https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/2235

REPUBLIC OF KENYA IN THE EMPLOYMENT AND LABOUR RELATIONS COURT AT MOMBASA CAUSE NO. E015 OF 2021 ERIC CHAMTU KAHINDI................................................. CLAIMANT VERSUS AFRIKA PEARL HOTEL LIMITED *(Formerly trading as African Safari Diani Adventure)* ..................... 1ST RESPONDENT ELEVEN PEARL BOUTIQUE HOTEL & SPA (FRENCH DREAM LIMITED) .......................... 2ND RESPONDENT **JUDGMENT** **A. INTRODUCTION AND PROCEDURAL BACKGROUND** 1. By a Memorandum of Claim filed on 11th February 2021, the Claimant sued the 1st Respondent alone, seeking, among other reliefs, a declaration that his termination from employment was unfair and unlawful, an award of terminal benefits totalling Kshs 7,972,922/=, damages for discrimination on account of sickness, and ancillary orders. 2. On 11th April 2024, the Claimant moved the Court orally to amend the Memorandum of Claim, asserting that the 1st Respondent had transferred its business to another entity trading under a different name. The application was allowed, and the Claimant thereby enjoined Eleven Pearl Boutique Hotel & Spa as the 2nd Respondent, on the premise that it had assumed the 1st Respondent's liabilities to him. The Amended Memorandum of Claim was filed on 25th March 2025. 3. The 2nd Respondent entered appearance and, on 12th June 2025, filed its Response to the Amended Memorandum of Claim, in which it denied any employment or other legal relationship with the Claimant, denied that it had acquired, merged with, taken over or succeeded to the business of the 1st Respondent, and denied liability for the Claimant's claim. 4. On 8th October 2025, the Claimant moved the Court to correct the description of the 2nd Respondent, on the ground that it had been misdescribed, so that it would properly read "French Dream Limited" (trading as Eleven Pearl Boutique Hotel & Spa). The application was allowed by consent of the parties, and the pleadings were amended accordingly. 5. The 1st Respondent, though duly served with summons and all subsequent process, has not at any stage of these proceedings entered appearance, filed a response to the claim, filed a witness statement, adduced evidence, or cross-examined the Claimant's witness. The claim against the 1st Respondent has accordingly proceeded, and falls to be determined, on the strength of the Claimant's own pleadings and evidence, untested by any responsive case. 6. The 2nd Respondent, by contrast, actively defended the suit, filing a response, a witness statement through its General Manager, Amir Mohamed, documentary evidence including its Certificate of Incorporation and CR-12 records, and written submissions. 7. I have considered the pleadings, the oral and documentary evidence on record, the respective submissions and the applicable law, and now render judgment. **B. THE CLAIMANT'S CASE** 8. The Claimant's case, as pleaded in the Further Amended Memorandum of Claim and as testified to in his witness statement, is that he was a permanent employee of the 1st Respondent who was unfairly, unlawfully and discriminatorily terminated from employment without notice, a valid reason, due process, or payment of his terminal dues, and that both Respondents are jointly liable to him. 9. He avers that the 1st Respondent employed him in 2007 as a tour guide, while it traded as African Safari Diani Adventure. In 2013 he was promoted to assistant manager and later hotel manager, earning a monthly salary of Kshs 88,640/= He states that from 2014 he reported to work at 7.30 a.m. and worked until 11.00 p.m. daily, without taking annual leave and without payment of house allowance. 10. On 11th May 2020, the Claimant fell ill, was hospitalised and granted a sick-off. He states that he informed one Dominique Rodrigo, whom he describes as having been introduced to him by the 1st Respondent, of his condition. When he attempted to resume duty on 17th June 2020, he was denied access to the hotel premises, and his telephone calls to the new manager, Dominique, went unanswered. He contends that this amounted to termination of his employment without notice, a hearing or lawful justification, and that he was discriminated against on account of his illness. 11. The Claimant further alleges that the 1st Respondent falsely characterised his position as redundant during the Covid-19 period, while at the same time retaining and hiring other employees, including Dominique, without complying with the redundancy procedure under section 40 of the Employment Act, 2007. 