https://new.kenyalaw.org/akn/ke/judgment/kemc/2026/447

**REPUBLIC OF KENYA** **IN THE CHIEF MAGISTRATES COURT AT MOMBASA** **MAGISTRATES COURT CIVIL** **MCELRC CAUSE NO. E398 OF 2025** **HENRY MKILO MWAGHUMBA, BARACK MATHEW OTIENO & 7 OTHERS...……….….……...………………………………………………...…CLAIMANTS** **VERSUS** **MISTRY V NARAN MULJI & COMPANY LIMITED…………………….….RESPONDENT** **JUDGEMENT** **Introduction** 1. This is a claim arising from an alleged constructive dismissal. The Claimants instituted these proceedings through a Memorandum of Claim dated 7th March 2025 alleging that the Respondent unlawfully and fundamentally breached their respective contracts of employment by failing to pay their salaries from July 2022 until their resignation on 5th February 2025. They contend that the Respondent's conduct rendered the employment relationship intolerable, thereby forcing them to resign. They consequently seek various terminal dues together with compensation for unlawful termination. 2. The Respondent opposed the claim through an Amended Response denying liability. It maintained that some of the Claimants were permanent employees while others were casual labourers engaged only when work became available. According to the Respondent, the permanent employees voluntarily resigned whereas the casual engagements simply came to an end upon completion of the assignments. The Respondent denied withholding salaries, denied constructively dismissing the Claimants and prayed that the suit be dismissed with costs. 3. The matter proceeded under Rule 59 of the Employment and Labour Relations Court (Procedure) Rules, the parties having elected to rely on the pleadings, witness statements, documentary evidence and written submissions. No viva voce evidence was tendered. Consequently, this Court is obligated to evaluate the documentary record in its entirety and determine whether each party has discharged the respective legal burden imposed by law. **The Claimants' Case** 1. The Claimants' case is substantially contained in the Memorandum of Claim, their respective witness statements and written submissions. 2. Their common position is that they were employed by the Respondent on various dates in different capacities and continuously worked at the Respondent's premises situated at Ganjoni, Mombasa. Their dates of employment, designations and salaries were particularised in the schedules accompanying the Memorandum of Claim. 3. The Claimants pleaded that despite diligently discharging their duties, the Respondent ceased paying their salaries. They allege that the last salary they received related to July 2022 although the same was only paid on 14th February 2024. Thereafter, no salaries were paid until their resignation. 4. It was further pleaded that despite repeated demands, the Respondent refused to settle the outstanding salaries. They instructed N.A. Ali Advocates to recover the unpaid salaries but their efforts proved unsuccessful. The prolonged non-payment allegedly caused them immense financial hardship, humiliation, eviction from rented houses and inability to adequately provide for their respective families. 5. The Claimants further averred that throughout the period in question they continued rendering services to the Respondent but were never allowed to proceed on annual leave. They asserted that although NSSF contributions were remitted, the Respondent deliberately refused to pay salaries from July 2022 until their resignation on 5th February 2025. 6. Their case is that failure to pay salaries for approximately thirty-one months constituted a fundamental breach of the employment contracts which destroyed mutual trust and confidence and left them with no reasonable alternative but to resign. They therefore contend that their resignation amounted to constructive dismissal. 7. On the basis of the foregoing, they seek: One month's salary in lieu of notice; Salary arrears from July 2022 to March 2025; Payment for accrued leave; House allowance; Twelve months' salary as compensation for unlawful termination; Costs and interest. The Respondent's Case 1. The Respondent denied the claim in its entirety save for the description of the parties. The Respondent maintained that not all Claimants enjoyed similar terms of engagement. It pleaded that whereas some were permanent employees, others were casual labourers whose services were engaged only when contracts became available. Its construction business depended entirely upon work awarded by clients and consequently casual workers were engaged strictly on an as-needed basis. 2. It was the Respondent's case that casual labourers were paid their daily wages immediately upon completion of their assignments and that their engagement automatically ceased upon completion of each assignment. It therefore denied the existence of contracts capable of termination in relation to casual employees. 3. As regards permanent employees, the Respondent maintained that they voluntarily resigned and therefore could not subsequently maintain claims founded upon unfair termination or constructive dismissal. 4. The Respondent denied failing to pay salaries between July 2022 and March 2025. It asserted that the Claimants produced no documentary proof such as payslips, bank statements, M-Pesa statements or other evidence demonstrating prolonged salary arrears. It further relied upon KRA statutory records which, according to it, demonstrated continued statutory remittances into 2023. 