https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/1787

**REPUBLIC OF KENYA** **IN THE EMPLOYMENT AND LABOUR RELATIONS COURT** **AT MOMBASA** *(Before Hon. Lady Justice Monica Mbarũ)* **APPEAL NO. E256 OF 2025** **MOIZ LIBAHI also trading as BAHARINI REPAIRS AND RETREADS, formerly known as** **BAHARINI RETREADING AND RUBBER APPELLANT** *VERSUS* **GONA KAHNDI FONDO 1ST RESPONDENT** **JONATHAN KARISA THUVA 2ND RESPONDENT** **BEATRICE KANINI NZUKI 3RD RESPONDENT** **KNDICHIMU KILILO 4TH RESPONDENT** **GODFREY SCAVER MCHANGHA KIMORI 5TH RESPONDENT** **KOMBO MOHAMED MACHACHE 6TH RESPONDENT** **[Being an appeal from the judgment of Hon. L. N. Wasige on 4 December 2025 in Mombasa MCELRC No. 611 of 2018]** **JUDGMENT** The appeal arises from the judgment delivered on 4 December 2025 in Mombasa MCELRC No. 611 of 2018. The appellant seeks that the judgment be set aside in its entirety and that the court be pleased to enter judgment for the appellant as pleaded in the response before the trial court. The grounds of appeal are that the learned magistrate erred in law and fact in determining that the procedure adopted by the appellant in terminating the respondents' employment through redundancy was unprocedural. The court erred in importing a reason for the appellant's termination of employment that the appellant did not advance. There was an error in finding that there was no sufficient reason leading to the termination of employment through redundancy, and following the appellant’s insolvency. Despite following due process in declaring redundancy, the trial court failed to take this into account. Another reason for the appeal is that the learned magistrate erred in law and fact in finding that the appellant did not serve notice, when in fact the notice was paid. The awards of leave pay, severance, compensation and salary arrears were not proved or justified. The trial magistrate gave no reasons for these awards. The background of the appeal is a claim filed by the respondents against the appellant. 8 persons filed the initial claim, and 6 respondents filed the appeal. Their case was that the appellant employed them on different dates and unfairly declared them redundant on 1 June 2018. 1. The 1st respondent, Gona Kahindi Fondo, was employed in 2007 as a supervisor earning Ksh. 17,403 per month and worked for 11 years. 2. The 2nd respondent, Jonathan Karisa Thuya, was employed in 1999 as a messenger earning Ksh. 16,800 and worked for 19 years. 3. The 3rd respondent, Beatrice Kanini Nzuki, was employed in October 1998 as a clerk earning Ksh. 16,000 and worked for 20 years. 4. The 4th respondent, Kindochimu Kililo, was employed in 1994 as a machine operator earning Ksh. 17,000 and worked for 11 years. 5. The 5th respondent, Godfrey Scaver Mgangha, was employed in 1995 as a greenkeeper earning Ksh. 17,000 and worked for 21 years. 6. The 6th respondent, Kombo Mohamed Machache, was employed in 2005 as a factory worker earning Ksh. 14,000 and worked for 13 years. Two persons in the initial claim, Wita Kamwele and William Beja Jenjewa, are not appellants. The respondents thus claimed that on 31 May 2018, the appellant issued those letters terminating their employment with effect on 1 June 2018, on the ground that the company would be sold and that they would be paid their terminal dues. Notices dated 1 May 2019 were issued to take effect on 1 June 2018. This resulted in unfair termination of employment because the requisite notices under section 40(1) (a) and (f) of the Employment Act were not issued. The selection criteria and payment of term dues were not addressed. There was no reason for the termination of employment. They claimed one month's notice pay, severance pay, underpayment of wages and leave days for years worked. The claims were: 1. Gona Kahidi 2. Monthly wage in notice pay Ksh. 17,403. 3. Salary for March, April, and May 2018: Ksh. 52,206. 4. 21 leave days for 11 years Ksh. 134,003. 5. Severance pay for 11 years, Ksh. 95,717. 6. Compensation for unfair termination Ksh. 208,836. 7. Jonathan Karisa Thuya 8. Monthly wage in notice pay Ksh. 16,800. 