12. He also alleges that the 1st and 2nd Respondents discreetly changed the hotel's business name to Eleven Pearl Boutique Hotel & Spa, while retaining the name “Pearl”, the same postal address and the same manager, and that the 2nd Respondent was joined to these proceedings on the premise that it inherited or assumed the 1st Respondent's liability for his terminal dues. 13. The Claimant's claim, as tabulated in his pleadings, is as follows: (a) One month's salary in lieu of notice – Kshs 88,640/= (b) House allowance (15% of Kshs 85,000 x 12 x 78 months) – Kshs 994,500/= (c) Unpaid April 2020 salary (88,640 + 12,750) – Kshs 101,390/= (d) Twelve months' pay for unfair termination – Kshs 1,216,580/= (e) Overtime (computed over 78 months) – Kshs 4,976,712/= (f) Leave pay (Kshs 85,000 x 7 years) – Kshs 595,000/= TOTAL – Kshs 7,972,922/= **C. THE 1ST RESPONDENT'S CASE** 14. As already noted, the 1st Respondent has not entered appearance, filed any pleading, witness statement or evidence in answer to the claim, nor participated in the hearing. It has, accordingly, placed nothing before the Court to controvert the Claimant's pleaded case or evidence, save to the extent that the Claimant's own documentary evidence speaks for itself. **D. THE 2ND RESPONDENT'S CASE** 15. The 2nd Respondent's witness, Amir Mohamed, describes himself as its General Manager. The 2nd Respondent's case is that it never employed the Claimant in any capacity and had no contractual or other relationship with him. It contends that it did not exist as a legal entity on 17th June 2020, the date of the Claimant's alleged termination, having been incorporated only on 3rd May 2021. 16. The witness denies that the 2nd Respondent acquired, merged with, took over or succeeded to the 1st Respondent's business, maintaining that the two Respondents are separate and distinct legal entities, as shown by its Certificate of Incorporation and CR-12 records. 17. The 2nd Respondent maintains that it has never entered into any contract of employment with the Claimant, that the Claimant has disclosed no reasonable cause of action against it, and prays that the claim against it be dismissed with costs. **E. THE 2ND RESPONDENT'S SUBMISSIONS** 18. On the existence of an employment relationship, the 2nd Respondent relies on section 2 of the Employment Act, 2007, section 2 of the Industrial Court Act, 2011, and section 2 of the Labour Relations Act, 2007, and submits that it never entered into a contract of service with the Claimant. It points out that the Claimant's employment contracts were all issued by the 1st Respondent, and that the Claimant himself admitted, in cross-examination, that he had never been employed by the 2nd Respondent. 19. On succession to liability, the 2nd Respondent relies on **Salomon v Salomon & Co Ltd [1896] UKHL 1** and **Mabachi & Another v Nurtun Bates Ltd, Civil Appeal No. 247 of 2005; [2013] KECA 204 (KLR)**, for the principle of separate corporate personality, and submits that the Claimant produced no evidence justifying the lifting of the corporate veil or the treatment of the two Respondents as one entity. It further relies on **East African Breweries Limited v Kenya Revenue Authority [2007] eKLR** on the doctrine of privity of contract, submitting that the Claimant's contract with the 1st Respondent cannot be enforced against it. 20. The 2nd Respondent submits, in conclusion, that the Claimant has failed to prove, on a balance of probabilities, an employment relationship with it, or any other basis on which it may be held liable for the 1st Respondent's acts or omissions, and prays that the claim against it be dismissed with costs. **F. ISSUES FOR DETERMINATION** 21. Having considered the pleadings, evidence and submissions, I find that the following issues arise for determination: (a) Whether the Claimant was a permanent employee of the 1st Respondent, or was engaged under successive fixed-term contracts; (b) Whether, and if so when, the Claimant's contract of service with the 1st Respondent came to an end, and whether that was fair; (c) Whether the Claimant was discriminated against on account of sickness; (d) Whether the 2nd Respondent was the Claimant's employer, or is otherwise liable for the 1st Respondent's obligations to him; and (e) Whether, and to what extent, the Claimant is entitled to the reliefs sought, and against which Respondent. **G. ANALYSIS AND DETERMINATION** ***Whether the Claimant was a permanent employee*** 22. The Claimant maintained that he was a permanent employee, employed by the 1st Respondent in 2007 as a tour guide and subsequently promoted to assistant manager and hotel manager. A letter dated 27th September 2006 and a letter of employment dated 1st December 2009 confirm his initial engagement as a tour guide with effect from 1st January 2007. The later contracts identify Afrika Pearl Hotel Limited as his employer, with the Claimant as Hotel Manager. 