https://new.kenyalaw.org/akn/ke/judgment/kemc/2026/159

Kotte v Kilimanjaro Biscuits Ltd & another (Cause E583 of 2025) [2026] KEMC 159 (KLR) (25 June 2026) (Judgment) Neutral citation: [2026] KEMC 159 (KLR) Republic of Kenya In the Mombasa Law Courts Cause E583 of 2025 EM Mwamuye, SRM June 25, 2026 Between Peter Ndune Kotte Claimant and Kilimanjaro Biscuits Limited 1st Respondent Alvamon Limited 2nd Respondent Judgment 1.The Claimant instituted this claim vide a Memorandum of Claim dated 4th September 2025 seeking various remedies arising from what he termed as unlawful, unfair and unprocedural termination of employment. 2.The Claimant contends that he was employed by the 1st Respondent as an Electrician on 2nd May 2017 and worked continuously until 30th April 2025 when his employment was verbally terminated without notice, hearing or lawful cause. 3.The 1st Respondent denied ever employing the Claimant and maintained that all manpower at its factory was outsourced through the 2nd Respondent. It contended that the Claimant was at all material times an employee of the 2nd Respondent. 4.The 2nd Respondent admitted that the Claimant was its employee but contended that he served under a succession of fixed-term contracts and that the last contract expired on 31st March 2025. It further argued that any entitlement was limited by the contractual terms. 5.The matter proceeded for hearing on 13th April 2026. The Claimant testified on oath and was cross-examined by counsel for both Respondents. Thereafter, both Respondents elected to proceed under Rule 59 of the Employment and Labour Relations Court (Procedure) Rules, 2024 and relied on their pleadings, witness statements and filed documents without calling oral witnesses. The Court thereafter directed parties to file written submissions. Issues for determination 6.Having considered the pleadings, evidence, documents and submissions filed, the issues arising for determination are:i.Whether there existed an employment relationship between the Claimant and the Respondents.ii.Whether termination of the Claimant's employment was unfair and unlawful.iii.Whether the Claimant is entitled to the remedies sought.iv.Costs. Whether there existed an employment relationship between the Claimant and the Respondents 7.The first issue concerns the identity of the Claimant's employer. The Claimant testified that he commenced employment in May 2017 as an Electrician. He produced evidence of trade qualifications obtained in 2013 and 2014, photographs showing recognition as a best-performing employee in December 2018, a first aid training certificate and a list of trained first aiders maintained at the premises of the 1st Respondent. 8.The Court notes that the Claimant's evidence regarding his engagement by the 1st Respondent was not displaced by any oral testimony from either Respondent. 9.The 1st Respondent's case is that the Claimant was solely employed by the 2nd Respondent. Reliance was placed on the Manpower Services Supply Agreement executed between the Respondents and the fixed-term contracts produced by the 2nd Respondent. The Court has carefully considered the said agreement. 10.The agreement expressly provides that manpower supplied by the 2nd Respondent remains employees of the 2nd Respondent and not employees of the 1st Respondent. Ordinarily, parties are bound by their contracts. 11.However, employment relationships are not determined solely by contractual labels. Courts are required to interrogate the factual realities of the relationship and determine where the true employer lies. 12.The evidence before Court demonstrates that: The Claimant worked continuously at the premises of the 1st Respondent. He rendered services integral to the manufacturing operations of the 1st Respondent as an Electrician. He was recognized and rewarded by the 1st Respondent as one of its best-performing employees in December 2018. 13.He underwent workplace training organized within the 1st Respondent's establishment. His work was performed entirely for the benefit of the 1st Respondent. 14.More significantly, the evidence establishes that the Claimant's relationship with the 1st Respondent predated the manpower agreement produced before Court. 15.The outsourcing agreement relied upon by the Respondents commenced on 1st January 2025. The Claimant's evidence, which was not displaced by oral testimony, is that he had been working since 2017. 16.The Court therefore finds that the 2nd Respondent functioned as the labour provider and payroll administrator while the 1st Respondent remained the principal beneficiary of the Claimant's labour. 17.The circumstances disclose a triangular employment arrangement in which both Respondents exercised roles relating to the Claimant's employment. 