https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/2067

**REPUBLIC OF KENYA** **IN THE EMPLOYMENT AND LABOUR RELATIONS COURT AT NYERI** **ELRC APPEAL NO. E049 OF 2025** **JOHN MUTHUI GACHAGO…………..……………………….APPELLANT** **VERSUS** **JOHN KABIRU MWANIKI…………………………………….RESPONDENT** *(Being an Appeal from the Judgment of Honourable Mary Gituma Senior Resident Magistrate in Nyeri Chief Magistrate's Employment and Labour Relations Cause No. E078 of 2014, delivered on 1st October 2025)* **JUDGMENT** 1. This judgment is with respect to both the Appeal and the Cross-Appeal arising from the decision in ***CMELRC Cause No. E075 of 2024, John Muthui Gachago v John Kabiru Mwaniki.*** The Appeal herein was filed by ***John Muthui Gachago*** (the Appellant), while the Cross-Appeal was lodged by ***John Kabiru Mwaniki*** (the Cross-Appellant/Respondent). 2. In his Statement of Claim at the Trial Court, the Appellant pleaded that he was engaged by the Respondent in September 2020 as a security guard/night watchman and was stationed at Kanyamati Apartments in the Classic Area of Nyeri County. He averred that he earned a monthly salary of Kshs. 11,000.00. 3. The Appellant further asserted that on 5th May 2024, the Respondent summarily terminated his employment without any valid reason or lawful justification. According to the Appellant, the dismissal was effected without prior notice or adherence to due process, notwithstanding that he had served the Respondent for approximately three (3) years and eight (8) months. 4. It was the Appellant’s case that although the parties had not executed a written contract of employment, their engagement gave rise to a permanent employer-employee relationship. 5. The Appellant further contended that throughout his employment, he was required to work on public holidays without remuneration and was never granted annual leave. 6. He maintained that he had never committed any act of gross misconduct, nor had his performance ever been questioned or the subject of discussion with the Respondent. 7. The Appellant further alleged that he was consistently underpaid during the subsistence of his employment. 8. On the basis of the foregoing, the Appellant sought, among other reliefs, a declaration that his termination was illegal, unlawful, unfair and inhumane, together with payment of **Kshs. 504,633.32**, being claims for one (1) month's salary in lieu of notice, accrued leave, compensation for unfair termination, underpayments, service pay and unpaid house allowance. He also prayed for a certificate of service, costs of the suit and interest. 9. In response, the Respondent filed a Statement of Response dated 10th January 2025, in which he denied that an employer-employee relationship had ever existed between the parties. He averred that he neither owned Kanyamati Apartments in the Classic Area nor possessed the capacity to employ the Appellant in the manner alleged. 10. The Respondent maintained that he would only engage the Appellant on a casual, need-based basis to undertake piecework at his residence, for which the Appellant would be paid upon completion of the assigned tasks. 11. He consequently denied having terminated the Appellant's employment, maintaining that no employment relationship existed. 12. The Respondent further denied liability for the sums claimed and to this end, put the Appellant to strict proof. 13. The matter proceeded for hearing on 16th July 2025, during which the Appellant testified in support of his claim, while the Respondent testified in his defence and called one additional witness, ***Naomi Njeri***, who identified herself as his wife. Upon the close of the oral hearing, both parties filed written submissions. 14. Having considered the pleadings, the evidence and the rival submissions, the learned trial Magistrate delivered judgment on 1st October 2025. The trial court found that the M-Pesa statements relied upon by the Appellant did not establish the existence of an employer-employee relationship. In so finding, the trial Court observed that the remittances reflected therein were irregular in both amount and timing. 15. In the trial Court's view, the statements merely demonstrated that the Respondent had made payments to the Appellant for work performed, but did not prove that the Appellant was employed by the Respondent. Consequently, the learned trial Magistrate held that the Appellant had failed to prove the existence of an employment relationship and dismissed the suit, with no orders as to costs. **The Appeal and Cross-Appeal** 1. Aggrieved by the judgment of the trial Court, the Appellant lodged the present Appeal, advancing the following six (6) grounds in support thereof: 2. **THAT the Learned Trial Magistrate erred in law and fact by holding and finding that the Appellant was not employed by the Respondent contrary to the overwhelming evidence by the parties of the existence of an employment relationship, thereby occasioning a miscarriage of justice.