23. The contracts produced by the Claimant himself, however, do not support his assertion of permanent employment. The contract dated 1st August 2015 was expressed to be for three months. The contract dated 15th August 2018 was expressly valid for six months, renewable upon expiry. The final and most recent contract relied upon by the Claimant was made on 1st February 2020, for a period of three months, commencing on 1st February 2020 and terminating on 30th April 2020, and was likewise expressed to be renewable upon expiry. 24. A fixed-term contract has a definite commencement and expiry date and, absent renewal, lapses automatically by effluxion of time upon expiry. In **Transparency International-Kenya v Omondi, Civil Appeal No. 81 of 2018; [2023] KECA 174 (KLR),** the Court of Appeal held: ***“Indeed, the doctrine of legitimate expectation does not arise in the renewal of a fixed-term contract, and its non-renewal cannot constitute unfair termination or dismissal.”*** 25. Similarly, in **Registered Trustees of the Presbyterian Church of East Africa & Another v Ruth Gathoni Ngotho Kariuki [2017] eKLR,** the Court of Appeal stated: ***“Fixed term contracts carry no rights, obligations, or expectations beyond the date of expiry. Accordingly, any claim based after the expiry of the respondent's contract ought not to have been maintained.”*** 26. The Claimant signed each of the fixed-term contracts and must be taken to have been aware of their respective durations. Although he served the 1st Respondent over a period of years, across successive engagements, the fact of that lengthy association does not, without more, convert his final written contract into one of permanent employment; nor is there evidence, whether documentary or otherwise, that the parties varied the terms of the February 2020 contract, whether expressly or by conduct, so as to convert it into an indefinite engagement. 27. I therefore find, as a fact, that the Claimant was not, as at the material time, a permanent employee of the 1st Respondent. His last demonstrated contract of service was a fixed-term contract running from 1st February 2020 to 30th April 2020. ***Effect of the 1st Respondent's default*** 28. The 1st Respondent's failure to enter appearance, file a response or adduce evidence does not, by itself, entitle the Claimant to judgment. Under section 47(5) of the Employment Act, 2007, the burden of proving that an unfair termination or wrongful dismissal has occurred rests on the employee; it is only once that threshold burden is discharged that the burden shifts to the employer to justify the reason for, and the procedure followed in, the termination, in accordance with sections 41, 43 and 45 of the Act. Where, as here, the employer has defaulted, the practical effect is that the Claimant's evidence stands unchallenged by cross-examination or by a competing account – but the Claimant must still satisfy the Court, on that evidence, that he has discharged the burden the law places on him. A default in defending a suit does not relieve a claimant of the obligation to prove his case, nor does it require the Court to accept a characterisation of the facts – such as “permanent employment” or “termination” – that the Claimant's own documentary evidence contradicts. 29. Sections 41, 43 and 45 of the Employment Act regulate the manner in which a subsisting contract of service may lawfully be brought to an end; they presuppose that a contract of service was, in fact, subsisting and was brought to an end by the employer. As found above, and as further explained below, the Claimant's own documents show that the contract upon which he founded his claim had already lapsed, by effluxion of time, before the events of 17th June 2020 relied upon as constituting his termination. In those circumstances, the question of the fairness of the reason for, or the procedure followed in, a termination under sections 41, 43 and 45 does not arise for consideration – not because those provisions are dispensed with on account of the 1st Respondent's default, but because no subsisting contract of service capable of being terminated by the 1st Respondent has been shown to have existed at the material time. ***Whether the Claimant's employment was unfairly terminated*** 30. The Claimant contends that, having fallen ill on 11th May 2020, he reported back to work on 17th June 2020 but was denied access to the hotel, and that this amounted to termination without notice, a hearing or a valid reason. 31. Under sections 43 and 45 of the Employment Act, an employer who terminates an employee must demonstrate a valid and fair reason and must also show that a fair procedure was followed. Section 47(5), however, places the initial burden on the employee to demonstrate that a termination or wrongful dismissal occurred. In **Walter Ogal Anuro v Teachers Service Commission [2013] eKLR**, the Court held: ***“However, for a termination to pass the fairness test, it must be shown that there was not only substantive justification for the termination but also procedural fairness.”