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Muendo v Chairperson, Mukuyuni Financial Services Association & another (Employment and Labour Relations Appeal E026 of 2025) [2026] KEELRC 2085 (KLR) (17 July 2026) (Judgment) Neutral citation: [2026] KEELRC 2085 (KLR) Republic of Kenya In the Employment and Labour Relations Court at Machakos Employment and Labour Relations Appeal E026 of 2025 JW Keli, J July 17, 2026 Between Solomon Munima Muendo Claimant and The Chairperson, Mukuyuni Financial Services Association 1st Respondent The Manager, Mukuyuni financial Services Association 2nd Respondent (Being an Appeal from the Judgment and Decree of the Hon. P. N. Gesora (CM) delivered on 24th April 2025 in Makueni MCELRC No. 3 of 2025) Judgment 1.The Appellant herein, being dissatisfied with the Judgment and Decree of the Hon. P.N. Gesora (CM) delivered on 24th April 2025 in Makueni MCELRC No. 3 of 2025 between the parties filed a Memorandum of Appeal dated the 23rd May 2025 seeking the following orders: -a.This Appeal be allowed and the entire Judgement delivered by Hon. P. N. Gesora in Makueni MCELRC Case No. 3 of 2020 dated 24th day of April, 2025, be set aside.b.The Honourable Court be pleased to set aside the judgment and/or decree given on the 24th day of April, 2025 as well as the Counter-Claim.c.The Honourable Court be pleased to analyse the evidence tendered in the lower court and address the issues raised by the Claimant in his Claim.d.The Honourable Court be pleased to award the Claimant the prayers sought in his statement of claim.e.Costs be provided for.f.Any other order or relief that this Honourable Court deems fit and just in the circumstances. Grounds Of The Appeal 2.The Honourable Trial Magistrate erred in law and fact by failing to give a detailed analysis of the issues raised by the Claimant in the primary suit in his judgment and applying blanket dismissal of all the prayers. 3.The Honourable trial Magistrate erred in fact and law in failing to take into consideration the trite provisions of Articles 41, 48 and 47 of the Constitution of Kenya, 2010 in coming up with his judgment. 4.The Honourable trial Magistrate erred in fact and law in failing to take into consideration the trite provisions of Sections 2, 7, 9, 35 (1) (c), 35 (5), 36, 45(1), (2), (4), (5), 46, 49, 50 and 51 of the Employment Act 2007. 5.The Honourable trial Magistrate erred in fact and law in failing to take into consideration the trite provisions of Rule 6 of the Regulation of Wages (General) Order. 6.The Honourable trial Magistrate erred in law and in fact by making conclusions in his impugned judgement dated the 24th day of April, 2025 finding that the Appellant was not unfairly terminated despite lack of notice of termination of employment as is required under law. 7.The Honourable trial Magistrate erred gravely in law and in fact by making a rushed determination on the merits and/ or otherwise of the nature of termination of employment and thus advertently fell in error to the prejudice of the Appellant herein. 8.The Honourable trial Magistrate erred in law and in fact by unreasonably trivializing the Appellant’s rights and fundamental freedoms and the Constitutional demands that promote the determination of disputes on their merit other than technicalities and the promotion and protection of rights and freedoms under Article 159 of the Constitution. Background To The Appeal 9.The Claimant/Appellant filed a claim against the Respondent vide a statement of claim dated the 5th of March 2020 seeking the following orders:-a.One month’s salary in lieu of notice Kshs. 26,348/-b.Unpaid leave days for the entire period served Kshs. 85,124.31c.Overtime pay (4 hours per day) Kshs. 1,264,224/-d.Compensation for unfair termination (6 months salary) Kshs. 158,088/-e.Service pay for the period served Kshs. 60,802.80f.Certificate of Service.g.General Damages.h.Interest accrued over the years.i.Costs of this suit.j.Any other relief that this Honourable Court may deem just and fit to grant.k.Costs of the suit.l.Interests on prayers (b), (c), (d) and (e) at court’s rates.(pages 8-10 of Appellant’s ROA dated 24th April 2026) 10.Alongside the claim, the Claimant/Appellant filed his bundle of documents; witness statement dated 2nd September 2020; and supplementary witness statement dated 11th November 2021 (pages 12-22 and 36-39 of ROA). 11.The claim was opposed by the Respondent, who entered an appearance and filed an amended statement of defence and counter-claim dated 6th October 2021 (pages 58-60 of ROA). They also filed a list of witnesses dated 3rd August 2020; an undated list of documents with the bundle of documents attached; and a witness statement of BENJAMIN MAWILI KILUVA (pages 31-35 of ROA). Later, the 1st and 2nd Respondents filed a supplementary list of documents dated 6th October 2021 with the bundle attached; and a supplementary witness statement of BENJAMIN MAWILI KILUVA dated 6th October 2021 (pages 63-69 of ROA). 