https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/1630

Midland and Construction Ltd v Osoro (Appeal E004 of 2025) [2026] KEELRC 1630 (KLR) (11 June 2026) (Judgment) Neutral citation: [2026] KEELRC 1630 (KLR) Republic of Kenya In the Employment and Labour Relations Court at Kakamega Appeal E004 of 2025 DN Nderitu, J June 11, 2026 Between Midland and Construction Limited Appellant and Paul Ambole Osoro Respondent (Being an appeal arising from the judgment of Hon. Z.J Nyakundi (Senior Principal Magistrate) delivered on 13th March 2025 in Kakamega Chief Magistrates’ Court ELRC No. 1 of 2023) Judgment I. Introduction 1.In a judgment dated and delivered on 13th March 2025, the lower trial court entered judgement in favour of the Respondent (the Claimant in lower court) in the sum of Kshs858,161.70, comprising of salary in lieu of notice, compensation for unlawful dismissal, leave allowance, and house allowance. He was also awarded costs of the cause plus interest. It was also ordered that the Respondent be issued with a certificate of service. 2.Dissatisfied with the judgment, the Appellant (the Respondent in the lower court), through Fwaya Masakhwe Were & Advocates, filed a memorandum of appeal dated 2nd April 2025 seeking that the entire judgment of the lower trial court be set aside and substituted with an order dismissing the claim. 3.The appeal is based on the following grounds –1.That the learned trial magistrate erred in law and fact in holding that the Respondent's employment was unlawfully terminated, after making a finding that ‘The claimant was employed on a contract renewable annually and not on permanent and pensionable basis’, and the contract of 30.12.21 was in force until 31.12.20222.That the trial learned magistrate erred in law and fact by instead of interpreting and enforcing the express terms and conditions of the contract between the parties, he introduced fresh terms, on which he relied on in his decision, contrary to the law.3.That the learned trial magistrate erred in law and fact in reaching a finding that there was a legal requirement for the appellant to inform the Respondent and communicate termination procedure in the circumstance.4.That the trial learned magistrate erred in law and fact in reaching a finding that there was termination of the contract, in the circumstance and with the burden of proving the reasons for termination on the appellant.5.That the trial learned magistrate erred in law and fact in after finding that; ‘That the claimant failed to furnish the court with the contract document signed by the claimant and respondent to guide the court on the issues of house allowance, public days and rest days’, He proceeded to award the Respondent house allowance of Kshs307,469.70 and leave allowance of Kshs152,970 without any basis.6.That the trial learned magistrate erred in law and fact in reaching a finding that the Respondent herein had proved his case on a balance of probability in the circumstance of the evidence on record.7.That the learned trial magistrate erred in law and fact in awarding the Respondent the maximum compensation of 12 months, without assigning any reason and when the circumstances/facts of the case did not warrant such an award.8.That the learned trial magistrate erred in law and fact in giving consideration to the Respondent's case only and failed at all to consider and analysis the appellant’s case.9.That the trial learned magistrate erred in law and fact in awarding the Respondent Kshs858,167.70 when the Respondent had failed to prove any of the particulars of unlawfulness and illegality pleaded in paragraphs 5 of the statement of claim, as the burden of prove was upon him.10.The trial learned magistrate erred in law and fact in failure to consider the appellant’s case, including its exhibit 1 and failure to find that the contract was worded in mandatory terms, i.e., "This agreement shall be of a definite term and shall remain in force until 31st December 2025...."11.That the learned trial magistrate relied on authorities whose facts were completely different from the instance case. 4.The Respondent is opposed to the appeal through Were Lukoko & Co. Advocates. 5.By consent, the court directed that the appeal be canvassed by way of written submissions. Mr. Fwaya for the Appellant filed written submissions dated 10th March 2026 and Mr Were for the Respondent filed written submissions dated 17th December 2025. II. Submissions 6.Counsel for the Appellant submitted on each of the 11 grounds of appeal. It is submitted that the Respondent was employed on a fixed-term contract running from 1st January 2022 to 31st December 2022, and that the same expired by effluxion of time. It is submitted that the Respondent admitted receiving salary up to December 2022. The trial court found that he was employed on contracts that were renewed annually. Counsel therefore argued that the court erred in holding that the employment had been unlawfully terminated. 