*** 32. That test presupposes an actual termination of a subsisting contract. In the present case, the Claimant's final written contract expired on 30th April 2020. The alleged denial of access occurred on 17th June 2020 – approximately seven weeks after the contract's stated expiry. The Claimant did not produce a written renewal, or any other evidence – whether of continued payment of salary, continued issuance of payslips, or otherwise – from which the Court could infer that the employment relationship subsisted, whether by renewal or by conduct, beyond 30th April 2020. 33. Sections 107 to 109 of the Evidence Act require a party who asserts the existence of a fact to prove it. In **Patrick Lumumba Kimuyu v Prime Fuels (K) Limited [2018] eKLR,** the Court of Appeal stated: ***“It is for the party that alleges a fact to be true to prove the existence and veracity of that fact. This is under the basic principle of Evidence that ‘he who asserts must prove.”*** 34. I find that the Claimant did not prove, on a balance of probabilities, that his employment continued after the expiry of the fixed-term contract on 30th April 2020. There was, accordingly, no subsisting contract of service capable of being terminated by the denial of access alleged to have occurred on 17th June 2020. 35. I have considered the Claimant's alternative characterisation of events – namely, that his position was declared redundant under cover of the Covid-19 pandemic, while other employees, including Dominique, were retained and hired, contrary to section 40 of the Employment Act. Even taken at its highest, however, the Claimant's own account does not describe a redundancy process at all: no notice of redundancy, to the Claimant or to any labour officer, no consultation, and no selection criteria are pleaded or evidenced. What is described, on the Claimant's own case, is an abrupt denial of access without any process. Had a contract of service still been subsisting at the material time, such conduct would more readily bear the character of a termination without a valid reason and without a fair procedure, than a redundancy properly so called. That observation does not, however, alter the outcome of this claim, for the reason already given: no subsisting contract of service has been shown to have existed at the material time capable of being so terminated. 36. For these reasons, the claim for a declaration that the Claimant's termination was unfair and unlawful, and the associated claim for compensation, must fail. ***Whether the Claimant was discriminated against on account of sickness*** 37. Section 46 of the Employment Act provides that an employee's temporary absence from work on account of illness or injury is not a fair reason for termination where the employee duly notifies the employer or produces the required medical evidence. Nevertheless, an allegation of discrimination must be supported by facts establishing a connection between the protected ground and the adverse action complained of. 38. The Claimant did not produce hospital records, a sick-off sheet, a medical certificate or correspondence establishing the period of his illness or his notification to the employer. More significantly, his final contract had already expired, on 30th April 2020, before the illness of 11th May 2020 on which the discrimination claim is founded, and before the denial of access of 17th June 2020. On the evidence, it has not been established that any adverse action was taken against the Claimant, still less that any such action was connected to his illness. Accordingly, the claim for discrimination on account of sickness has not been proved. ***Whether the 2nd Respondent was the Claimant's employer or is otherwise liable*** 39. The documents produced by the Claimant uniformly identify the 1st Respondent, not the 2nd Respondent, as his employer. None of the contracts of employment on record was entered into between the Claimant and the 2nd Respondent. 40. The 2nd Respondent's Certificate of Incorporation shows that French Dream Limited was incorporated on 3rd May 2021. It therefore did not exist as a legal entity in 2007, when the Claimant says he was first engaged; in February 2020, when his final contract was executed; on 30th April 2020, when that contract expired; or on 17th June 2020, when the alleged denial of access occurred. A company cannot, in law, have employed or dismissed a person before it came into existence. 