** 3. **THAT the Learned Trial Magistrate erred in law and in fact by applying wrong principles of law thus erroneously dismissing the Appellant’s claim under the head of unpaid leave days, underpayment, service pay and housing allowance, thereby occasioning a miscarriage of justice.** 4. **THAT the Learned Trial Magistrate erred in law and fact by applying wrong principles of law thus erroneously dismissing the Appellant’s claim entirely, thereby occasioning a miscarriage of justice.** 5. **THAT the Learned Trial Magistrate erred in law and fact by taking into account extraneous and irrelevant considerations, thus arriving at erroneous findings in the judgment, thereby occasioning a miscarriage of justice.** 6. **THAT the Learned Trial Magistrate failed to address her mind to the pleadings on record and the evidence by the parties, thereby occasioning a miscarriage of justice.** 7. **THAT the Learned Trial Magistrate erred in law and fact in failing to evaluate the entire evidence as well as submissions as presented by the Appellant, thereby occasioning a miscarriage of justice.** 8. Consequently, the Appellant prays that this Court allows the Appeal in its entirety, sets aside the judgment delivered on 1st October 2025 in *Nyeri MCELRCC No. E078 of 2024,* and substitutes it with an order allowing the Appellant's claim as filed. 9. On its part, the Respondent filed a Memorandum of Cross-Appeal dated 10th November 2025, raising the following four (4) grounds of appeal: 10. ***The learned trial magistrate erred in law and in fact by failing to exercise her discretion judiciously on the issue of costs, having found that the Claimant had failed to prove any employment relationship or entitlement to any reliefs sought.*** 11. ***The learned magistrate misdirected herself in declining to award costs to the successful party without providing any reasons, contrary to the mandatory provisions of Section 27(1) of the Civil Procedure Act, which vests discretion in the court but presumes costs shall follow the event.*** 12. ***The learned magistrate erred in principle by denying the Respondent costs despite finding that the Claimant's suit was entirely unmerited, thereby rewarding frivolous litigation and occasioning prejudice to the successful Respondent.*** 13. ***The learned magistrate erred in law by failing to consider that no exceptional circumstances had been demonstrated to justify a departure from the general rule that costs follow the event.*** 14. Accordingly, the Respondent prays that the Cross-Appeal be allowed, the part of the judgment declining to award him costs be set aside and substituted with an order awarding him costs, and that he be awarded the costs of both the Cross-Appeal and the Appeal. **The Submissions** 1. The Appeal was disposed of by way of written submissions. The Appellant submitted that the M-Pesa statements he presented at the Trial Court indicate an uninterrupted payment pattern from the year 2021 to 2024. It was his contention that the Trial Court ought to have considered those messages, which demonstrated that he worked continuously for a period exceeding one (1) month, with the result that his casual employment had, by operation of law, converted into regular employment. 2. The Appellant maintained that the Respondent paid him consistently for three (3) years as per the M-Pesa messages, which show that their relationship had surpassed the aggregate one-month period and thus converted to regular employment. 3. In support of the Appellant’s submissions, reliance was placed on the cases of ***Ng’ang’a & 4 others v County Government of Kajiado & another [2025] KEELRC 1299 (KLR), Olindo v Kenya Power and Lighting Company Ltd [2024] KEELRC 746 (KLR)*** and ***Ruth Nyasuguta Areimba v Conference Caterers Limited [2021] KEELRC 1640 (KLR).*** 4. It was further submitted by the Appellant that the Respondent had no valid reason to terminate his employment as he was not guilty of any offence under ***Section 44(4) of the Employment.*** 5. The Appellant further submitted that he was dismissed without notice and was never heard before the dismissal. 6. On the other hand, the Respondent reiterated his position that at no material time did he employ the Appellant as a night watchman at Kanyamati Apartments. 