https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/1675

Mutuku v Soluxe International Group of Hotels & another (Cause E224 of 2024) [2026] KEELRC 1675 (KLR) (19 June 2026) (Judgment) Neutral citation: [2026] KEELRC 1675 (KLR) Republic of Kenya In the Employment and Labour Relations Court at Nairobi Cause E224 of 2024 CN Baari, J June 19, 2026 Between Elizabeth Mutuku Claimant and Soluxe International Group of Hotels 1st Respondent Zijing Greatwall (K) Travel Company Ltd 2nd Respondent Judgment Introduction 1.For determination is the Claimant’s Amended Memorandum of Claim dated 20th November, 2024, wherein the Claimant seeks the following reliefs as against the Respondents: -i.A Declaration that the 1st Respondent’s actions violated the Claimant’s rights under the contracts of serviceii.A Declaration that the termination of the Claimant’s contract on grounds of redundancy was procedurally and substantively unfairiii.Damages for unfair treatment and breach of contractiv.An order directing the 1st Respondent to issue the Clamant with a Certificate of Servicev.Damages for unfair termination assessed at 12-months pay, being, Kshs.840,000/=vi.One Month’s pay in lieu of Notice, being Kshs. 70,000/=vii.Severance pay for the three (3) years of service, being Kshs. 105,000/=viii.Commission on Sales being Kshs. 11,200/=ix.Compensation for Leave days not taken being Kshs. 400,400/=;x.Interests on (e), (f), (g), (h), and (i) above at Court Rates until payment in full, and the costs of the suit. 2.The Claimant replicates the above reliefs against the 2nd Respondent. 3.The Respondent initially filed a Response to the Claim dated 23rd April, 2024, and later an amended Response to the Claim dated 6th March 2025, denying the Claimant’s Claim. 4.The Claimant’s case was heard on 13th October, 2025, when the Claimant (CW1) testified in support of her case. She adopted her witness statement dated 20th November, 2024, and produced her list and bundle of documents of even date as exhibits in the matter, and which were marked as Claimant’s exhibits Nos. 1-6. 5.The Respondent’s case was heard on 25th February, 2025, when the Respondent’s witnesses, Elly Magero (RW1) and Jacob Oluoch Jabuto (RW2) testified in support of the Respondent’s case. They adopted their witness statements dated 24th March, 2025, as their evidence in chief. 6.Submissions were received from both parties and have been considered. The Claimant’s case 7.The Claimant states that the Respondents are sister companies operating from the same premises and sharing common directors, shareholders, and company secretary, as evidenced by the CR12 documents contained in her bundle of documents. 8.She avers that on or about 1st February 2021, she was jointly employed by the Respondents as an Accountant after accepting their offer of employment and executing the respective service agreements/contracts of service. It is her case that under the service agreements, she earned a net monthly salary of Kshs. 70,000 from each Respondent, exclusive of bonuses. 9.The Claimant further states that her duties as an Accountant, as stipulated in Clause 2 of the service agreements, included carrying out the accounting and financial management responsibilities assigned to her by the Respondents. 10.The Claimant avers that she was responsible for maintaining proper financial records and documentation, accurately recording expenditures in ledger books, safeguarding receipt books, cheque books, and other financial documents, ensuring all payments were supported by relevant documentation, processing staff payroll in a timely manner, preparing accurate billing and invoices, and undertaking any other duties assigned by the Respondents. 11.The Claimant contends that she discharged her duties diligently, honestly, and competently despite working in challenging circumstances created by the Acting Directors, Zhang Chunjiang and Shi Chao Ran. She avers that the Acting Directors were appointed by the Principal Director, Mr. Lei Jiang, solely to oversee the operations of the two companies in his absence, but they exceeded the scope of their delegated authority by assuming powers, duties, and functions reserved exclusively to the Principal Director. 12.The Claimant states that she repeatedly objected to these actions and, as a result, was subjected to threats of termination and other adverse repercussions for raising her concerns. 13.The Claimant further states that the Acting Directors engaged in several unauthorized and unlawful activities beyond the scope of their authority, including falsifying the employees’ PAYE obligations to facilitate tax evasion, directing her to receive company funds into her personal account for onward transfer to their personal M-Pesa accounts, and requesting the forgery of signatures of the Respondents’ bank signatories for documents required during the annual bank review. 