12.In challenge to the counter-claim, the Claimant/Appellant filed a statement of response to counter-claim dated 14th August 2023 (pages 84-85 of the ROA). 13.The Claimant/Appellant’s case was heard on 2nd March 2022 with the Claimant testifying. He adopted his filed witness statements as his evidence in chief, and produced his documents as exhibits. He was cross-examined by counsel for the Respondent, Ms. Katuma (pages 103-106 of ROA). 14.The Respondent’s case was heard on 7th December 2023 with one BENJAMIN M. KILUVA testifying on behalf of the Respondent as DW1. He adopted his filed witness statements as his evidence in chief; produced the Respondent’s documents as exhibits; and was cross-examined by counsel for the Claimant/Appellant Mr. Mulandi (pages 113-115 of ROA). 15.The Trial Magistrate Court delivered its Judgment on 24th April 2025, dismissing the Claimant/Appellant’s suit and allowing the counterclaim with costs (judgment at pages 132-137 of ROA). Determination 16.The appeal was canvassed through written submissions. Both parties filed. Issues for determination 17.In his submissions dated 4th June 2025, the Appellant identified the following issues for determination:-i.Whether the trial court misdirected itself by holding that Appellant’s refusal to sign an “employee undertaking and lien” amounted to resignation/fair termination.ii.Whether the court failed to apply Sections 41, 43 & 49 of the Employment Act 2007 on procedural and substantive fairness.iii.Whether the court erred in dismissing claims for notice, leave, overtime, compensation, service pay and certificate of service without evaluating evidence.iv.Whether the court erred in awarding Respondents’ counter-claim without strict proof. 18.The Respondent filed their submissions dated 22nd June 2026 in Machakos ELRC Appeal No. E030/2025 with the intention that the same applies across the series, and identified the following issues for determination:-i.What is the role of this Honourable Court.ii.Whether the Learned Magistrate properly appreciated the issues in contention with respect to the Appellant's claim.iii.Whether the Learned Magistrate erred in law and fact in dismissing the Appellant's claim.iv.Whether the Learned Magistrate erred in law and fact in allowing the Respondents' counter-claim. 19.The court discerned that the issues for determination in the appeal and in related series, placed by the court for determination by the parties, were as follows-a.Whether the trial court erred in fact and law in finding a fair terminationb.Whether the appellants were entitled to the relief sought in the claimc.Whether the trial court erred in finding on the counterclaim Whether the trial court erred in fact and law in finding a fair termination 20.The relevant grounds of the appeal were as follows-a.The Honourable Trial Magistrate erred in law and fact by failing to give a detailed analysis of the issues raised by the Claimant in the primary suit in his judgment and applying blanket dismissal of all the prayers.b.The Honourable trial Magistrate erred in fact and law in failing to take into consideration the trite provisions of Articles 41, 48 and 47 of the Constitution of Kenya, 2010 in coming up with his judgment.c.The Honourable trial Magistrate erred in fact and law in failing to take into consideration the trite provisions of Sections 2, 7, 9, 35 (1) (c), 35 (5), 36, 45 (1), (2), (4), (5), 46, 49, 50 and 51 of the Employment Act 2007.d.The Honourable trial Magistrate erred in law and in fact by making conclusions in his impugned judgement dated the 24th day of April, 2025 finding that the Appellant was not unfairly terminated despite lack of notice of termination of employment as is required under law.e.The Honourable trial Magistrate erred gravely in law and in fact by making a rushed determination on the merits and/or otherwise of the nature of termination of employment and thus advertently fell in error to the prejudice of the Appellant herein.f.The Honourable trial Magistrate erred in law and in fact by unreasonably trivializing the Appellant’s rights and fundamental freedoms and the Constitutional demands that promote the determination of disputes on their merit other than technicalities and the promotion and protection of rights and freedoms under Article 159 of the Constitution.g.This appeal ELRCA NO. E026 of 2025 has been selected as the test file in series with; ELRCA NO. E025 of 2025, ELRCA NO. E027 of 2025, ELRCA NO. E028 of 2025, ELRCA NO. E029 of 2025 and ELRCA NO. E030 of 2025. The Appellant and five (5) others were employed by the Respondents from January 2016 as a Credit Officers until December 2019 when their services were terminated. 21.They sued for unfair termination, salary in lieu of notice, unpaid leave, overtime, compensation, service pay, certificate of service as well as shares they had bought. 