https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/1497

Makonen v Gibb Africa Limited (Employment and Labour Relations Cause E244 of 2023) [2026] KEELRC 1497 (KLR) (3 June 2026) (Judgment) Neutral citation: [2026] KEELRC 1497 (KLR) Republic of Kenya In the Employment and Labour Relations Court at Nairobi Employment and Labour Relations Cause E244 of 2023 HS Wasilwa, J June 3, 2026 Between Woldeyesus Shimeles Makonen Claimant and Gibb Africa Limited Respondent Judgment 1.The Claimant instituted this claim vide a Statement of Claim dated 10th March 2023 and prays for judgment against the Respondent for orders that: -a.Salary arrears in the sum of Kshs.5,076,985.b.USD 151,054 gratuity.c.Issuance of Release & Certificate of Clearance to the claimant.d.Any other relief that the court shall deem fit and just.e.Interest at 18% or prevailing commercial rates. Claimant’s Case 2.The Claimant avers that he was employed by the Respondent as a Senior Engineer under a two-year renewable contract. Pursuant to the contract of employment dated 8th October 2012, he commenced employment on 10th October 2012 earning a basic salary of Kshs.163,000, house allowance of Kshs.50,000 and travel allowance of Kshs.37,000, translating to a gross monthly salary of Kshs.250,000. He avers that the contract was conditional upon the Respondent securing a work permit for him. 3.The Claimant further avers that it was an express term of the contract that he would be paid a monthly gratuity of USD 1,900. 4.He states that his contract was subsequently renewed in 2014 and 2018 for further terms of two years each and that he received annual salary increments throughout his employment. According to the Claimant, by the time his contract expired in May 2021, he was earning a basic salary of Kshs.331,381, house allowance of Kshs.133,752 and travel allowance of Kshs.89,169. 5.The Claimant contends that difficulties arose in 2019 and 2020 when the Respondent either failed to pay his salary altogether or only remitted portions thereof without indicating the specific months to which the payments related. He further avers that the Respondent failed to issue him with payslips. He states that by the time his contract came to an end in May 2021, salary arrears had accumulated to Kshs.5,076,985. 6.The Claimant further asserts that throughout the period of employment, the Respondent largely failed to pay the agreed monthly gratuity of USD 1,900. He avers that over the 96 months he served the Respondent, he only received USD 31,346 against an expected gratuity of USD 186,200, leaving an outstanding balance of USD 151,054. 7.He states that he made efforts to engage the Respondent through email correspondence regarding the outstanding dues but received no response. 8.The Claimant avers that as a result of the Respondent’s failure to pay his salary and gratuity, he suffered immense hardship and humiliation as he was unable to meet his financial obligations, including payment of house rent and provision for his dependants’ needs and school fees. He states that he remains in rent arrears to date. 9.The Claimant contends that the Respondent’s actions were in breach of the Constitution of Kenya, the Employment Act, the terms of his contract of employment and the principles of fair labour practices and natural justice. 10.Consequently, he seeks payment of Kshs.5,076,985 being unpaid salary arrears, USD 151,054 being outstanding gratuity, and release of a Certificate of Clearance. 11.He avers that despite demand and notice of intention to sue, the Respondent has failed and/or neglected to settle his claim. 12.The Claimant states that he shall rely on the provisions of the Employment Act, the Constitution of Kenya and the terms of the employment contract. He further avers that there are no previous or pending proceedings between the parties over the same subject matter and that the cause of action arose within the jurisdiction of this Court. Respondent’s Case 13.In opposition, the Respondent filed a Response to Statement of Claim dated 16th May 2023. 14.It is the Respondent’s case that while it admits that the Claimant was its employee and that his contract was renewed from time to time, it denies the particulars of employment as pleaded by the Claimant and puts him to strict proof thereof. 15.The Respondent denies that it was under any obligation to pay the Claimant a monthly gratuity of USD 1,900; and avers that it never issued the alleged gratuity letter dated 8th October 2012. 16.The Respondent avers that it is not privy to any agreement for payment of gratuity and that the said letter was issued by GIBBAL Holdings Ltd and not itself. Therefore, any claim for gratuity lies outside its responsibility. 17.The Respondent admits that the Claimant’s contract was renewed in 2014 and 2018 but denies that he received salary increments every year as alleged. 18.It further avers that renewal of the contract was entirely at its discretion and that upon expiry of the contract in May 2021, it elected not to renew the same. 19.The Respondent states that any delays and partial payment of salaries were occasioned by the adverse effects of the Covid-19 pandemic and that its clients delayed making payments, resulting in cash flow constraints that affected its ability to pay salaries in full. 20.However, despite these challenges, it continued settling salary arrears as and when funds were received and that the Claimant continued receiving part of his salary during the subsistence of his employment and even after the expiry of his contract. 