7. Referencing the case of ***Casmir Nyakundi Nyaberi v Mwakikar Agencies Limited (2016) eKLR***, the Respondent further submitted that the Appellant failed to produce an appointment letter and/or an employment contract, any duty roster, any attendance register, any witness from Kanyamati Apartments to confirm that he worked there as a watchman, any evidence demonstrating control, supervision or direction by the Respondent consistent with an employment relationship and any evidence of deductions by the Respondent for the NSSF or NHIF contributions. 8. The Respondent further submitted that the Mpesa statements relied upon by the Appellant, which reflected the receipt of varying sums of money from the Respondent over a period of time, disprove the Appellant's assertion that he was employed by the Respondent in September 2020. 9. The Respondent maintained that the evidence adduced by the Appellant does not prove without reasonable doubt that he was engaged daily, continuously for a month, and that he was paid for services at the end of each day, after engagement of a period no longer than 24 hours, as alleged. 10. It was further submitted that the Appellant failed to prove the existence of an employee-employer relationship and thus, a claim of unfair termination or wrongful dismissal under ***Section 47 (5) of the Employment Act, 2007,*** cannot stand. 11. According to the Respondent, the question of conversion under Section should not be admitted because the threshold of existence of an employment relationship, casual or otherwise, did not exist and was not proven on a balance of probabilities. 12. In the Respondent’s view, the Learned Trial Magistrate, after finding that the appellant had failed to prove the foundational requirement of the existence of an Employee- Employer relationship, correctly declined to proceed to issues of unfair termination, leave pay, underpayments, service pay and housing allowance. **Analysis** **and Determination** 1. As this is a first appeal, the Court is enjoined to reconsider and re-evaluate the entire evidentiary record and draw its own independent conclusions as to whether the decision of the trial court should be sustained. In undertaking that exercise, however, the Court must remain alive to the fact that it neither saw nor heard the witnesses testify and must therefore accord due regard to the trial court's advantage in that regard. This principle was aptly stated in ***Selle v Associated Motor Boat Co. Ltd & Others [1968] EA 123.*** 2. Guided by the foregoing principle, and having carefully considered the Memorandum of Appeal, the Record of Appeal, the rival submissions, and the applicable law, the Court is of the view that the following issues fall for determination: - 3. ***Whether the learned trial Magistrate erred in finding that the Appellant failed to establish the existence of an employer-employee relationship between himself and the Respondent;*** 4. ***If the answer to (a) is in the affirmative, whether the Appellant's termination from employment was unfair and unlawful;*** 5. ***Depending on the determination of issue (b), whether the Appellant is entitled to the reliefs sought before the trial Court; and*** 6. ***Who bears the costs of these proceedings?*** **Existence of an Employment relationship?** 1. The Appellant’s main grievance is that the learned trial Magistrate erred in finding that no employer-employee relationship existed between him and the Respondent. 2. Before the trial Court, the Appellant pleaded that he was engaged by the Respondent in September 2020 as a security guard/night watchman, stationed at Kanyamati Apartments, and remunerated at the rate of **Kshs. 11,000.00** per month. 3. The Respondent denied the existence of an employment relationship. His primary contention was that he neither owned Kanyamati Apartments nor had the capacity to employ the Appellant. Without prejudice to that position, he maintained that he only engaged the Appellant from time to time to undertake piecework at his residence on a need basis, for which the Appellant would be paid cumulatively upon completion of the assigned tasks. 4. In support of his claim, the Appellant produced an M-Pesa statement covering the period from 1st January 2021 to 15th May 2024. A perusal of the statement confirms that the Respondent regularly remitted money to the Appellant during that period. 5. More notably, the statement reveals that although the remittances were often made in instalments, they consistently aggregated to **Kshs. 11,000.00** every month. This pattern of payment persisted over a period of approximately three (3) years. 6. While the Respondent maintained that the Appellant was merely engaged on a casual, need-based basis, he offered no explanation for the sustained and consistent monthly payments of Kshs. 11,000.00 over such a prolonged period. The consistency of those payments is difficult to reconcile with the Respondent's assertion of intermittent casual engagements. 