22.The trial court dismissed their claims on 24th April, 2025 vide the judgment in the lead file; Makueni MCELRC No. 3 of 2020, now this file, with costs and instead entered judgment for Respondents on their counter-claims for Kshs 7,500 plus costs and interest. 23.This being a first appellate court, it was held in Selle v Associated Motor Boat Co. [1968] EA 123 that:-“The appellate court is not bound necessarily to accept the findings of fact by the court below. An appeal to the Court of Appeal from a trial by the High Court is by way of a retrial and the principles upon which the Court of Appeal acts are that the court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in this respect. In particular the court is not bound necessarily to follow the trial Judge’s findings of fact if it appears either that he has clearly failed 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.” 24.The threshold for the determination of the fairness of termination of employment is according to the provisions of section 45 (2) of the Employment Act to wit:- ‘45(2) A termination of employment by an employer is unfair if the employer fails to prove—(a)that the reason for the termination is valid(b)that the reason for the termination is a fair reason—(i)related to the employees conduct, capacity or compatibility; or(ii)based on the operational requirements of the employer; and(c)that the employment was terminated in accordance with fair procedure.’’ To pass the fairness test the termination must pass the substantive (in terms of reasons) fairness and the procedural fairness under section 41 of the Employment Act (see Walter Ogal Anuro v Teachers Service Commission [2013] eKLR). 25.The appellant’s case was that the respondent gave him an employee undertaking and lien form for him to sign, but he had concerns about some clauses in the lien form. After he hesitated to sign the lien form, the respondent terminated his employment. The appellant stated that he was not issued a notice of termination (pages 8-9 of the ROA were cited). He produced the said employee undertaking lien form (at pages 13-15 of the ROA). The appellant also issued a demand notice through their advocate and presented it as evidence. In his witness statement, the appellant stated that he was instructed to sign and return the lien form by 31st December 2019. He requested a meeting with the chairman and manager of the respondent to clarify the documents, but instead, they threatened him with dismissal for failing to sign. On 31st December 2019, he reported to work as usual, and upon arrival, the manager called him to the office, where he met the chairperson. They asked for the signed form. The appellant replied that he had not signed it because he did not understand the content. The manager and chairperson told him he was dismissed and instructed him to pack his belongings, as his services were no longer required. (See page 36 of the ROA for the appellant’s witness statement). 26.The respondent filed an amended statement of response and counterclaim opposing the claim and, among other points, contended that if any Employee Undertaking Lien was issued to the appellant, it was done in good faith and did not at any time lead to the respondents terminating the services of the claimants (response and counterclaim at pages 58-60 of ROA). The witness statement of Benjamin Mawali Kiluva for the respondent provided further details, stating that it was indeed true the appellant was issued with the lien form as a measure to secure and prevent future losses to the company. Each employee was given two weeks, ending 16th December 2019, to return the form, having signed or highlighted any problematic clause. The appellant did not return the form by the due date and subsequently absconded from work. Kiluva alleged that in the first week of December 2019, he was tasked with meeting employees and explaining the steps being taken to secure deposits and client resources within the organisation. He stated that he complied, and all other employees returned the forms. He also mentioned a board meeting on 20th January 2020 where the appellant’s conduct was discussed, and a show cause notice was issued; however, the appellant declined to accept service or to sign as proof. He further stated that the appellant never raised any grievance regarding the form. His services were not terminated; rather, he chose to walk away (pages 33-34 of ROA). 27.During cross-examination, the appellant reiterated his statements in his witness statement, asserting that he never signed the lien form because he did not understand it and it was never explained to him. The appellant told the trial court that he was not issued a termination letter. He denied failing to report for duty. He was referred to the check-in and check-out register. He explained to the trial court that he only signed in as the registers were taken away around 10 am, and he worked until late. (See proceedings at pages 105 of ROA). In re-examination, the appellant told the trial court that management kept the registers and that, when he arrived late, he was not reprimanded for lateness or for leaving early. (See page 106 of ROA). 