9. Salary for March, April, and May 2018: Ksh. 50,400. 10. 21 leave days for 19 years Ksh. 223,440. 11. Severance pay for 19 years, Ksh. 159,600. 12. Compensation for unfair termination Ksh. 201,600. 13. Beatrice Kanini Nzuki 1. Monthly wage in notice pay Ksh. 16,000. 2. Salary for March, April, and May 2018 Ksh. 48,000. 3. 21 leave days for 20 years Ksh. 224,000. 4. Severance pay for 20 years, Ksh. 160,000. 5. Compensation for unfair termination Ksh. 640,000. 14. Kindochimu Kililo 15. Monthly wage in notice pay Ksh. 17,000. 16. Salary for March, April, and May 2018 Ksh. 51,000. 17. 21 leave days for 24 years Ksh. 285,600. 18. Severance pay for 24 years, Ksh. 204,000. 19. Compensation for unfair termination Ksh. 204,000. 20. Scaver Kimori 21. Monthly wage in notice pay Ksh. 17,000. 22. Salary for March, April, and May 2018 Ksh. 51,000. 23. 21 leave days for 21 years Ksh. 273,700. 24. Severance pay for 21 years, Ksh. 195,500. 25. Compensation for unfair termination Ksh. 204,000. 26. Kombo Mohamed 27. Monthly wage in notice pay Ksh. 14,000. 28. Salary for March, April, and May 2018 Ksh. 42,000 29. 21 leave days for 13 years Ksh. 127,400. 30. Severance pay for 13 years, Ksh. 91,000 31. Compensation for unfair termination Ksh. 168,000 In reply, the appellant denied the claims made and asserted that the respondents are not entitled to them. However, the appellant filed various work records, including the notice of redundancy dated 31 May 2018 and a note indicating the terminal dues to be paid: 1. Pending salary. 2. One month's pay. 3. Any pending leave day. 4. Severance pay at 15 days for each completed year of service. There was a notice to the labour officer, Mombasa. The appellant also filed the individual notices to the respondents on 1 May 2018. There is also a tabulation of the terminal dues owed, including: 1. Balance of unpaid salary. 2. Salary for May 2018. The appellant also filed the witness statement of Moiz Alibhai, detailing the respondents' employment, the individual term dues, and the outstanding debts owed by each. A muster roll for each respondent is attached. In the judgment of the learned magistrate, the facts and the law are analysed, and it is held that the notices terminating employment are all dated 31 May 2018 and amount to unfair termination of employment. The reasons given were that the factory was being leased with a possible future sale in mind. That termination of employment by redundancy failed to comply with the provisions of section 40 of the Employment Act. The requirement to pay accrued leave days was not met. There was no one-month notice or payment in lieu thereof. The severance pay due was not tabulated or paid. Hence, the learned magistrate assessed the individual claim and awarded the following hearings: 1. Notice pay. 2. Leave days. 3. Severance pay. 4. Salary arrears. 5. Compensation for wrongful termination. On the appeal, the appellant submitted that in the judgment of the learned magistrate, the finding that the appellant failed to show the reason for the summary dismissal and hence there was unfair dismissal was contrary to the evidence presented by the parties. The respondents’ employment contracts were lawfully terminated on grounds of redundancy. In employment, either party can give notice to terminate employment or make payment in lieu thereof, as held in **Jaswinder Kaur Ghataaura v Naredrasing R. Mahida & another [2013] KELRC.** These provisions are meant to ensure that labour relations are conducted in a manner that is fair and equitable, and no party in employment relations is forced to serve through force or coercion. The appellant submitted that the respondent claimed unfair termination on 1 June 2018. However, the people tabled evidence that it declared a redundancy affecting the respondents. Due process was observed in the payment of terminal dues. In the judgment delivered, the learned magistrate failed to analyse the evidence in its entirety and, as a result, awarded notice pay, service pay, salary arrears, and compensation, which is an error. In response to the claim, the