7. Even assuming that the Respondent’s version is correct that he had engaged the Appellant as a casual worker, the nature and duration of the engagement, coupled with the uniform monthly remuneration, would bring the relationship within the ambit of **Section 37 of the Employment Act**. By operation of that provision, the casual engagement would be deemed to have been converted into a contract of service to which **Section 35(1)(c) of the Employment Act** applies. 8. For context, Section 37 of the Employment Act provides as follows: - **(1) Notwithstanding any provisions of this Act, where a casual employee—** **(a) works for a period or a number of continuous working days which amount in the aggregate to the equivalent of not less than one month; or** **(b) performs work which cannot reasonably be expected to be completed within a period, or a number of working days amounting in the aggregate to the equivalent of three months or more,** **the contract of service of the casual employee shall be deemed to be one where wages are paid monthly and section 35(1)(c) shall apply to that contract of service.** **(2) In calculating wages and the continuous working days under subsection (1), a casual employee shall be deemed to be entitled to one paid rest day after a continuous six days working period and such rest day or any public holiday which falls during the period under consideration shall be counted as part of continuous working days.** **(3) An employee whose contract of service has been converted in accordance with subsection (1), and who works continuously for two months or more from the date of employment as a casual employee shall be entitled to such terms and conditions of service as he would have been entitled to under this Act had he not initially been employed as a casual employee.** **(4) Notwithstanding any provisions of this Act, in any dispute before the Industrial Court on the terms and conditions of service of a casual employee, the Industrial Court shall have the power to vary the terms of service of the casual employee and may in so doing declare the employee to be employed on terms and conditions of service consistent with this Act.** **(5) A casual employee who is aggrieved by the treatment of his employer under the terms and conditions of his employment may file a complaint with the labour officer and section 87 of this Act shall apply.** 1. The import and effect of ***Section 37 of the Employment Act***was considered by the Court of Appeal in ***Nanyuki Water & Sewage Company Limited v Benson Mwiti Ntiritu & 4 others [2018] eKLR,*** thus: - ***“Section 37 of the Employment Act, 2007 applies to the employment of the respondents to the effect that their casual employment was converted into a contract of service where wages are paid monthly and to which section 35 (1) (c) of the Act applies. The respondents were entitled to such terms and*** ***conditions of service as they would have been entitled to under this Act had they not initially been employed as casual employees.”*** 1. In the premises, the Respondent's contention that he merely engaged the Appellant on a casual basis cannot be sustained in the face of ***Section 37 of the Employment Act.*** 2. Accordingly, the Court is satisfied that the material on record demonstrates that the Appellant was employed by the Respondent on a fixed salary and served continuously over a considerable period. 3. Consequently, the Court is persuaded that the learned trial Magistrate fell into error in holding that the Appellant had failed to establish the existence of an employer-employee relationship with the Respondent. **Unfair and unlawful termination of employment?** 1. Before the trial Court, the Respondent's case rested entirely on the contention that no employer-employee relationship existed between the parties. Maintaining that position, the Respondent denied having summarily dismissed the Appellant from employment. 2. Having found that the trial Court erred in concluding that no employment relationship existed, it follows that the Appellant was entitled to the statutory safeguards against unfair termination provided under the Employment Act. 3. In those circumstances, the evidential burden fell on the Respondent, pursuant to ***Sections 43 and 45(2)(a) and (b) of the Employment Act****,* to prove the reasons for the Appellant's termination and to demonstrate that those reasons were valid, fair, and related to the Appellant's conduct, capacity, compatibility, or the Respondent's operational requirements. 4. The Respondent was equally obligated to establish that the termination was preceded by a fair procedure in compliance with ***Section 41 of the Employment Act.