28.Conversely, the respondent’s witness, Mr Kiluva, stated at cross-examination that he explained the lien form to the appellants, but they did not sign it within the two weeks as required. He also mentioned that they issued the appellants with documents, which they refused to sign. The court assumed this was for the show cause. He further told the trial court that they did not issue a certificate of service. He claimed that the appellants absconded from work, and therefore, certificates of service could not be issued. The court, upon perusal, only found the list of documents. It was also given the original trial court file and managed to find all the documents that were produced. 29.The trial court held as follows- ‘I have carefully considered the evidence adduced herein. It is clear that the respondent did offer the claimant an opportunity to work in its establishment. The claimant has a duty to abide with the respondents requirements. It was not for him to elect what to abide with. He cannot therefore cry foul that his services were unfairly terminated. The respondent had a right to secure its services there is nothing peculiar in the contents of employee undertaking and lieu form. A look at it reads that the employee were required to covenant themselves to certain norms of the organisation and I hold that if they were uncomfortable they had a right to decline the offer. I find that the claim herein is unmerited and has not been proved.’ 30.The respondent submitted that as the first Appellate Court, this Honourable Court enjoys a fairly broad jurisdiction to re-examine and re-evaluate the record and reach a just conclusion. Nonetheless, the jurisdiction must be exercised carefully being mindful that the Court neither had the benefit to see nor hear the witnesses testify. The foregoing position was emphasised in the celebrated case of Peters v Sunday Post Limited [1958] EA 424 as cited with approval in Mayaka v Atieno & another (Suing as the Administrators & Personal Representatives of the Estate of George Yalo Madar - Deceased) [2026] КЕНС 8296 (KLR) in the following terms: "i. First, on first appeal, the Court is under a duty to reconsider and re-evaluate the evidence on record and draw its own conclusions; ii. In reconsidering and re-evaluating the evidence, the first appellate court must bear in mind and give due allowance to the fact that the trial court had the advantage of seeing and hearing the witnesses testify before her; and iii. It is not open to the first appellate court to review the findings of a trial court simply because it would have reached different results if it were hearing the matter for the first time" We submit, therefore, that this Honourable Court is properly clothed with the jurisdiction to consider not only the issues raised in this appeal but also the record of the lower court, including but not limited to what the witnesses for each party presented in support of their respective cases. The responded urged the court to make due allowance to the fact that it never saw nor heard the witnesses testify. In light of the foregoing, the respondent urged the court to dive into the record as guided by the judgement of the Learned Magistrate for it to make a just conclusion. I find the decision consistent with Selle v Associated Motor Boat Co. [1968] EA 123 cited above. The appellant’s submissions 31.The trial court in its judgment held: -“It was not for him to elect what to abide with… if they were uncomfortable, they had a right to decline the offer”. It found the claim “unmerited” because Appellant refused to sign the undertaking/lien form. That from the said holding by the trial court, there was thus an error of law: This misdirects on Section 45 of Employment Act 2007. Termination is unfair if employer fails to prove both substantive justification and procedural fairness as per Sections 41 and 43. Refusal to sign a new contract with “certain norms” imposed 3 years after employment is not misconduct on the part of the Appellant. It amounts to unilateral change of terms therefore equating to a constructive dismissal. The Employer did not explain to the Appellant as to what document was and how it would affect their service. The employer must prove a valid reason under Section 43 of Employment Act 2007. The court here never analyzed whether signing a “lien” was a lawful instruction. Further the trial court was in clear error of fact when it held as follows, “there is nothing peculiar in the contents” yet admits the document “bore no claimant name”. That’s fatal as it is trite that a document not specifically personalized to the Appellant cannot bind him. The trial court failed to evaluate that defect. The court ought to have given substantive reasons supported by the law