appellant filed various records to confirm due process, including a letter dated 31 May 2018 to the labour officer, a summary of the respondents’ claims, a muster roll and correspondence between the parties. The applicant admitted that it was previously registered as a different entity, Baharini Retread and Repairs, on 10 November 2009, and that it started operations on 30 November 2009. Some of the respondents were employed by Baharini Retreading and Rubber Limited, which surrendered its machinery to the appellant on 30 November 2009. The respondents who transitioned to the appellant were: 1. Beatrice Kanini Nzuki, 2. Kindochimu Kililo. 3. Godfrey Scaver Mghangha Kimori. The other respondents were employed by the appellant later: 1. Gona Kahindi Fondo was employed on 30 November 2009 as a supervisor earning Ksh. 17,403 per month. 2. Jonathan Karisa Thura was employed on 30 November 2009 as a messenger earning Ksh. 15,278 per month. 3. Beatrice Kanini Nzuki was employed on 30 November 2009 as a clerk earning Ksh. 14,003 per month. 4. Kindochimu Kililo was employed on 30 November 2009 as a machine operator earning Ksh. 15,703 per month. 5. Godfrey Scaver Mghangha Kimori was employed on 30 November 2009 as a machine operator earning Ksh. 15,703 per month. 6. Kombo Mohamed Machache was employed on 30 November 2009 as a factory worker earning Ksh. 14,003 per month. All the respondents’ employment was terminated with effect from 1 June 2018 in accordance with section 40(1) of the Employment Act. Notices were issued to them and to the labour officer. All their positions became obsolete, and without discrimination, the same reasons were explained to each respondent. Notices were issued to this effect. The appellant submitted that each respondent was paid terminal dues: 1. Gona Kahindi Fondo was paid Ksh. 23,913; Balance for April 2018 Ksh. 6,510 Salary for May 2018: Ksh. 17,403. 1. Jonathan Karisa Thura was paid Ksh. 41,990 Balance for March 2018, Ksh. 11,434 Salary for April 2018 Ksh. 15,278 Salary for May 2018 Ksh. 15,278. 1. Beatrice Kanini Nzuki was paid Ksh. 49,512 Balance for February 2018 Ksh. 7,503. Salary for March 2018 Ksh. 14,003. Salary for April 2018 Ksh. 14,003. Salary for May 2018 Ksh. 14,003. 1. Kindochimu Kililo was paid Ksh. 48,715 Balance for February 2018 Ksh. 3,606. Salary for March 2018 Ksh. 15,703.. Salary for April 2018 Ksh. 15,703. Salary for May 2018: KSh. 15,703. Less Ksh. 2,000 1. Godfrey Scaver Mghangha Kimori was paid Ksh. 45,615 Balance for March 2018 Ksh. 14,209. Salary for April 2018 Ksh. 15,703. Salary for May 2018 Ksh. 15,703. 1. Kombo Mohamed Machache was paid Ksh. 40,115. Balance for March 2018 Ksh. 12,109. Salary for April 2018 Ksh. 14,003. Salary for May 2018 Ksh. 14,003. The appellant submitted that the respondents did not contest these payments. However, the trial court did not take them into account in assessing the claims and the awards. During employment, the respondents had statutory deductions remitted. They took their weekly rest/off days. They took annual leave when due, and there was no overtime work. A house allowance was included in the consolidated salary. Therefore, save for the terminal dues paid, the respondents were not eligible for any other payments. In response, the appellant made a case of the respondents being indebted, which should be offset from their terminal dues: 1. Gona Kahindi Fondo Ksh. 70,000 and lost tyres worth Ksh. 500,000. 2. Jonathan Karisa Thura, a company bicycle, Ksh. 8,000. 