21.The Respondent reiterates that it had no obligation to pay gratuity to the Claimant and maintains that any arrangement regarding gratuity was between the Claimant and GIBBAL Holdings Ltd. It therefore denies liability for the gratuity claim and puts the Claimant to strict proof thereof. 22.The Respondent denies the Claimant’s allegations that he suffered hardship, humiliation or any violation of his rights as pleaded in the Statement of Claim and puts him to strict proof of the same. 23.With regard to the reliefs sought, the Respondent denies liability for the claims for unpaid salary arrears and unpaid gratuity and puts the Claimant to strict proof thereof. However, upon expiry of the contract, it duly issued the Claimant with a Release and Certificate of Clearance. 24.The Respondent further denies that it failed or neglected to respond to the Claimant’s demands and puts him to strict proof thereof. Evidence in Court 25.The Claimant witness, (CW1) adopted his witness statement dated 17th February 2023 as his evidence in chief and produced his documents dated 10th March 2023 as his exhibits. 26.During cross examination, CW1 testified that the Respondent was going through financial difficulties at some period. 27.He testified that the Respondent paid him until 2019 and thereafter the salary payments were made with difficulty. 28.It is CW1’s testimony that he received an offer letter in respect to gratuity dated 8th October 2012 from GIBB Africa Limited and not GIBBAL Holdings Limited and further his contract was given by the Respondent. 29.He further testified that gratuity was negotiated with the Respondent. 30.The Respondent’s witness, Ruth Odengo, (RW1) stated that he is the Respondent’s HR Manager. She adopted her witness statement dated 2nd March 2024 as her evidence in chief and produced the Respondent’s list of documents dated 2nd March 2024 as her exhibits. 31.Upon cross-examination, RW1 testified that the Respondent did not pay the Claimant all his dues, they have produced any statement in Court to show how much they paid him. 32.She testified that the Respondent Company suffered cash flow problems. Claimant’s Submissions 33.The Claimant submitted on six issues: how much is owed by the respondent to the claimant in unpaid salary; whether the letter by Gibbal Holdings Ltd for payment of USD1900 monthly gratuity formed part of contract of employment; who paid the agreed USD1900 gratuity? Gibb Africa Ltd or Gibbal Africa; whether the claimant is entitled to a claim of unpaid sum of USD.151,054 gratuity as pleaded; whether demand and notice to sue was issued; who is to meet the cost of the claim. 34.On the first issue, the Claimant submitted that during his last contract running from 20th May 2019 to 20th May 2021, the Respondent defaulted in payment of his salary. He submitted that he received his salary through his ABSA Bank account and produced bank statements from December 2019 which demonstrated that he either received partial salary payments or no salary at all. He argued that the last salary deposit reflected in his account was made in April 2020. 35.The Claimant submitted that it was common ground that his contract expired on 20th May 2021 and that during the period from July 2019 to May 2021 he earned a gross monthly salary comprising a basic salary of Kshs.331,381, house allowance of Kshs.133,752 and transport allowance of Kshs.89,169, amounting to Kshs.557,302 per month. 36.He submitted that an examination of his bank statements showed that between December 2019 and April 2020 the Respondent deposited a cumulative sum of Kshs.1,282,460 into his salary account. 37.It is his submission that over the 18-month period preceding the expiry of his contract, he ought to have earned Kshs.10,031,436 in gross salary. 38.He further submitted that although payslips were not issued during the last contract period, his net monthly pay as reflected in the demand letter was Kshs.395,000. On that basis, he calculated his total net earnings for the 18 months at Kshs.7,110,000 and, after deducting the sum received, arrived at a balance of Kshs.6,359,800. 39.The Claimant submitted that although he had pleaded Kshs.5,076,985 as unpaid salary arrears, that figure was a mathematical error. He argued that the Respondent’s contention that all outstanding salary had been paid was unsupported by any documentary evidence. 40.He submitted that whereas RW1 testified that the arrears had been settled, no payment records, bank statements or other documents were produced to substantiate that assertion. 41.He further submitted that the Respondent’s reliance on the effects of the Covid-19 pandemic did not absolve it from its obligation to pay wages because it was not disputed that he continued rendering services throughout the period. He therefore urged the Court to find that Kshs.6,359,800 remained outstanding and to enter judgment for that sum. 42.On the claim for gratuity, the Claimant submitted that the agreed monthly gratuity of USD 1,900 formed part of his employment contract. He argued that he had specifically negotiated the gratuity with his employer and that the Respondent’s assertion that it was a stranger to the arrangement was not borne out by the evidence. 