7.It is further submitted that the trial court improperly invoked the doctrine of legitimate expectation thereby effectively rewriting the contract in finding and holding that the Respondent expected renewal of the contract in 2023. Counsel submitted that the contract contained no provision guaranteeing renewal or requiring notice of non-renewal, and hence the court's duty was to enforce, not to vary, the already agreed terms by and between the parties. 8.Counsel further submitted that Clause 3.1 of the contract provided for a definite term ending on 31st December 2022 and, since the contract expired by effluxion of time, there was no termination as envisaged under the Employment Act. It is therefore urged that the trial court erred in faulting the Appellant for failing to communicate the expiry or renewal of the contract. 9.Counsel further argued that the trial court shifted the burden of proof by requiring the Appellant to establish matters relating to renewal and notification of expiry of the contract, which matters were neither pleaded nor proved by the Respondent. 10.On the awards made for house allowance and leave pay, counsel submits that the trial court contradicted itself by awarding the claims after finding that the relevant contracts had not been furnished to guide the court. It is submitted that the only contract produced in court provided for an all-inclusive salary without house allowance or leave pay. 11.Counsel posits that the Respondent failed to prove unlawful termination and that the court relied on matters not supported by evidence while disregarding the express terms of the contract. It is further submitted that the award of compensation equivalent to 12 months’ salary was excessive, unsupported, and based on the erroneous finding that the Respondent had been terminated. 12.Counsel argued that the trial court failed to consider the evidence by the Appellant, particularly the contract produced as Exhibit 1, and wrongly relied on authorities dealing with unfair termination. It is submitted that since the employment relationship ended through expiry of a fixed-term contract, Sections 43 and 45 of the Employment Act alongside the decision in Walter Ogal Anuro v Teachers Service Commission (2013) eKLR were inapplicable. Counsel therefore urged the Court to allow the appeal, set aside the judgment, and dismiss the suit with costs. 13.On the other hand, counsel for the Respondent submitted on two issues – Whether the Respondent was unlawfully terminated; and, Whether the Respondent was entitled to house allowance and leave allowance. 14.On the first issue, counsel submitted that the continuous renewal of the Respondent’s annual contracts from 2017 to 2022 created a legitimate expectation of renewal. Although the Appellant alleged that the Respondent failed to report to sign a 2023 contract, no evidence of such invitation, desertion, or notice of non-renewal was produced during the trial. 15.Citing Jonyo v Kisumu National Polytechnic & 8 Others, Keen Kleeners Limited v Kenya Plantation and Agricultural Workers Union (2021) eKLR, and Mediterranean Woollen Mills (Pty) Ltd v South African Clothing and Textile Workers' Union (143/96) (1998) ZASCA 11, counsel argued that the repeated renewal of the fixed-term contracts created a legitimate expectation. 16.It is further submitted that the Appellant failed to prove valid reasons for non-renewal and the same amounted to termination. It is thus submitted that the Appellant failed to comply with Sections 41, 43 and 45 of the Employment Act. Counsel cited Walter Ogal Anuro v Teachers Service Commission(supra) and Bernard Ngugi v G4S Security Services Kenya Limited (2013) eKLR in stressing the importance of substantive and procedural fairness. 17.On the issue of house allowance, counsel contends that the contract did not provide that the salary was inclusive of house allowance, and that the pay-slip indicated house allowance as nil. To buttress this position, counsel relied on the provisions of Section 31 of the Employment Act. Counsel cited Grain Pro Kenya Inc. Ltd v Andrew Waithaka Kiragu (2019) eKLR, and Benson Wambulwa v Board of Management Lunyu Secondary School (2020) eKLR in support of the argument that the Respondent was entitled to payment of house allowance as a separate item. 18.On leave pay, counsel submitted that the Respondent was not allowed to take annual leave and that is the reason that the Appellant failed to produce leave records as required under section 74(1)(f) of the Employment Act. Counsel cited Ishmael Otieno Ondigo v African Portland Cement Company Limited (2015) eKLR and Milton Wanyonyi Omaka v Board of Management Nambalayi D.E.B Primary School (2020) eKLR in support of that argument. 19.Counsel urged the Court to uphold the judgment of the trial court and dismiss the appeal with costs. III. Issues for Determination 20.Briefly, at all material times, the Respondent was an employee of the appellant as a motor vehicle electrician from 1st June 2017 until 3 January 2023 when he was allegedly terminated. 