3. Beatrice Kanini Nzuki owes Ksh. 15,000 medical loan and 35 working days. The petitioner submitted that the termination of employment was due to redundancy. Notice issued, and payment of terminal dues made. Termination of employment through redundancy arises from involuntary and operational requirements. It is subject to the employer's compliance with the provisions of section 40 of the Employment Act, as held in **Julie Topirian Njeru v Kenya Tourist Board, Cause No. 886 of 2010**. In **Roadtainers Mombasa Limited v Choga Tsuma ELRCA E078 of 2024**, the court held that where the employer has complied with the law and followed due process in terminating employment, such cannot be faulted. In this case, there was a valid reason leading to the termination of employment. The awards for notice pay, leave pay, severance pay, and salary arrears, which were confirmed as paid, should be set aside. The compensation awarded is not justified. The respondents submitted that the 1st respondent was employed in 2007 as a supervisor earning Ksh. 16,800 and worked for 11 years. The 2nd respondent was employed in 1999, earning Ksh. 16,800 ad worked for 19 years. The 3rd respondent was employed in October 1998 as a clerk earning Ksh. 16,000 ad worked for 20 years. The 4th respondent was employed in 1994 as a machine operator earning Ksh. 17,000 and worked on 0000000 The 5th respondent was employed as a machine operator earning Ksh. 17,000 and worked for 23 years. The 6th respondent was employed in 2005 as a factory worker earning Ksh. 14,000 and worked for 13 years. The respondents submitted that they were issued notices dated 31 May 2018 terminating their employment on the grounds of redundancy, with effect from 1 June 2018. The appellant stated that the factory would be sold and that their terminal dues would be paid. The notices required under section 40 of the Employment Act were not issued, nor was payment in lieu thereof made, resulting in an unfair termination of employment allegedly due to redundancy. In **Webuge v Transnet Payments Limited [2026] KEELRC**, the court held that two notices are envisaged under section 40 of the Employment Act. The general notice and the personal notice to the affected employee. Where notices due under sections 43 and 45 of the Act are not issued, this amounts to unlawful and unfair termination of employment. The awards by the trial court are justified and should be framed by this court with costs. The respondents are awarded: 1. Notice pay since there were insufficient notices given. 2. Unpaid salaries for March, April, and May 2018, which were in arrears. 3. Unpaid leave days for years worked. 4. Severance pay following the redundancy. 5. Compensation for unfair termination of employment. The respondents are also entitled to costs. Determination As the first appeal, the court's mandate is to review and evaluate the evidence and reach a conclusion. In Ng’ati Farmers’ Co-Operative Society Ltd v Ledidi & 15 others [2009] KLR, the court held that a first appeal is a re-trial on the principle that the court must reconsider the evidence, evaluate it, and draw its conclusions. However, it should always bear in mind that it has neither seen nor heard the witness and should make due allowance in that respect. This position I emphasized in Kenya Ports Authority v Kuston (Kenya) Limited [2009] 2 EA where the court held that although the court on appeal is not bound necessarily to follow the trial court findings of fact if it appears either that there was a failure on some point to take account of particular circumstances or probabilities materially to estimate the evidence, or if the impression based on the demeanour of a witness is inconsistent with the evidence in the case generally. In that regard, the respondents assert that the appellant terminated their employment by notice dated 31 May 2018, effective 1 June 2018. The reasons given were redundancy and the sale of the appellant company. The case was that the appellant failed to adhere to the due process under section 40 of the Employment Act (the Act), and the due terminal dues were not paid. The appellant’s case was that, indeed, there was a redundancy, that notice was issued, and that terminal dues were paid, including payment in lieu of notice and salary arrears; the respondent's claim is not justified. The appellant does not contest that it issued a notice dated 31 May 2018 to the respondents. These notices are generic to each respondent. The notice indicated that: *This is indeed a matter of great sadness that we are going to begin the termination process, which will be effective from 1 June 2018, as we are in the process of leasing out the factory for a possible future sale.