41. The only fact established connecting the 2nd Respondent to the 1st Respondent's former business is that the 2nd Respondent came to operate its hotel, Eleven Pearl Boutique Hotel & Spa, from premises previously used by the 1st Respondent, retaining the name element “Pearl” and a manager by the name Dominique – who, on the 2nd Respondent's own CR-12, is one Dominique Andree Yvonne, a director and shareholder of the 2nd Respondent. This evidence of continuity of premises, name element and personnel was not seriously discounted or displaced by the 2nd Respondent, and I accept it as established. It does not, however, follow from this alone that the 2nd Respondent acquired, merged with, or succeeded to the 1st Respondent's business or liabilities. Separate corporate personality is the ordinary consequence of incorporation, and may only be disregarded where facts are proved that justify lifting the corporate veil – for instance, fraud, sham, or the use of the corporate form to evade an existing obligation. See **Salomon v Salomon & Co Ltd [1896] UKHL 1**, and **Mabachi & Another v Nurtun Bates Ltd, Civil Appeal No. 247 of 2005; [2013] KECA 204 (KLR)**, where the Court of Appeal held: ***“A persona juridica, with a separate independent identity in law, distinct from its shareholders, directors and agents, unless there are factors warranting a lifting of the veil.”*** 42. No such factors were pleaded with particularity, or proved, in this case. The bare continuity of premises, a name element and a common individual, without evidence of a sale, assignment or other transfer of the 1st Respondent's business, assets, employees or liabilities to the 2nd Respondent, falls well short of what is required to displace separate corporate personality. 43. No evidence, whether documentary or oral, was placed before the Court to establish that the 1st Respondent transferred its business to the 2nd Respondent, still less that any such transfer was calculated to deny the Claimant his terminal dues. The Claimant's averments to that effect, at paragraphs 10A, 10B and 10BB of the Further Amended Memorandum of Claim, remained bare assertions, unsupported by any sale agreement, asset transfer document, board resolution, correspondence or admission. Further, and in any event, even assuming, without so finding, that the 1st Respondent's business had in some manner passed to another entity, no provision of the Employment Act, 2007, or of any other law placed before this Court, imposes a general obligation on an employer to consult an employee before disposing of, or transferring, its business, nor does a transfer of business, by itself, operate to transfer the transferor's accrued liabilities to former employees onto the transferee, in the absence of an express assumption of such liabilities or a specific statutory provision to that effect. The Claimant's submissions that the 2nd Respondent is “vicariously liable” for having “inherited or rented the hotel”, or is “estopped from pleading ignorance”, are not grounded in any pleaded or proved legal or factual basis. 44. Considering the circumstances under which the 2nd Respondent came to be enjoined in this matter – on the strength of an unproved allegation of a covert business transfer, made against an entity that did not even exist at the time of the events complained of – I am unable to find any basis, whether as employer, successor or otherwise, upon which liability could properly attach to the 2nd Respondent. No liability has been established against it, and the claim against it must fail in its entirety. **H. RELIEFS** ***Declaration of permanent employment*** 45. Having found that the Claimant's final and operative contract of service was a fixed-term contract, the prayer for a declaration that he was employed on permanent terms is declined. ***Declaration of unfair and unlawful termination*** 46. Having found that no subsisting contract of service existed as at 17th June 2020, the prayer for a declaration that the Claimant's termination was unfair and unlawful is declined. ***One month's salary in lieu of notice*** 47. Since the Claimant's final contract came to an end by effluxion of time on 30th April 2020, no notice of termination was required. This claim is declined. ***House allowance*** 48. The Claimant was engaged, over the years, under different contracts with different salary structures. The salary breakdown attached to his final, February 2020 contract records a consolidated gross monthly salary of Kshs 88,640/= (basic salary of Kshs 85,000/= plus transport allowance of Kshs 3,640/=), with no separate house allowance component. The Claimant did not identify the specific contractual periods during which house allowance was allegedly withheld, nor explain how the claimed period of 78 months – which does not correspond to the duration of any single contract on record, the documented engagements being for three months (2015), six months (2018) and three