as to its findings. The trial court in its judgment admitted that there was no notice of termination issued to the claimant. The court also notes that the Appellant testified he was not issued with a notice of termination. Section 41 of Employment Act 2007 mandates specific steps before termination; Explanation, Hearing, Representation, Notice, Right to appeal before termination. None was done in the present case. The court completely ignored the quoted section in its entirety. That alone makes termination unfair as was held in the case of CMC Aviation Ltd vs Mohammed eKLR. Further, the trial court shifted burden to prove fairness to the claimant by holding that the claimant has a duty to abide… and he cannot cry foul. The burden to prove fairness lies on the employer under Section 47(5) of Employment Act 2007. It is crystal clear that the Respondents never demonstrated they gave Appellant a hearing before termination in December 2019. The Respondents never issued any Notice to Show Cause if what they want the Court was true. They should demonstrate that they were fair and that they followed the procedure as laid down in the Employment Act. The Respondent’s submissions 32.The Respondent submitted on whether the Learned Magistrate properly appreciated the issues in contention with respect to the Appellant's Claim. That the issue is be relevant as it is evident from the Appellant's Memorandum of Appeal and submissions in support thereof that the Appellant doubts whether the Learned Magistrate appreciated the issues raised in his Claim by allegedly applying a blanket dismissal of all the prayers. Nothing can be further from the truth! As rightly acknowledged, though selectively reproduced, in the first sentence of paragraph 8 of the Appellant's Written Submissions before this Court, the Learned Magistrate was concerned about the Appellant's defiant conduct. We hasten to add that far from what the Appellant herein wants this Honourable Court to believe, the quoted text does not emanate from a single sentence but rather a continuous analysis of evidence and probabilities. Be that is as it may, it is our humble submissions that an holistic reading of the quoted portions of the judgement suggests that the learned Magistrate was mainly balancing between the Appellant's claim that he was terminated for his confessed refusal to sign the Employee Undertaking and Lien on the one hand, and his failure to demonstrate attempts to seek clarification and/or adequately challenge the 1st and 2nd Respondents' testimony that all staff members were invited for an engagement meeting in the 1st week of December, 2019 where the contents and purpose of the form were explained and that he wilfully deserted work on the other. Logically, a party who chooses to abscond duty in defiance and/or refusal to co-operate with their employer in the exercise of their managerial prerogatives, including efforts to secure their organization's legitimate interests and wellbeing cannot defy an employer's bona fide invitation to a disciplinary meeting and later seek compensation by relying on fabricated facts. Moreover, there was adequate evidence that the Appellant was properly advised on the content of the document and given ample time to consult. In fact, it was his testimony that he allegedly received the impugned forms sometimes in October, 2019 and was only asked whether he had signed them on 31st December, 2019. If the foregoing were to be taken to be true, didn't the Appellant have ample time to consult and even seek legal advice on the same? He did. It is our submissions that the exercise of the 1st and 2nd Respondents managerial prerogative to introduce the Employee Undertaking and Lien was justified, procedural and lawful. As held by Justice Onesmus Makau in the case of Ayub Imbira v Teachers Service Commission [2018] KEELRC 1343 (KLR), “the court does not exist to muzzle the employers from exercising their managerial prerogative for their best interest so long as they act within the confines of the law," Guided by the foregoing legal principle, the learned Magistrate correctly found that '‘there [was] nothing peculiar in the contents of the Employee Undertaking and Lien form, and concluded that the Appellant's discomfort with the terms was unjustified and self-imposed. Perhaps the Appellant was apprehensive that some loop holes that he had exploited for his personal gain in the past would be exposed and tied if he signed the form. The only conclusion is that he was uncomfortable with the legitimate goals of the 1st and 2nd Respondents Association requiring him to sign the undertaking and chose to fire himself- resign by conduct. It is, therefore, our submissions that the learned Magistrate properly appreciated the issues that were in contention before him as well as the evidence presented by both Parties, and therefore arrived at a sound conclusion of fact and law. That the Appellant had the opportunity