21.In the statement of claim filed in the lower court – pgs. 4 – 7 of the record of appeal – the Respondent pleaded that his termination was unfair as he was not accorded a fair hearing, as the Appellant allegedly acted contrary to the rules of natural justice. 22.Consequently, he sought for a declaration that the termination was unlawful; one month's salary in lieu of notices 12 months' salary in compensation for unfair termination, arrears in house allowance, leave pay, payment for rest days and public holidays worked, all totaling Kshs1,504,804/=. He also sought for a certificate of service, costs, and interest. 23.In the defence filed in the lower court – pgs. 20 – 21 of the record of appeal – the appellant denied that the respondent was unlawfully terminated and maintained that he was employed on a fixed-term annual contract that expired on 31st December 2022 and was not renewed. It was pleaded that the employment relationship therefore ended by operation of law, not through termination. The Appellant further stated that the Respondent was paid all his dues, including the December 2022 salary. The Appellant denied liability for the claims sought and pleaded that the suit was misconceived and without merit. 24.From the evidence placed before the trial court, the Appellant produced a contract agreement signed by the parties on 30th December 2021 – pg. 26 of the record. In the said agreement, the contract period was to run from 1st January 2022 to 31st December 2022. 25.In my considered view, the issues for determination by this court are the following –i.Whether the Respondent was an employee of the Appellant.ii.Whether the respondent was unfairly and unlawfully terminated and, did the lower trial court arrive at the right finding and holding in that regard?iii.If (i) is in the affirmative, was the Respondent entitled to the reliefs sought?iv.What orders should this court make in the disposal of this appeal?v.Costs. VII. Employment 26.The court has examined the contract agreement by and between the parties signed on 30th December 2021. Apparently, this is the one and only document availed by the parties to verify the employment relationship between them. The contract describes the Respondent as an independent contractor whose daily wage was consolidated and payable monthly at Kshs36,489/=. 27.The agreement clearly indicates that the Respondent was not entitled to any further payments and that contract governed their relationship and clause 3.2 stated as much. 28.However, going by the oral evidence adduced coupled with the pay slip for November 2023, the court is satisfied that although the Respondent was described as an independent contractor in the agreement, he was truly and legally an employee of the Appellant. 29.The Respondent’s position is that he was employed from June 2017 until 3rd January 2023 and thereafter the Appellant failed to renew his contract. He claims that he was neither informed nor notified of the lapse of the contract. In the trial court, the Respondent testified that he was a stranger to the contract agreement adduced by the Appellant – pg. 40 of the record. 30.On the other hand, Divyesh Ramesh (RW1), the Director of the Respondent, testified that the Respondent’s contract of employment had lapsed and no notice was to issue – pgs. 44 – 46 of the record. 31.The trial court found that the Respondent had a legitimate expectation that his contract would be renewed as his previous contracts spanning from 2017 had always been renewed. The trial court further found and held that the Appellant was required to issue to the Respondent a notice of intention not to renew the contract and, that in the absence of such notice the Appellant unlawfully and unprocedurally dismissed the Respondent. 32.The court has reviewed the contract agreement adduced by the Appellant in the trial for the period from 1st January 2022 to 31st December 2022. The respondent alleged he did not sign the same. However, there was no objection to the production of the said document in the trial court. He did not produce a copy of any other contract or explain the other basis upon which he remained in employment over the said period. RW1 confirmed that the contracts for the previous years were not presented in court and the record confirms that position. 33.In any event, what the Respondent complained about was that the non-renewal of his contract as per the pleadings filed. In fact, he pleaded legitimate expectation of the renewal of the contract. Yet he did not avail his copy of the contract that he expected to be renewed. 