14.It is her case that the Acting Directors manipulated annual audit accounts to reflect losses with the intention of evading taxes and falsified records relating to fire extinguishers by forging service providers’ handwriting and altering the expiry dates. The Claimant maintains that she objected to and resisted participation in these alleged irregularities. 15.The Claimant avers that on 26th February 2024, she was instructed by one of the Acting Directors, Mr. Zhang Chunjiang, to provide copies of all employees’ contracts, including her own, which she duly did. She avers further that on the same day, she was further directed to prepare employment contracts for staff who had not yet received them and to interview and recruit two new waitresses for the 1st Respondent, tasks which she successfully completed. 16.She further states that after completing her duties on 29th February 2024, she was summoned to a meeting with the Acting Directors and informed that her employment had been terminated with immediate effect. She avers that she was subsequently issued with an unsigned termination letter indicating that the reason for termination was redundancy. 17.It is her case that the following day, 1st March 2024, she received an executed termination letter via email formally confirming the termination of her employment on grounds of redundancy. 18.The Claimant contends that the Respondents failed to comply with both the substantive and procedural requirements governing termination on grounds of redundancy. She maintains that she was neither given prior notice of the intended redundancy nor afforded an opportunity to be heard or respond before the decision to terminate her employment was made. 19.The Claimant further maintains that the purported redundancy was merely a pretext for her dismissal and was motivated by her persistent objections to the unauthorized and unlawful actions of the Acting Directors. 20.The Claimant asserts that the redundancy was predetermined, unfair, and intended to remove her from employment without lawful justification. She further avers that the termination was carried out in disregard of the principles of natural justice, fair labour practices, and the statutory requirements applicable to redundancy, rendering the termination both procedurally and substantively unfair. 21.The Claimant further avers that she had a legitimate expectation of continuing in the Respondents’ employment under fair and reasonable working conditions, an expectation which she contends was unjustifiably defeated by the Respondents’ actions. She asserts that the decision to terminate her employment was motivated by malice and discrimination stemming from her opposition to the Acting Directors’ misconduct. 22.The Claimant also states that, at the time of termination, the Respondents had failed to settle several employment-related dues, including her salary for February 2024 from the 1st Respondent, accumulated salary arrears allegedly owed by the 2nd Respondent for a period of three years, sales commissions due from both Respondents, annual leave arrears from the 2nd Respondent, and compensation for accrued but untaken leave days from the 1st Respondent. 23.Consequently, the Claimant urges the Court to find that the redundancy was unfair, unlawful, and wrongful, and to award her the maximum compensation available for unfair termination. 24.On cross-examination, the Claimant told the court that she was employed by the 1st Respondent and that she had no evidence that she was also employed by the 2nd Respondent. She further stated that the screenshots produced in evidence were her evidence of manipulation, but that she had no evidence of discrimination. 25.The Claimant further confirmed on cross-examination that the employment contract she had was with the 1st Respondent and had none with the 2nd Respondent. 26.It is her position that she did not attend the meeting where the potential redundancy was communicated. 27.Under re-examination, the Claimant told the court that although she had no contract with the 2nd Respondent, she worked for both companies and that the 2nd Respondent was supposed to issue her a formal contract, but it did not. 28.The Claimant finally prays that the Court allow her claim as drawn. The Respondent’s Case 29.It is the Respondents’ case that the Claimant was indeed issued with a termination letter, as stated in paragraph 3 of his Memorandum of Claim. The 1st Respondent also admits the allegation in paragraph 7 of the Amended Memorandum of Claim and further states that all duties and responsibilities assigned to the Claimant were stored in or reflected through the work computer/laptop that had been provided to her by the 1st Respondent. 