43.The Claimant relied on the letter dated 8th October 2012 which stated: “Further to your appointment letter dated 6th October, 2012 from GIBB AFRICA LTD, you will receive a gratuity from GIBBAL HOLDINGS LTD of USD1900 per month.” He submitted that although the letter was issued on the letterhead of GIBBAL Holdings Ltd, both the gratuity letter and the appointment letter dated 6th October 2012 were authored and signed by Mr. Paul Kalekezi in his capacity as Director of both entities. According to the Claimant, the natural and reasonable inference was that the gratuity was intended to be a benefit attached to his employment with the Respondent. 44.The Claimant further submitted that the wording “Further to your appointment letter dated 6th October, 2012 from GIBB AFRICA LTD” clearly demonstrated that the gratuity letter was intended to be read together with the letter of appointment and therefore formed part of the terms and conditions of service. 45.He also argued that the actual gratuity payments received by him were remitted by the Respondent, GIBB Africa Ltd, into his HIBRET SC Bank USD account and not by GIBBAL Holdings Ltd. By making those payments, the Respondent acknowledged and assumed responsibility for the gratuity obligation and thereby treated the gratuity as part of its contractual obligations under the employment relationship. 46.The Claimant therefore urged the Court to find that the Respondent was contractually bound to pay the agreed gratuity of USD 1,900 per month. 47.He submitted that the parties were agreed that he commenced employment on 10th October 2012 and remained in employment through successive renewals until the final contract expired on 20th May 2021. According to his computation, this translated to approximately 103 months of service at USD 1,900 per month, the total gratuity payable amounted to USD 195,700. 48.The Claimant further submitted that his HIBRET SC Bank statement showed that throughout the 103-month period he received only USD 31,346 in gratuity payments. He therefore computed the outstanding gratuity at USD 164,354 and urged the Court to enter judgment for the unpaid gratuity, which he quantified at approximately USD 164,700. 49.With regard to the prayer for issuance of a Release and Certificate of Clearance, the Claimant submitted that he was entitled to the same and argued that the Respondent had not genuinely disputed that claim. He therefore urged the Court to compel the Respondent to issue the documents. 50.On interest, the Claimant submitted that the rate of 18% per annum sought in the Memorandum of Claim was reasonable in the circumstances. He argued that the sums claimed represented salary and gratuity that ought to have been paid when due and that had the monies been in his possession, he would have utilized or invested them for his benefit. He therefore urged the Court to award interest at 18% per annum together with costs of the suit. Respondent’s Submissions 51.The Respondent submitted that there was no dispute as to the existence of an employer–employee relationship between the parties. It submitted that for the Court to exercise jurisdiction in an employment dispute, there must be proof of an employment relationship. The Respondent contends that in the present case, it was common ground that the Claimant was its employee and that an employer–employee relationship existed between the parties. 52.On the claim for salary arrears, the Respondent submitted that the Claimant’s claim constituted a claim for special damages which, in law, must not only be specifically pleaded but must also be strictly proved. It argued that the burden rested upon the Claimant to demonstrate with precision the amounts allegedly due and owing. 53.The Respondent submitted that its principal clients were government entities and that from the year 2019, and particularly during the Covid-19 pandemic, government agencies experienced severe budgetary constraints. According to the Respondent, payments to contractors and service providers were either delayed or suspended, leading to significant disruption of its revenue streams. 54.It was submitted that the Court ought to take judicial notice of the economic effects of the Covid-19 pandemic and the financial difficulties experienced by businesses during that period. The Respondent argued that its inability to meet salary obligations was neither deliberate nor malicious but arose from unavoidable financial constraints occasioned by force majeure circumstances and disruptions in cash flow. 55.The Respondent further submitted that during cross-examination, the Claimant admitted being aware of the Respondent’s financial difficulties. It reasoned that this admission demonstrated that the employment relationship continued within a context of mutual understanding regarding the prevailing financial challenges and negated any allegation of bad faith on the Respondent’s part. 56.It was submitted that the Claimant acquiesced to the delayed salary payments due to the prevailing circumstances. The Respondent maintained that the Court has previously emphasized the importance of good faith and mutuality in employment relationships and urged the Court to consider the broader economic realities that affected employers during the material period. 