026] KEELRC 2441 (KLR) (31 August 2026) (Judgment)

**REPUBLIC OF KENYA** **IN THE EMPLOYMENT AND LABOUR RELATIONS COURT AT NAIROBI** **APPEAL NO. E357 OF 2025** **ASHLEYS KENYA LIMITED APPELLANT** *VERSUS* **DUNCAN OPIYO RESPONDENT** **(Being an appeal from the judgment of the Hon. E. Riany delivered on 30 September 2025 in Nairobi MCELRC No. E440 of 2024)** **JUDGMENT** The appeal arises from the judgment delivered on 30 September in Milimani MCELRC No. E0440 of 2024. The appeal is that the learned trial magistrate erred in law and in fact by finding that the respondent was unfairly, wrongfully and unlawfully terminated from employment when, in fact, the Respondent’s engagement with the appellant was that of a Contract of Service in the capacity of a consultant for a fixed period of time, which period had since elapsed and the same was not renewed by the parties. Other grounds of appeal are that the learned trial magistrate misdirected herself by importing employment rights and remedies into a non-employment relationship and consequently erred in awarding compensation for unfair termination of employment, a Certificate of Service, and one month's salary in lieu of Notice, where none was contractually or statutorily due. The background to the appeal is a claim filed by the respondent. In the claim, the respondent's case was that he was employed by the appellant as a product manager in 2011 until his untimely and illegal dismissal on 2 February 2024. He was earning a gross salary of Kshs. 25,000. On 24 January 2024, he received a notice from the appellant suspending him immediately. The suspension was to enable the respondent to investigate an alleged array of misconduct. These included punctuality and work ethic performance issues, integrity issues and insubordination. He declined to countersign a notice stating that he would be paid only for the period worked during his suspension. On 2 February 2024, the respondent received a call from the appellant to report to work immediately, and upon doing so, the respondent was issued with a termination of employment letter. The termination letter stated that the appellant was not in a position to resolve within its confines, hence the decision to terminate his employment. He was neither issued a show-cause letter nor subjected to a disciplinary process under the Employment Act. He claimed the following: 1. A declaration that he was unfairly, wrongfully and unlawfully terminated from employment 2. 12 months’ salary as compensation for unfair and illegal termination 3. One month's salary in lieu of notice 4. Service pays for the 13 years worked 5. Issuance of certificate of service 6. Costs of the claim In reply, the appellant filed a response and admitted that, through a consultancy agreement dated 1 October 2023, the respondent was engaged in the capacity of a consultant for a period of three months commencing 1 October 2023 to 31 December 2023, terminable by 30 days’ notice or for breach of contract. The appellant never retained the respondent on any long-term employment basis as alleged, and neither did the parties execute any contract confirming the respondent as a full-time employee of the appellant. During the 3-month consultancy engagement, the respondent grossly violated the terms of the services contract and failed to discharge his obligations under the contract, resulting in its termination. The particulars of breach included neglecting to carry out his duties diligently, overcharging the clients for personal gain, misusing the appellant’s products, insubordination against persons placed in authority, failing to report to work punctually, sluggishness in the execution of duties and selling competing products at the appellant’s business without authority. Following investigations, the appellant issued a suspension letter to the respondent to show cause why the service contract should not be terminated for breach, but the appellant, in further acts of breach, refused even to acknowledge the letter dated 24 January 2024. The appellant therefore suspended the consultancy agreement to review whether it was worthwhile to renew it. Granted the respondent was in a consultancy engagement, there was no mandatory requirement, but it nevertheless allowed the respondent to show cause. The engagement contract had, in any event, lapsed by effluxion of time on 31 December 2023, and was not renewed due to the breakdown of the relationship between the parties. The appellant asked that the respondent’s claim be dismissed with costs. The learned magistrate assessed the evidence and held that the respondent was issued a suspension letter on 24 January 2024, and thereafter there was no disciplinary hearing. Instead, on 2 February 2024, he received a termination letter. The appellant, having served the respondent with a suspension letter, it was only proper that a hearing followed. The appellant failed to do this, rendering its termination unlawful and unprocedural. The appellant was never informed of the reasons for the termination and given a chance to respond to the allegations against him, just the suspension, then termination of employment. There was no evidence that a hearing took place or that the respondent declined to participate. The burden placed on the appellant under section 43 and 45 of the Act was therefore not discharged. The trial court found the termination unfair and awarded the respondent 6 months' salary compensation, pay in lieu of notice, and a certificate of service. Service pay was not proved. The appellant submitted that the trial court failed to appreciate that the relationship between the parties was a fixed-term contract for services, dated 1 October 2023 and expiring on 31 December 2023. Such a relationship should not have been subjected to the provisions of the Employment Act (the Act). In **Stanley Mungai Muchai v National Oil Corporation of Kenya [2012] KEELRC 38**, the court held that in a contract of service, unlike a service contract, the rights under the Act do not arise. The appellant issued the respondent a fixed contract for service which lapsed on its terms. He was classified as a consultant, and the payment was subject to a 5% withholding tax. Upon lapse of the contract, there was no obligation to renew the contract, as held in **Todor Services Limited v Deri Appeal E270 of 2024 [2025] KEELRC 1948.