months (2020), with unexplained gaps between them – was arrived at. The claim is neither sufficiently particularised nor proved, and is declined. ***Unpaid salary for April 2020*** 49. April 2020 fell within the currency of the Claimant's final, proved contract of service (1st February 2020 to 30th April 2020). The 1st Respondent, who alone would hold the payroll and payment records for that period, produced no such records and did not otherwise controvert the Claimant's assertion that his April 2020 salary remained unpaid. In those circumstances, I am satisfied that this claim is proved. It is, however, allowed only to the extent of the Claimant's proved gross monthly salary of Kshs 88,640/=, as recorded in the salary breakdown attached to his February 2020 contract; the additional Kshs 12,750/= claimed as house allowance for that month is declined for the same reasons the general house allowance claim fails above. Judgment is entered for the Claimant against the 1st Respondent in the sum of Kshs 88,640/=. ***Compensation for unfair termination*** 50. Compensation under section 49(1)(c) of the Employment Act is dependent on a finding that the employee was unfairly terminated. Having found that the Claimant's contract came to an end by effluxion of time, and that no unfair termination has been established, this claim is declined in its entirety. ***Overtime*** 51. The Claimant's overtime claim, like his house allowance claim, is computed over 78 months, a period unsupported by any single continuous contract on record. He states generally that he worked from 7.30 a.m. to 11.00 p.m. but produced no attendance records, time sheets or other contemporaneous evidence to substantiate this, nor any computation tied to a specific, proved period of continuous service. In **Mombasa Coffee Limited v Shuke [2024] KEELRC 444 (KLR)**, the Court held: ***“Alleged overtime payment is in the nature of special damages, and must always be strictly proved.”*** 52. The Claimant's general and unparticularised computation does not meet that standard, and the claim is declined. ***Leave pay*** 53. This claim, computed at Kshs 85,000/= for each of seven years, suffers from the same infirmity as the overtime and house allowance claims: it assumes a continuous seven-year engagement that is not borne out by the documentary record, which instead shows discrete, short, fixed-term engagements (three months in 2015, six months in 2018, three months in 2020) separated by unexplained gaps. The Claimant did not identify which specific contract period(s) he was allegedly denied leave, nor tie his computation to the leave entitlement actually provided for under the relevant contracts – for instance, the February 2020 contract provided for only six leave days over its three-month term. A claim for payment in lieu of leave is a species of special damages and must, like overtime, be strictly proved. On the material before me, the claim for leave pay has not been proved with the requisite particularity, and is declined. ***Damages for discrimination on account of sickness*** 54. Declined, for the reasons given above. ***Certificate of service and recommendation letter*** 55. Section 51 of the Employment Act requires an employer to issue an employee with a certificate of service on the cessation of employment, irrespective of the reason for that cessation. The Claimant is entitled to this relief, and the 1st Respondent shall issue him with a certificate of service. There is, however, no corresponding statutory obligation to issue a recommendation letter, and that prayer is declined. **I. DISPOSITION** 56. For the reasons set out above, I make the following orders: **(a)** The Claimant's claim against the 1st Respondent succeeds only in part. Judgment is entered for the Claimant against the 1st Respondent in the sum of Kshs 88,640/=, being unpaid salary for April 2020. **(b)** The 1st Respondent shall, within thirty (30) days of this judgment, issue the Claimant with a certificate of service in accordance with section 51 of the Employment Act, 2007. **(c)** All other prayers against the 1st Respondent – including the declarations sought, notice pay, house allowance, twelve months' compensation for unfair termination, overtime, leave pay, damages for discrimination, and a recommendation letter – are declined and dismissed. **(d)** The sum awarded at (a) above shall attract interest at court rates from the date of filing of this suit until payment in full. **(e)** The Claimant shall have the costs of the suit as against the 1st Respondent. **(f)** The claim against the 2nd Respondent is dismissed in its entirety. **(g)** The Claimant shall bear the 2nd Respondent's costs of the suit. Dated signed, and delivered at Mombasa this 30th day of July 2026. **OCHARO KEBIRA** **JUDGE**