30.The 1st Respondent states that the Claimant performed her duties, but denies the assertions that the duties were performed diligently, honestly, and skilfully, or that the Claimant worked under difficult and frustrating circumstances allegedly caused by the Company’s Acting Directors, Zhang Chunjiang and Shi Chao Ran. 31.The 1st Respondent asserts that it has only ever had one director, Mr. Jiang Lei, and no other directors. It further states that it is not involved in the management or operations of Zijing Greatwall (K) Ltd and that its auditing services are outsourced. 32.The 1st Respondent denies the allegations contained in paragraph 9 of the Amended Memorandum of Claim and maintains that there have never been any Acting Directors within the company. It states that all decisions are made by the sole director, Mr. Jiang Lei, with the concurrence of the majority shareholder. 33.The Respondent states that Zhang Chunjiang, Shi Chao Ran, Feng Jiaqi, and Guo Pingtai were not employees of the Respondent, and is unable to comment on the status of their visas. 34.It is the 2nd Respondent’s position that if the Claimant was aware of the alleged forgeries, then she ought to have reported them as a whistleblower to the relevant banking fraud investigation authorities. The 2nd Respondent further avers that, rather than reporting the alleged misconduct, the Claimant became complicit in and an accessory to the alleged wrongdoing, given that she was responsible for maintaining the 1st Respondent’s bookkeeping and financial records. 35.The Respondent nevertheless maintains that it is a stranger to the allegations concerning the alleged forgeries. 36.The Respondent maintains that the Claimant’s employment was terminated on account of redundancy and that the redundancy process complied with the provisions of the Employment Act. 37.The Respondent further states that the recruitment of employees was undertaken solely by the named Director and not the Claimant as alleged. The 1st Respondent similarly states that it is a stranger to the allegation that the Claimant did not receive her salary for February, and therefore does not admit the claim. 38.The 2nd Respondent reiterates that the Claimant was never its employee. The Respondents further contend that, in light of their preceding averments, they bear no liability to the Claimant whatsoever. 39.The Respondents argue that the Claimant has disclosed no cause of action against them and that the present suit is therefore an abuse of the court process. 40.On cross-examination, RW1 told the court that the 1st Respondent’s employees were called to a meeting on 28th January, 2024, where they were informed of the impending redundancy, but could not confirm whether the Claimant attended the meeting. 41.It is his position that he was unsure if minutes of the meeting were recorded, confirming that the meeting had no secretary and further stating that what was done was just an announcement. 42.RW1 further testified that he was unsure if the Claimant was issued with a redundancy notice, as he was not the one who served the redundancy notices. 43.It is his assertion that the Respondent’s business was low, which position informed the redundancy. It is his position that the Claimant was the only accountant and was the only one declared redundant. 44.The witness further confirmed that he personally did a notice to the labour officer on the redundancy on 29th January, 2024. He confirmed that although the 1st and 2nd Respondents are sister companies, they operated from different locations and different managers. 45.RW2, in his testimony, told the court that he is aware that a meeting was convened on 28th January, 2024, where the 1st Respondent communicated to the employees that business was low and that some departments would be affected. He confirmed, however, that he did not know how the departments affected by the redundancy were determined. 46.RW2 told the court that the Claimant attended the meeting. 47.It is RW2’s evidence that he knew the 2nd Respondent and that it is located within the 1st Respondent’s hotel, hence the two Respondents are indeed located in the same building. 48.The Respondents pray that the Claimant’s claim be dismissed. Analysis and Determination 49.From the pleadings, evidence, and the parties’ submissions, the following issues arise for determination:i.Whether the Claimant was an employee of the 2nd Respondent.ii.Whether the termination of the Claimant’s employment on account of redundancy was substantively and procedurally fair.iii.Whether the Claimant proved discrimination, victimization, retaliation, or breach of her constitutional and statutory rights.iv.Whether the Claimant is entitled to the remedies sought. Whether the Claimant was an employee of the 2nd Respondent 50.The Claimant’s assertion is that she provided services for both the 1st and the 2nd Respondent, while the 2nd Respondent denied ever employing the Claimant. The Claimant bore the burden to establish the existence of an employment relationship with both Respondents. 