*** 5. However, having denied the existence of an employment relationship altogether, the Respondent neither pleaded nor adduced any evidence explaining the reasons for terminating the Appellant's employment. Consequently, there are no reasons before the Court capable of being evaluated against the standards of validity and fairness prescribed under ***Sections 43 and 45(2)(a) and (b) of the Employment Act.*** 6. It follows, therefore, that the Respondent failed to discharge the statutory burden of justifying the termination, with the result that the Appellant's dismissal was without valid or fair cause and in contravention of Sections 43 and 45 of the Employment Act. 7. Equally, there is no evidence that the Appellant was notified of the allegations against him or afforded an opportunity to be heard before the decision to terminate his employment was made. The mandatory procedural safeguards set out under Section 41 of the Employment Act were therefore not complied with. 8. In light of the foregoing, the Court finds and holds that the termination of the Appellant's employment was both unfair and unlawful. **Remedies?** 1. Having found that the Appellant's termination was both unfair and unlawful, the Court awards him one (1) month's salary in lieu of notice and compensation equivalent to four (4) months' gross salary. In arriving at this award, the Court has taken into account the Appellant's period of service, the Respondent's failure to establish a valid and fair reason for the termination, and adherence to the procedural safeguards prescribed under the Employment Act. 2. Turning to the claim for accrued annual leave, the Court notes that, pursuant to **Section 74(1)(f) of the Employment Act**, the Respondent bore the statutory obligation to keep and maintain leave records. Despite this obligation, no such records were produced to demonstrate the leave taken by the Appellant during the subsistence of his employment or any outstanding leave balance at the time of termination. Nevertheless, by virtue of ***Section 28(4) of the Employment Act,*** recovery of accrued annual leave is limited to the 18 months immediately preceding the termination of employment. The Appellant's entitlement shall therefore be confined to that statutory period. 3. As regards the claim for unpaid house allowance, the Appellant contended that no house allowance was paid throughout his employment. However, the evidence on record shows that his remuneration was made through bank transfers, and no pay slips or other documentary evidence were produced to demonstrate that his monthly salary excluded a housing component. In the absence of such evidence, the Court is unable to conclude that the salary paid was exclusive of house allowance and, accordingly, presumes that the housing element was consolidated into the Appellant's gross monthly wage. The claim for house allowance therefore fails. 4. The claim for service pay is likewise unmerited. The evidence on record demonstrates that the Appellant was a contributing member of the National Social Security Fund (NSSF) and therefore falls within the exclusions stated under ***Section 35(6) of the Employment Act***. Consequently, he is not entitled to service pay. **Orders** 1. In the final analysis, the Court allows the Appeal and makes the following orders:- 2. **The order of the trial Court dismissing the Appellant’s Claim is hereby set aside.** 3. **The Appellant is awarded one (1) month’s salary in lieu of notice in the sum of Kshs 11,000.00.** 4. **The Appellant is further awarded compensation for unfair termination equivalent to four (4) months’ salary, amounting to Kshs 44,000.00.** 5. **The Appellant is awarded unpaid leave for a period of 18 months in the sum of Kshs 11,550.00.** 6. **The total award therefore amounts to Kshs 66,550.00.** 7. **Interest on the sum in (e) shall accrue at court rates from the date of this Judgment until payment in full.** 8. **The Respondent shall issue the Appellant with a certificate of service within thirty (30) days from the date of this Judgment.** 9. Having found the Appeal meritorious, the Court declines the Respondent's prayer in the Cross-Appeal for an award of costs in the Trial Court. 10. As the Appeal has succeeded, costs in this Court and at the trial Court shall be borne by the Respondent. **DATED, SIGNED** and **DELIVERED** at **NYERI** this **16th** day of **July** 2026. **………………………………** **STELLA RUTTO** **JUDGE** **In the presence of:** For the Appellant Ms. Njau instructed by Mr. Magua For the Respondent No appearance Court Assistant Ndati **ORDER** In 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. **STELLA RUTTO** **JUDGE**