to respond to the issues raised in the Notice to Show Cause letter and, if he deemed it necessary, communicate his legitimate concerns with respect to the Employee Undertaking and Lien. He, however, chose not to. As held by your sister Lady Justice M. Mbaru in Omusundi v Kitui Flour Mills Limited [2025] KEELRC 2664 (KLR), failure to respond to a show cause letter bars an employee from later claiming that their employment rights have been breached. On the other hand, as held in Bernard E.N. Gachuri v Jamii Bora Bank Limited [2020] KEELRC 606 (KLR), the 1st and 2nd Respondents satisfied their obligations under section 41 of the Employment Act, 2007 when they invited the Appellant to explain his absence. The above position was clearly outlined in the case of Jackson Butiya v Eastern Produce Cause 335 of 2011 as cited with approval by Lady Justice M. Mbaru in Duncan Ndegwa Muriuki v Lasit Limited [2018] KEELRC 137 (KLR) as follows: "An employee who squanders the internal grievance handling mechanisms provided by an employer cannot come to Court and say 'I refused to talk with those people and therefore I was not heard, order them to pay me." It is not the role of the Court to supervise the internal grievance handling processes between employers and employees. The role of the Court is to ensure that such processes are undertaken within the law. The procedural fairness requirements set out under Section 41 of the Employment Act, 2007 are fulfilled by asking an employee facing disciplinary proceedings to respond to a show cause letter and to attend an oral disciplinary hearing. The employee is not at liberty to decline to respond to the allegations levelled against them and if they have any issues with the process, they must raise them directly with the employer within the timelines provided." Accordingly, the conduct of the Appellant frustrated the course of the 1st and 2nd Respondents disciplinary procedures under Section 41 of the Employment Act, when he failed to respond to the Notice to Show Cause within the stipulated timelines. In such a case, it was impossible to hear the Appellant leave alone issue him with a termination notice. Furthermore, these proceedings were commenced before the disciplinary processes even proceeded. That such an employee cannot claim that they were terminated unfairly when the disciplinary proceedings stopped at the issuance of a letter to show cause, thanks to their uncooperative conduct. Furthermore, the Appellant in cross-examination informed the learned Magistrate that he believed he was 'dismissed for demanding appointment letters.' (see page 105 of the Record of Appeal). The above assertion was a fundamental departure from his earlier claim that he was dismissed for allegedly refusing to sign the Employee Undertaking and Lien, which he purportedly did not understand its content. Surely, the Learned Magistrate cannot be faulted for disregarding the Appellant's foregoing unsubstantiated and inconsistent evidence. What is consistent is the fact that the Appellant for reasons best known to him absconded work and further frustrated the 1s and 2nd Respondents' efforts to reach out to him and even failed to respond to the Notice to Show Cause. It is our further submission that having correctly determined that the claim for unfair termination was unproven, the learned Magistrate was also right to dismiss the Appellant's prayers i, iv, vi and vii together with interests, which are only available as remedies for wrongful termination as provided for under Section 49(1) of the Employment Act and not to an employee who wilfully deserted work and frustrated the efforts of his employer to subject him through a disciplinary process. 33.The court, having evaluated the evidence before the trial court and perused the submissions of the parties, established that contrary to the finding of the trial court, the proposed lien was onerous and not a regular managerial prerogative. The term ‘onerous’ is defined under the Black Law Dictionary (Garner, 10th Ed) as ‘excessively burdensome or troublesome, causing hardship, having or involving obligations that outweigh the advantages’. To evidence of onerous terms is found in clause 10 of the proposed lien, where the appellant was asked to pledge his assets and execute the lien by depositing the original titles of pledged assets for existing and future debts, and the employer was at liberty to dispose of the assets. Clause 12 required the appellant to agree to create a valid charge over the pledged assets in favour of the employer and to pay fees for the related charges. This was very onerous and unjustified. It sought to place a burden on the appellant beyond the normal employment requirements, amounting to a material change of terms of service. The court finds that the lien terms amounted to a repudiation of the employment agreement. The court concludes that the trial court erred both in fact and law in failing to recognise the lien contract as onerous to extend of repudiating the contract. The appellant had valid reasons to decline to sign the lien form, as it materially sought to amend the terms of service. 