51.The Claimant's own evidence substantially undermined her case against the 2nd Respondent. During cross-examination, she expressly admitted that she had no contract of employment with the 2nd Respondent and possessed no evidence that she had been employed by it. Although she later stated during re-examination that she worked for both companies, this assertion remained unsupported by documentary evidence, including appointment letters, salary records, statutory deductions, bank transfers, correspondence, or express instructions issued by the 2nd Respondent. 52.Further, the mere fact that the two companies were sister companies operating from the same premises does not automatically create a joint employment relationship. Separate corporate entities retain distinct legal personalities unless exceptional circumstances justify lifting the corporate veil. 53.The Court of Appeal in Victor Mabachi & Another v Nurtun Bates Ltd [2013] KECA 204 (KLR), reaffirmed the principle that a limited liability company is a separate legal entity distinct from its shareholders, directors, and affiliated companies. 54.Accordingly, I find and hold that the Claimant failed to establish on a balance of probabilities that she was employed by the 2nd Respondent. 55.The Claimant’s entire claim against the 2nd Respondent therefore fails and is dismissed. Whether the termination of the Claimant’s employment on account of redundancy was substantively and procedurally fair. 56.Section 43 of the Employment Act requires that an employer prove the reason for termination, while Section 45 requires the reason to be valid and fair. The 1st Respondent's position is that its business had declined and consequently the position of accountant was declared redundant. 57.The evidence of RW1 and RW2 was consistent that the Respondent was experiencing low business volumes. The Claimant, on her part, did not produce evidence demonstrating that the business downturn was fictitious, even when she held the crucial position of the entity’s accountant. 58.A redundancy is defined under Section 2 of the Employment Act as loss of employment through no fault of the employee where the services of an employee become superfluous. In Thomas De La Rue (K) Ltd v David Opondo Omutelema [2013] KECA 492 (KLR), the Court held that employers retain the managerial prerogative to reorganize their businesses and abolish positions provided the redundancy is genuine and lawful. 59.Although the Claimant alleged that the redundancy was merely a pretext to remove her for objecting to unlawful activities, no independent evidence was produced to prove the alleged victimization. The screenshots relied upon did not establish a causal connection between her complaints and the decision to declare her position redundant. 60.Similarly, the Claimant’s allegations concerning forged signatures, tax manipulation, visa irregularities, and audit improprieties were not supported by documentary or expert evidence. There was also no evidence of any complaints to investigative agencies, statutory authorities, or regulators placed before the court. 61.In the circumstances, I find and hold that the Respondent established a valid operational reason for the redundancy. 62.On procedural fairness, even where a redundancy is genuine, the employer must strictly comply with Section 40 of the Employment Act. The Court of Appeal in Kenya Airways Limited v Aviation & Allied Workers Union Kenya & 3 Others [2014] eKLR, emphasized that redundancy must satisfy both substantive justification and procedural fairness. 63.Likewise, in Thomas De La Rue (K) Ltd v David Opondo Omutelema (supra), the Court held that compliance with Section 40 in redundancy is mandatory. 64.The Respondent's evidence reveals several procedural deficiencies. Firstly, RW1 admitted that he could not confirm whether the Claimant was personally served with a redundancy notice, and the Claimant consistently testified that she received no prior notice of the redundancy. 65.Further, a general staff meeting does not substitute the statutory notice contemplated by Section 40(1)(b). In Thomas De La Rue (K) Ltd v David Opondo Omutelema (supra), the Court held that the notice contemplated under Section 40 is a formal notice directed to the affected employee and the labour officer. 66.On the statutory requirement for consultation, the Respondent relied on a meeting allegedly held on 28th January 2024. RW1, however, could not confirm whether the Claimant attended the said meeting, and no minutes of the meeting were produced in evidence. RW1 admitted that there was no secretary at the meeting to record minutes and described the meeting as merely an announcement. 67.Consultation is a fundamental component of a redundancy process. The Court of Appeal in Cargill Kenya Limited v Mwaka & 3 Others 2021] KECA 115 (KLR), emphasized that meaningful consultation is an essential aspect of a fair redundancy process. 