* *…* *As you may be aware, we are facing a financial crisis and must make a decision. We will work out the details with you and advise once we can make a payment.* Essentially, this notice was to take effect immediately. The painful reality of redundancy is that where the employer is no longer able to support its operations, provide financial support, or continue employing its workforce, this constitutes a redundancy under section 2 of the Employment Act. The employer is legally permitted to terminate employment, subject to compliance with the provisions of section 40 of the Act. In [Nyaanga & 20 others v Parapet Cleaning Services [2025] KEELRC 2541 (KLR)](https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/2541/eng%402025-09-25), in a redundancy, section 40 of the Act requires that the employer must issue a notice of the intended redundancy to the employees who are likely to be affected by the process. In cases where the employees are members of a trade union, the notice is supposed to be issued to the trade union. The redundancy notice should be for at least one month. Further, it should specify the grounds for and extent of the proposed redundancy. In [Barclays Bank of Kenya Ltd & another v Gladys Muthoni & 20 others [2018] KECA 718 (KLR)](https://new.kenyalaw.org/akn/ke/judgment/keca/2018/718/eng%402018-03-16) and **Cargill Kenya Limited v Mwaka & 3 others (Civil Appeal 54 of 2019) [2021] KECA,** the courts have held that Under section 40(1)(f) of the Employment Act, where the employer must close its business, the law allows the payment in lieu of notice and all pending terminal dues, including leave pay due in cash and severance pay. See [Highlands Mineral Water Company Limited v Shaeen [2023] KECA 1133 (KLR)](https://new.kenyalaw.org/akn/ke/judgment/keca/2023/1133/eng%402023-09-22). The employer is permitted to terminate employment due to a decrease in business that leads to redundancy under Section 40 of the Act. However, the due process of the law must be observed in such circumstances, as established in National Oil Corporation of Kenya v Cheruiyot & 37 others [2025] KECA 148 (KLR). In this case, the appellant issued notice, stating the reasons for the termination of employment arising from a lease and the possible sale of the business. The respondents do not contest that notice was also issued to the labour officer. The motion of section 40(1) (a) of the Act was adhered to. The notice giving reasons for the redundancy was issued. The reasons are lawful pursuant to the Act. The payment of terminal dues to the respondents is not challenged. The example of Jonathan Karisa Thuya, who was paid the following total of Ksh. 41,990 including: 1. Balance for March 2018, Ksh. 11,434 2. Salary for April 2018 Ksh. 15,278 3. Salary for May 2018 Ksh. 15,278. Each respondent is paid accordingly. The balance of wages and salaries due for March, April, and May 2018. The only payments not factored into the redundancy dues under section 40 of the Act are payments in lieu of notice as contemplated under section 40(1)(f), leave pay under section 40(1)(e ), and severance pay due under section 40(1)(g) of the Act. Upon a declared redundancy, these payments are due to the affected employees. To this extent, the learned magistrate analysed the records and awarded notice pay, leave pay and severance pay. These are, however, reviewed. Notice pay is due at the last gross wage earned by each respondent. Notice pay I assigned as follows: 1. Gona Kahindi Fondo is entitled to Ksh. 17,403 in notice pay. 2. Jonathan Karisa Thuva notice pay Ksh. 15,278. 3. Beatrice Kanini Nzuki notice pay Ksh. 14,003. 4. Kindochimu Kililo notice pay Ksh. 15,703. 5. Godfrey Scaver Mghangha Kimori notice pay Ksh. 15,703. 6. Kombo Mohamed Machache Ksh. 14,003 On-leave pay is due at the end of employment under section 28 of the Act. In ordinary practice, accrued leave days should not accumulate for more than 18 months. The total leave days for each respondent are 33 days, based on the basic wage. The muster rolls filed by the appellant indicate a consolidated wage for each respondent. The basic and gross are not separated. For the 33 day due for annual leave, the following are due: 1. Gona Kahindi Fondo on gross wage of Ksh. 17,403, leave pay for 33 days is Ksh. 19,143.30. 