18.This Court is persuaded that both Respondents bore obligations towards the Claimant and cannot evade responsibility merely by allocating those obligations amongst themselves through private contractual arrangements. 19.Accordingly, the Court finds that the Claimant has established, on a balance of probabilities, the existence of an employment relationship involving both Respondents and that both Respondents are jointly and severally liable for employment obligations arising therefrom. Whether termination was unfair and unlawful 20.The Claimant testified that he worked until 30th April 2025.He further testified that on that date he was verbally informed by one Nicodemus Onywoki that his services were no longer required and was thereafter denied access to the workplace. The Respondents elected not to call oral evidence. 21.The 2nd Respondent's own submissions contain an important concession. The 2nd Respondent expressly acknowledges that the Claimant's engagement ended before expiry and that notice was not issued. That concession significantly undermines the Respondents' position. 22.Where termination occurs prior to expiry of a fixed-term contract, such termination must comply with the Employment Act. 23.Sections 41, 43 and 45 of the Employment Act require an employer to: Explain the reasons for termination. Accord the employee a hearing. Establish a valid and fair reason. Follow a fair procedure. 24.No evidence was placed before Court demonstrating compliance with any of these statutory requirements. No show-cause letter was produced. No invitation to disciplinary hearing was produced. No minutes of disciplinary proceedings were produced. No termination letter was produced. No valid reason for termination was proved. 25.The Respondents therefore failed to discharge their burden under Sections 43 and 45 of the Employment Act. 26.The Court consequently finds that the Claimant's employment was terminated unfairly and unlawfully. Whether the Claimant is entitled to the remedies sought 27.One month's salary in lieu of notice- The Claimant sought Kshs.18,700. The Court notes that the 2nd Respondent's contract provided for seven days' notice. However, the evidence establishes a relationship extending well beyond the contractual periods relied upon by the Respondents. The Claimant had served continuously for several years. The Court is therefore satisfied that the Claimant is entitled to one month's salary in lieu of notice. Award: Kshs.18,700/=. 28.Accrued leave- The Claimant seeks leave for three years amounting to Kshs.79,295.20/=. Section 74 of the Employment Act obligates employers to keep leave records. No leave records were produced. Where such records are not produced, the burden shifts to the employer. The Court therefore finds the claim proved. Award: Kshs.79,295.20 29.Severance pay- The Claimant seeks severance pay of Kshs.65,450/= Severance pay is payable only in cases of redundancy pursuant to Section 40 of the Employment Act. This was not a redundancy. The prayer therefore fails. Award: Nil. 30.Compensation for unfair termination- The Court has considered the factors under Section 49(4) of the Employment Act including: Length of service. The manner of termination. Absence of procedural fairness. The Claimant's legitimate expectation of continued employment. The Respondents' failure to comply with statutory obligations. 31.The Claimant served from 2017 until April 2025, a period of approximately eight years. Taking all circumstances into account, the Court finds that an award equivalent to five (5) months' gross salary is fair and proportionate. Kshs.18,700 × 5 = Kshs.93,500/=. 32.Certificate of Service- The Claimant is entitled to a Certificate of Service pursuant to Section 51 of the Employment Act. Disposition 33.Judgment is entered for the Claimant against the Respondents jointly and severally as follows:a.One month's salary in lieu of notice 18,700.00b.Accrued leave 79,295.20c.Compensation equivalent to five months' salary 93,500.00Total 191,495.20d.The claim for severance pay is dismissed. 34.Accordingly, the Court makes the following orders:i.A declaration is hereby issued that the termination of the Claimant's employment was unfair, unlawful and unprocedural.ii.Judgment is entered for the Claimant against the Respondents jointly and severally in the sum of Kshs.191,495.20/=.iii.The Claimant shall be issued with a Certificate of Service within thirty (30) days of this Judgment.iv.The award shall attract interest at court rates from the date of judgment until payment in full.v.The Claimant shall have the costs of the suit.It is so ordered. DATED, SIGNED AND DELIVERED ONLINE VIA MICROSOSFT TEAMS AT MOMBASA THIS 25TH JUNE 2026.……………………………………………….EMILY M. MWAMUYESENIOR RESIDENT MAGISTRATE