34.The court found no evidence that the show cause letter was served. The respondent's witness stated that the appellant refused to accept service. The appellant claimed the show cause was not issued. Consequently, the respondent bore the burden of proving service since the document was produced in court as Exhibit 2. The show cause letter was dated 28th January 2020 and was not included in the record of appeal. The court reviewed the original trial court file. The letterhead of the show cause letter was from Krep Fedha Services Ltd and addressed to Mukuyuni Financial Services Association, PO box 76-90301, which was indeed received by the association. It was thereafter addressed to the appellant, indicating he had been away from work without permission from 2nd January 2020. The court then questioned how the letter could be addressed to his place of work if the appellant had been away. There was no evidence that the show cause letter was served on the appellant. Moreover, the respondent’s response contradicted the show cause letter by stating that the appellant absconded from duty from 16th December 2019, whereas the show cause letter indicated 2nd January 2020 (witness statement of Kiluva at page 67 of ROA). The court concluded that it was not proved on a balance of probabilities that the appellant received the show cause letter, and therefore, his account of events, that he was asked to leave on 31st December 2019 (PAGE 36 OF ROA), prevailed. 35.The Court holds that the Respondent ought to have invoked provisions of section 41 of the Employment Act to terminate the services on the grounds of the alleged absconding. This was not done. The employer did not issue a letter of termination and a certificate of service. The court sets aside the decision of the trial court and holds that the proposed lien was onerous and amounted to repudiation of the employment contract. It introduced major changes to terms of service. That the termination was not proved to be on the basis of absconding but failure to sign the impeached lien document. There was no procedural fairness. The termination is held as unlawful and unfair. The termination of employment can only be on grounds as per section 45 of the Employment Act to wit- ‘45(2) A termination of employment by an employer is unfair if the employer fails to prove—(a)that the reason for the termination is valid(b)that the reason for the termination is a fair reason—(i)related to the employees conduct, capacity or compatibility; or(ii)based on the operational requirements of the employer; andc)that the employment was terminated in accordance with fair procedure.’’ The court holds that the failure to sign the onerous lien form was not a valid reason for termination. Whether the appellant was entitled to the relief sought 36.The appellant submitted that the trial court dismissed everything as “unmerited and not proved” without analysing any single head. The court never stated why the pay slip/attendance register were rejected. That violates duty to evaluate evidence as was held in the case of Joseph Gichuhi vs W.M. Trucking eKLR. The court established the trial court did not evaluate the claim on the termination benefits and proceeds to do as the 1st appellate court. 37.The court held the termination was unlawful and unfair. The appellant was entitled to Notice payment in lieu. Notice pay is due under section 35 of the Employment Act and is awarded for 1 month, Kes. 26,348 38.Unpaid leave days- whereas the employer did not provide evidence to prove having granted annual leave as the custodian of records, the claim is limited to 18 months under section 28(4) of the Employment Act - ‘The uninterrupted part of the annual leave with pay referred to in subsection (3) shall be granted and taken during the twelve consecutive months of service referred to in subsection (1) (a) and the remainder of the annual leave with pay shall be taken not later than eighteen months from the end of the leave earning period referred to in subsection (1)(a) being the period in respect of which the leave entitlement arose.’ Thus leave is awarded in lieu for 18 months Kshs 39,522/- 39.Overtime- the appellant testified that he only signed in. He also said no action was taken when he came late or left early. On the basis of the appellant’s testimony, the court finds that overtime being special damages was not proved. The burden lies with the employee to prove extra hours worked beyond the normal 52 hours per week . The claim for overtime is disallowed. In Rogoli Ole Manadiegi V general Cargo Services Limited (2016) eKLR, the Court stated as follows: ‘It is true the Employer is the custodian of employment records. The Employee, in claiming overtime pay however, is not deemed to establish the claim for overtime pay by default of the Employer bringing to Court such employment records. The burden of establishing hours or days served in excess of the legal maximum, rests with the Employee. The Claimant did not show in the Trial Court when he put in excess hours, when he served on public holidays or even rest days" 40.Service pay- The appellant produced his payslip which had item of NSSF I find the service pay is not payable under section 35 (5) as read with (6) of the Employment Act to wit- ‘An employee whose contract of service has been terminated under subsection (1)(c) shall be entitled to service pay for every year worked, the terms of which shall be fixed.(6)This section shall not apply where an employee is a member of—(a)a registered pension or provident fund scheme under the Retirement Benefits Act;(b)a gratuity or service pay scheme established under a collective agreement;(c)any other scheme established and operated by an employer whose terms are more favourable than those of the service pay scheme established under this section; and(d)the National Social Security Fund.’’ 41.Compensation – the appellant sought compensation for unfair termination equivalent of 6 months. He told the court he was not issued an employment contract. He pleaded in a witness statement adopted as evidence in chief that he was employed in January 2016 as a credit officer but was not issued with a contract. Indeed he raised the issue as one of his employment grievances. I did not find contest on the employment. The termination was in December 2019 . That is 3 years of service. The appellant’s service was interpreted by the introduction of onerous terms of service being the lien requirements, which the court found repudiated the agreement of service. There was no record of a previous disciplinary issue. There was no procedural fairness. Applying the foregoing factors as per section 49(4) of the Employment Act, I find the compensation equivalent of 6 months' salary sought as fair. It is so granted. Counterclaim 42.The respondent submitted as follows-In their Further Supplementary List and Bundle of Documents dated 6th October, 2021 annexed at pages 63-66 of the Record of Appeal, the 1st and 2nd Respondents annexed copies of Loan Ledgers of Reference No. 11324, showing instalments due for Loan No. MU/075978 and MU/115922, being Kshs. 5000 and 2500, respectively, which totals to Kshs. 7500. In his testimony in cross-examination, the Appellant conceded to owing the Respondents a loan of Kshs. 7500. That it is evident that the 1st and 2nd Respondents adequately discharged their burden of proof and the learned Magistrate has therefore unfairly been accused of erring to uphold their counter-claim. 43.Conversely the appellant submits-Whether the court erred in awarding Respondents’ counter-claim without strict proof. the lower court entered judgment for Respondents in the sum of Kshs 7,500 plus interest on loans allegedly advanced in December 2018 and February 2019. No material preposition was advanced by the Respondent in support. In his pleadings and evidence, the Appellant denied the loans and “put them to strict proof”. The Respondent’s oral testimony alone, without loan agreements, disbursement vouchers, or statement, is insufficient proof to hold existence and advancement of loan to the Appellant. The trial court plainly applied wrong standard. In employment matters, counter-claims must be proved strictly. The lower court also failed to set-off terminal dues against alleged debt. 44.The court on perusal of the proceedings found the appellant admitted owing the 1st respondent Ksh. 7,500 as unpaid loan. I uphold the award on the counterclaim. Conclusion 45.In the upshot, the counterclaim Decree is upheld. The appeal is allowed with respect to the suit. The Judgment and Decree of the Hon. P.N. Gesora (CM) delivered on 24th April 2025 in Makueni MCELRC No. 3 of 2025 is set aside as relates to the main claim and substituted as follows-Judgment is entered for the claimant against the respondents as follows-a.Notice Payment in Lieu -Kes 26,348/-b.Untaken leave in lieu equivalent of 18 months Kes39,522/-c.Compensation for unfair termination equivalent of 6 months’ salary Kes 158,088/-Total sum awarded Kes 223,958/-d.Costs and interest at the court rate from judgment date.e.Judgment is entered in the counterclaim for the respondent against the claimant Kshs. 7,500/- with interest at court rate from the date of filing suit and costs of the counterclaim to be set off the sum payable in the claim above. 46.This was the test file. The judgment applies in determination of Machakos ELRC Appeals Numbers E025, E027, E028, E029 AND E030 all of 2025. 47.Stay of 30 days is granted. 48.It is so Ordered. DATED, SIGNED, AND DELIVERED IN OPEN COURT AT MACHAKOS THIS 17TH DAY OF JULY, 2026.JEMIMAH KELI,JUDGE.In The Presence Of:Court Assistant: OtienoAppellant – MulandiRespondent – Otieno h/b Kithi