2. Jonathan Karisa Thuva's gross wage of Ksh. 15,278, for 33 leave pay is Ksh. 16,805.80. 3. Beatrice Kanini Nzuki's gross wage of Ksh. 14,003, the Leave pay Ksh. 15,403.30. 4. Kindochimu Kililo gross wage Ksh. 15,703, the leave pay is Ksh. 17,273.30. 5. Godfrey Scaver Mghangha Kimori gross wage Ksh. 15,703, the leave pay is Ksh. 17,273.30. 6. Kombo Mohamed Machache gross wage Ksh. 14,003 leave pay Ksh. 15,403.30. Severance pay should be based on the employee's last gross wage. The employee, as the employer, has the correct work records as outlined above. Severance pay is thus assessed: 1. Gona Kahindi Fondo was employed on 30 November 2009, earning Ksh. 17,403 per month, and employment was terminated on 1 June 2018. There was work for 9 full years. Based on the wage, 15 days' pay for 9 years = Ksh. 78,313.50. 2. Jonathan Karisa Thuva was employed on 30 November 2009 and worked for 9 full years, last earning Ksh. 15,278 per month. Severance pay due is Ksh. 68,751. 3. Beatrice Kanini Nzuki was employed on 30 November 2009 and worked for 9 years, earning Ksh. 14,003 per month. Severance pay is Ksh. 63,013.50. 4. Kindochimu Kililo was employed on 30 November 2009 and worked for 9 years, earning Ksh. 15,703 per month. Severance pay is Ksh. 70,663.50. 5. Godfrey Scaver Mghangha Kimori was employed on 30 November 2009 and worked for 9 years, earning Ksh. 15,703 per month. Severance pay is Ksh. 70,663.50. 6. Kombo Mohamed Machache was employed on 30 November 2009 and worked for 9 years, earning Ksh. 14,003 per month. Severance pay is Ksh. 63,013.50. Regarding debts due from the respondents at the end of employment, the employer may deduct any liabilities owed by the employee pursuant to section 17 of the Employment Act. Whether this is counterclaimed or not, the employer is legally obligated to make such a deduction. The evidence and work records indicate that the respondent owed the appellant as follows: 1. Gona Kahindi Fondo Ksh. 70,000 and lost tyres worth Ksh. 500,000. 2. Jonathan Karisa Thura, a company bicycle, Ksh. 8,000. 3. Beatrice Kanini Nzuki owes Ksh. 15,000 medical loan and 35 working days. These liabilities are deductible from the terminal dues. On costs, having assessed the appeal above and considered the reviews of the trial court judgment, it is only fair and just that each party bear their costs for the appeal. For the trial court, the claims made are on a good foundation; hence, costs are awarded. **Accordingly, judgment in Mombasa MCELRC No. 611 of 2018 is hereby reviewed in the following terms:** 1. **Employment was terminated for a lawful cause of redundancy that is justified.** 2. **The respondents are entitled to notice pay, leave pay and severance pay.** 3. Gona Kahindi Fondo Notice pay Ksh. 17,403. Leave pay Ksh. 19,143.30. Severance pay Ksh. 78,313.50. 1. Jonathan Karisa Thuva Notice pay Ksh. 15,278. Leave pay Ksh. 16,805.80. Severance pay Ksh. 68,751. 1. Beatrice Kanini Nzuki Notice pay Ksh. 14,003. Leave pay Ksh. 15,403.30. Severance pay Ksh. 63,013.50. 1. Kindochimu Kililo Notice pay Ksh. 15,703. Leave pay Ksh. 17,273.30. Severance pay Ksh. 70,663.50. 1. Godfrey Scaver Mghangha Kimori Notice pay Ksh. 15,703. Leave pay Ksh. 17,273.30. Severance pay Ksh. 70,663.50. 1. Kombo Mohamed Machache Notice pay Ksh. 14,003 Leave pay Ksh. 15,403.30. Severance pay Ksh. 63,013.50. 1. **The dues above shall be paid less the following:** 2. **Gona Kahindi Fondo Ksh. 70,000 and lost tyres worth Ksh. 500,000.** 3. **Jonathan Karisa Thura, a company bicycle, Ksh. 8,000.** 4. **Beatrice Kanini Nzuki owes Ksh. 15,000 medical loan and 35 working days.** 5. **For the appeal, each party shall bear its costs. For the trial court, the costs are awarded.** **Delivered in open court this 29th day of June 2026.** **M. MBARŨ** **JUDGE** **In the presence of:** Court Assistant: Samuel Maruga ……………………………………………… and …………………………………..………….