34.The Appellant availed a copy of the contract that clearly stipulated that it was to expire on 31st December 2022. Clearly, there was no legal obligation on the part of the Appellant to mandatorily renew the contract. It is therefore the finding and holding of this court that the employment contract between the parties lapsed by effluxion of time. It was not interrupted by either party hence neither party was obligated to issue a notice to the other or at all. 35.Further, the court finds and holds that the parties were bound by the terms of the contract availed in court by the Appellant as at the time of the lapse of the contract and expiry of the employment relationship between them. As stated above, the Respondent did not avail any other contract and he did not challenge the Appellant to avail such contracts. VIII. Reliefs Awarded 36.The trial court awarded the Respondent as follows –a.A declaration that the said termination of the claimant's services and/or employment by the respondent was unlawful, unfair and/or illegal.b.Payment of the sum of money claimed under paragraph / above as damages for loss of employment.i.1 month’s pay in lieu of notice ……………..Kshs36,489/=ii.Compensation for unlawful termination (Kshs36,489*12)……………………………Kshs437,868/=iii.House allowance arrears June 2017 to January 202315% x 36,486 x 67 months…………………..Kshs366,684/=iv.Leave allowance arrears 26 days*years worked * Gross salary/26 26x5x36,486/26……………………… Kshs182,430/=v.Rest days 36,486/26 x 144 x 2…………………………Kshs404,152/=vi.Public Holidays Gross* No of Holidays * Years worked 36,486/26 x 11 x 5…………………………….Kshs77,181/=c.Issuance of certificate of serviced.Costs and interest 37.Order (a) was for declaration that the termination of employment was unfair and unlawful. The court finds and holds that the employment relationship came to an end through expiry of the period of contract also known as effluxion of time. 38.Order (b) (i) was for one month’s salary in lieu of notice. The Respondent was not entitled to any notice as the contract simply came to an end as agreed by and between the parties. This award was wrongly made and shall be set aside. 39.Order (b)(ii) was for compensation for unlawful termination. The court has found and held that there was no termination whatsoever and this award shall be set aside. 40.Order b(iii) is for arrears of house allowance from June 2017 to January 2023. The trial court awarded the claim at Kshs307,469.70. The trial court found and held that there was no contract between the parties that provided for a housing allowance and yet it proceeded to award the same – pg. 58 of the record. In the contract agreement produced in court by the Appellant, the Respondent was entitled to a sum of Kshs36,489/= per month worked. The pay-slip adduced by the Respondent for November 2019 – Pg. 14 of the record – indicated the items payable to the Respondent. Evidently, no house allowance was payable as the salary was consolidated. Again, the trial court was wrong and the ward of Kshs307,469.70 is hereby set aside. 41.In any event, if the Respondent truly believed that such house allowance was payable to him, why did he not claim the same for the entire period of the employment from 2017. The fact of the matter is that he was entitled to none as the salary was consolidated. 42.Order (b) (iv) is for leave allowance for five years. The trial court awarded the Respondent Kshs152,970/=. It was upon the Respondent to prove his case all along. The record of the trial does not show that the Respondent proved or established his terms of engagement prior to the last contract that was availed in court. In my considered view, if the Respondent worked on annual fixed term contracts, each contract formed an independent period of engagement. The contract availed in court is clear on the agreed terms and the court cannot interfere with the same unless the same offends any law. 43.In the circumstances, the award of Khs152,970/= for leave allowance shall be set aside. 44.Prayer b(v) and (vi) were rest days and public holidays, which the trial court declined to award for lack of particulars. During his testimony in court RW1 testified that the Appellant’s sites are closed during public holidays and weekends. The Respondent‘s claims on the two heads as pleaded were ambiguous and lacked particulars, such as the number of rest days sought or the holidays during which the Respondent allegedly worked. The court shall not interfere with the findings of the trial court and the same are denied. 45.The Appellant was directed to issue the Respondent with a certificate of service. This finding is upheld as Section 51 of the Employment Act confirms that this is a right for every employee. VIII. Costs 46.This appeal is allowed with no order as to costs. VIII. Orders 47.Flowing from the foregoing, the court makes the following orders–i.The entire Judgment of Hon. Z.J Nyakundi (Senior Principal Magistrate) delivered on 13th March 2025 in Kakamega Chief Magistrates’ Court ELRC No. 1 of 2023 between the parties is hereby set aside.ii.The claim in the lower court is hereby dismissed with costs.iii.Each party shall meet own costs in this Appeal.iv.The Appellant shall issue the Respondent with a certificate of service within 30 days of this judgment. DELIVERED VIRTUALLY, DATED, AND SIGNED AT KAKAMEGA THIS 11TH DAY OF JUNE 2026.……………………DAVID NDERITUJUDGE