68.An announcement of an intended decision is, in my considered view, not consultation. 69.On the selection criteria, the Respondent admitted that the Claimant was the only accountant and the only employee declared redundant. No evidence was presented to show that any criteria were applied, such as seniority, skill, ability, reliability, or alternatives to redundancy. 70.Section 40(1)(c) demands that an employer adhere to an objective selection criterion. The Court in Kenya Airways Limited v Aviation & Allied Workers Union Kenya & 3 Others (supra) stressed the necessity of a transparent and objective selection criteria, which the 1st Respondent obviously did not consider. 71.Finally, on the requirement to notify the labour officer, although RW1 stated that notice was issued to the Labour Officer on 29th January 2024, no documentary proof of service upon the Labour Officer was produced before the Court. As a matter of fact, the Respondent did not at all produce any documentary evidence in relation to the Claimant’s termination. 72.In light of the foregoing, I find and hold that the 1st Respondent failed to demonstrate full compliance with Section 40 of the Employment Act, 2007, which renders the Claimant’s termination on account of redundancy unlawful and unfair. Whether the Claimant has proved discrimination, victimization, and retaliation 73.The Claimant alleged that she was targeted because she opposed unlawful conduct by the acting directors of the 1st Respondent. However, apart from her oral testimony, no independent evidence linked the redundancy decision to her complaints. 74.Further, the Claimant expressly admitted during cross-examination that she had no evidence of discrimination. The Court in Rift Valley Railways (Kenya) Ltd v Hawkins Wagunza Musonye & Another [2016] eKLR held that allegations of discrimination must be supported by evidence and cannot rest on mere assertions. 75.I therefore find that the claims of discrimination, malice, victimization, and retaliation were not proved. Whether the Claimant is entitled to the reliefs sought Declaration of unfair redundancy 76.Having found that the 1st Respondent had a valid reason for redundancy but failed to comply with the mandatory procedural requirements of Section 40, I find that the termination was procedurally unfair and therefore unlawful. 77.The declaration sought therefore succeeds against the 1st Respondent. Compensation for unfair termination 78.Under Section 49(1)(c) of the Employment Act, the law mandates the Court to grant compensation of up to twelve months' salary. Considering that the Claimant served the 1st Respondent for approximately three years, that procedural safeguards were not observed by the employer in declaring redundancy, and that no evidence of misconduct was established against the Claimant, I deem an award of 10 months’ salary sufficient compensation for the unfair termination, and which is hereby awarded. One month's salary in lieu of notice 79.There is no evidence that the Claimant received the statutory one month's redundancy notice. She is thus entitled to one month's salary in lieu of notice. Severance pay 79.Section 40(1)(g) mandates severance pay at not less than 15 days' pay for each completed year of service. For the three completed years of service, the Claimant is entitled to severance pay, which is hereby awarded as prayed. Certificate of Service 80.Pursuant to Section 51 of the Employment Act, the 1st Respondent shall issue the Claimant with a Certificate of Service. Claims for commission, leave arrears, salary arrears, and leave compensation 82.. No sufficient records, computations, leave records, payroll records, or supporting documentation were produced to establish the pleaded sums. 83.These claims are therefore declined. 84.In the end, Judgment is entered for the Claimant against the 1st Respondent as follows:-a.A declaration be and is hereby issued that the Claimant’s redundancy was procedurally unfair and unlawful.b.That the 1st Respondent shall pay the Claimant 10 months’ salary as compensation for the unfair termination at Kshs. 700,000/=.c.That the 1st Respondent shall pay the Claimant one month's salary in lieu of notice at Kshs. 70,000/=.d.That the 1st Respondent shall pay the Claimant Severance pay at Kshs. 105,000/=e.That the 1st Respondent shall issue the Claimant a Certificate of Service within 14 days of this Judgment.f.That the 1st Respondent shall bear the costs of the suit.g.That all the monetary awards herein shall attract interest at court rates from the date of judgment until payment in full.h.That the claim against the 2nd Respondent is dismissed with no orders as to costs. 80.Judgment of the Court. SIGNED, DATED, AND DELIVERED BY VIDEO-LINK AND IN COURT AT NAIROBI THIS 19TH DAY OF JUNE, 2026.C. N. BAARIJUDGEAppearance:Mr. Mafumbo present for the ClaimantMr. Muriithi present for the RespondentsMs. Esther S- C/A