** The petitioner submitted that the trial court erred in finding that an employment relationship existed under the Act and that it was terminated unlawfully, thereby warranting an award of compensation. The foundation of such finding was in error. The appeal should be allowed and the trial court judgment set aside with costs. The respondent submitted that, during his employment, the appellant issued him a suspension notice on 24 January 2024 and a termination notice on 2 February 2024. Such was within the employment relationship, and save that there was no due process leading to termination of employment. The appellant's allegation that there was a fixed-term contract ending on 31 December 2023 is not supported by the record, as the employment relationship extended beyond that period. Sections 43 and 45 of the Act require procedural and substantive fairness before employment can lawfully be terminated. In **Janet Nyandiko v Kenya Commercial Bank Limited [2017] eKLR**, the court held that the provisions of section 41 of the Act are mandatory. The employee must be accorded the right to a fair hearing before employment can terminate. The judgment of the trial court should be affirmed with costs. **Determination** This being a first appeal, the court is required to review the record, reassess the findings and make a conclusion. However, account must be taken of the fact that the trial court had the opportunity to hear the witnesses and hence form inferences. The respondent’s case is that in 2011, the appellant employed him as a product manager. He worked until 2 February 2024 when his employment was unfairly terminated. On 24 January 2024, he was suspended from duty to allow for investigations over alleged misconduct. Without due process, his employment was terminated. In reply, the appellant denied the employment relationship. The respondent was previously employed on a short-term 3-month contract, and, through a consultancy agreement dated 1 October 2023, he was engaged as a consultant, ending on 31 December 2023, or terminable upon 30 days’ notice. There was no long-term employment as stated, and he was suspended from service due to misconduct. The consultancy agreement permitted termination upon breach, a right the appellant exercised by notice dated 2 February 2026. In any event, the appellant contended that the term contract had lapsed on 31 December 2023 and was not renewed. Indeed, as submitted by the appellant, the respondent was employed under a contract dated 1 October 2023, for a term ending on 31 December 2023. This followed an offer of employment through a letter dated 1 October 2023. Although parties are at liberty to engage under a contract for services, under section 10(3) of the Act, they may secure the employment relationship under a fixed-term contract. However, the parties' conduct can blur the distinction between a contract for services and a fixed-term contract. In this case, the consultancy contract lapsed on 31 December 2023. Post such lapse, the appellant suspended the respondent from duty over alleged misconduct. This was to allow for investigations. From 1 January to 2 February 2024, the appellant engaged the respondent on an oral basis. He was required to adhere to workplace protocols and regulations, including being punctual, and hence under its control and direction. Subsequently, the respondent was accused of breach of the employment relationship. Under section 37 of the Act, the respondent became a protected employee post the consultancy agreement ending on 31 December 2023. Being left under an open relationship and continuing with his duties, he acquired rights and benefits under the Act as held in [**Kenyatta University v Maina [2022] KECA 1201 (KLR)**](https://new.kenyalaw.org/akn/ke/judgment/keca/2022/1201/eng%402022-11-04). The duty to issue a written contract defining the nature of the employment relationship rests on the employer under section 10(6) and (7) of the Act. In this case, the appellant, under the mistaken belief that the respondent was still a consultant, suspended him and then issued notice terminating his employment without adhering to Sections 35, 41 and 45 of the Act. Such resulted in unfair termination of employment as held in **Isindu v Lavington Security Guards Ltd [2017] KECA 225 (KLR).** The due process under Sections 41 and 44 of the Act is mandatory. Even where the employee has engaged in gross misconduct, procedural fairness is imperative. The respondent was entitled to notice pay under section 35 of the Act at one month. He was earning Ksh. 25,000, which is due. Where any monies are not paid during the suspension period, the full amount is due. On the above findings, the learned magistrate awarded 6 months in compensation. However, the justification for such an award is not examined. Although the award under section 49 of the Act is discretionary, such discretion must be applied judicially. Under section 45(5) of the Act, the court hearing the claim must consider the work record of the employee. The appellant filed a warning letter to the respondent dated 20 September 2023. The issues relating to the suspension notice on 24 January 2024 are not contested. Such a poor record comes to bear in court, rationalising the award to issue. After the consultancy agreement was signed, the respondent served for only one month. Based on his poor work record, and the fact of the appellant failing to adhere to due process under the Act, a compensation of one month is hereby found appropriate. On costs, under section 12(4) of the Employment and Labour Relations Court Act, costs do not follow the cause. Reasons why such is justified must be issued. None were addressed in this case. The order regarding the issuance of a Certificate of Service is not contested. Such shall suffice. Based on the above findings and the appeal addressed, each party should pay its own costs for the appeal and trial court. **Accordingly, judgment in Nairobi CMELRC E440 of 2024 is hereby reviewed in the following terms:** 1. **Employment terminated unfairly.** 2. **Compensation Ksh. 25,000.** 3. **Notice pay Ksh. 25,000.** 4. **For the appeal and trial court proceedings, each party to meet its costs.** **Delivered in open court this 31st day of August 2026** **M. MBARŨ** **JUDGE** **In the presence of:** **Court Assistant: Kemboi** **……………………………………………… and …………………………………..………**