57.The Respondent therefore submitted that the claim for salary arrears was legally untenable and failed to take into account the extraordinary economic circumstances that prevailed during the Covid-19 period. 58.On the claim for gratuity, the Respondent submitted that gratuity is not a statutory entitlement under the Employment Act, 2007 unless expressly provided for in a contract of employment, a collective bargaining agreement or an established employment policy. It argued that gratuity is only payable where there is a clear contractual or agreed basis for such payment. 59.The Respondent submitted that the Claimant had failed to establish a contractual obligation on its part to pay the alleged gratuity and had equally failed to demonstrate how the sum of USD 151,054 claimed was computed. Therefore, the gratuity claim lacked evidential and legal foundation and ought to be dismissed. 60.With regard to the prayer for interest at 18% per annum or commercial rates, the Respondent submitted that the rate sought was excessive, unjustified and unsupported by any contractual provision. It argued that employment disputes do not ordinarily attract commercial rates of interest and that no basis had been laid for departure from the normal rule that interest, where awarded, should be at court rates. 61.The Respondent therefore urged the Court to reject the claim for commercial interest and, should any award be made, to limit interest to court rates from the date of judgment. 62.It is the Respondent’s submission that the Court should consider the broader context within which the dispute arose. It argued that it was itself a victim of systemic financial disruption brought about by the Covid-19 pandemic and that the challenges it faced were industry-wide and nationally recognized. 63.The Respondent submitted that the Court, as a court of equity, not to impose punitive financial burdens in circumstances where any default in payment was involuntary and occasioned by factors beyond its control. 64.The Respondent accordingly prayed that the Claimant’s claim be dismissed with costs. In the alternative, it urged the Court to limit any award to sums strictly proved and lawfully payable, and to award interest, if any, at court rates from the date of judgment together with such other relief as the Court may deem fit and just. 65.I have examined all the evidence and submissions of the parties herein. The claimants claim is for unpaid salary which he avers was not paid from 2019 when the respondents either partly paid him or failed to pay all together to 2021 May when his contract expired. The claimant also claims he was not paid 1900 USD monthly gratuity as agreed upon with the respondents which is for over the 96 months he worked for the respondents. 66.The respondents concede that the claimant was their employee but deny owing him as claimed. I have looked at the documents filed by the parties. The claimant produced his pay advise which show how much he was earning. The one dated 28/6/2018, show he was earning kshs 334,381/- basic salary plus house allowance of kshs 133,752 and transport allowance of kshs 89,169 total is kshs 557,302/-. 67.In the letter of 8/10/2012, the respondents also wrote to the claimant and in the letter indicated that a part from her other terms of employment she would receive a gratuity of USD 1900 per month. 68.The respondents denied owing the claimant as alleged. I have however confirmed the gross salary payable from the letter of appointment and also the letters issued to him indicating the review. 69.I have also confirmed from the letter of 8/10/2012 that she was also entitled to gratuity of 1900 USD per month. The letter was issued by Gibb Holdings Ltd. The appointment letter was issued by Gibb International. The terms of service was also issued by Gibb International but the two letters are signed by Paul Karekozi who is director of Gibb Africa Ltd the respondents herein. All other letters are issued by Gibb International where Gibb Africa Ltd whose MD is Paul Karekozi. 70.From the statement of bank account produced by the claimant was being paid his salary by Gibb Africa Ltd. It is therefore apparent that the holding company under which the respondent was operating was Gibb International. Under Gibb International was the Gibb Africa Ltd who is the respondent herein. 71.The respondents despite denying not owing the claimant anything have failed to produce any evidence to show how they paid the claimant his gross salary and gratuity as per the contract between the claimant and the respondents. 72.The claimant set out his case and proved that he was not paid. I expected the respondents to counter this by proving how they paid out. This has not been done and this leaves the claimants’ case uncontroverted. The respondents did not produce any pay slips nor bank statements to show remittances made to the claimant. 73.It is therefore my finding that the claimant proved his case as being owed by the respondents and I find for claimant and enter judgment for him as prayed as follows:1.Salary arrears to the tune of kshs 5,076,985/-2.USD 151,054 gratuity. The amounts be paid less statutory deduction.3.The claimant be issued with a certificate of service.4.The respondents will pay costs of this suit plus interest at court rates with effect from the date of this judgement. DATED, SIGNED AND DELIVERED VIRTUALLY AT NAIROBI THIS 3RD DAY OF JUNE, 2026.HELLEN WASILWAJUDGE