5. The Respondent further denied liability for leave pay, notice pay, house allowance and compensation. It maintained that casual labourers were not entitled to annual leave, notice pay or compensation whereas permanent employees voluntarily resigned and therefore forfeited any entitlement to compensation for unfair termination. Accordingly, the Respondent prayed for dismissal of the suit with costs. **Documentary Evidence** 1. Since this matter proceeded under Rule 59, the Court has carefully considered all documents placed before it, including: 2. The Memorandum of Claim. 3. Individual Claimants' schedules. 4. Witness statements of the nine Claimants. 5. Copies of identity cards. 6. Employment and payroll records. 7. KRA statutory documents. 8. The Respondent's Amended Response. 9. Respondent's witness statement by Yunus Harun. 10. The written submissions filed by both parties together with the authorities relied upon. **Issues for Determination** 1. Having considered the pleadings, documentary evidence and submissions, the Court is of the respectful view that the issues arising for determination are: 2. Whether there existed contracts of employment between each of the Claimants and the Respondent. 3. Whether the Respondent proved that some Claimants were casual labourers while others were permanent employees. 4. Whether the Claimants proved that the Respondent failed to pay salaries from July 2022 until their resignation. 5. Whether the circumstances surrounding the resignation amounted to constructive dismissal. 6. Whether the Claimants are entitled to the reliefs sought. 7. Who should bear the costs of the suit. 8. Before addressing each of these issues, it is necessary to consider the applicable statutory provisions and the legal principles governing constructive dismissal, burden of proof and the evidential effect of proceedings conducted under Rule 59. **Analysis and Determination** **Applicable Law** 1. This matter proceeded under Rule 59 of the Employment and Labour Relations Court (Procedure) Rules. Accordingly, the Court has determined the dispute on the basis of the pleadings, witness statements, documentary exhibits and written submissions filed by the parties. The absence of oral testimony does not diminish the burden of proof resting upon each party; rather, the Court is required to evaluate the documentary evidence against the applicable statutory framework. 2. The claim before Court is founded on constructive dismissal. Constructive dismissal arises where an employer, by conduct amounting to a fundamental breach of the contract of employment, leaves an employee with no reasonable alternative but to resign. The resignation is treated in law as a dismissal by the employer. 3. The principles governing constructive dismissal are now settled following the Court of Appeal decision in Coca-Cola East &Central Africa Limited v Maria Kagai Ligaga [2015] eKLR, where the Court held that an employee must establish: 4. A fundamental breach of contract by the employer; 5. That the breach was sufficiently serious to go to the root of the contract; 6. That the employee resigned because of the breach; and 7. That the employee did not waive the breach by remaining in employment for an unreasonable period. 8. Equally applicable is section 47(5) of the Employment Act which provides that an employee alleging unfair termination bears the burden of proving the fact of unfair termination, whereupon the burden shifts to the employer to justify the termination. 9. However, section 47(5) cannot be read in isolation. Parliament imposed additional statutory obligations upon employers under sections 10 and 74 of the Employment Act. 10. Section 10(6) requires employers to keep written particulars of employment. Section 10(7) provides that where an employer fails to produce those written particulars in legal proceedings, the burden of proving or disproving an alleged term of employment shifts to the employer. 11. Section 74 further obligates every employer to keep employment records including records relating to wages, hours worked, leave and other employment particulars. 12. These provisions recognise that employment records are ordinarily within the exclusive possession of the employer. Consequently, an employee cannot reasonably be expected to produce payroll records, attendance registers or wage sheets which the law requires the employer to maintain. 13. Kenyan courts have consistently held that an employer who fails to produce statutory employment records after disputing an employee's claim runs the risk of the Court accepting the employee's version where it remains uncontroverted by the records the employer is legally required to keep. Whether Employment was Proved 1. The existence of an employment relationship is not disputed. The Memorandum of Claim sets out the names of the nine Claimants, their respective dates of employment, job descriptions and salaries. 2. The Respondent expressly admits that the Claimants worked for it. Its witness, Yunus Harun, confirms that the Claimants were former employees although he asserts that some were casual employees while others were permanent employees. Accordingly, the Court finds that all nine Claimants were employees of the Respondent. Whether the Respondent Proved Casual Employment 1. A substantial portion of the Respondent's defence is anchored on the assertion that some Claimants were casual employees and therefore not entitled to annual leave, notice pay or compensation. The Court has carefully examined the Amended Response. The Respondent does not identify which Claimants were allegedly casual employees. Neither does the witness statement. During submissions, the Respondent attempted to classify individual Claimants as casual employees. Those classifications were never pleaded. 2. It is trite law that submissions cannot introduce evidence or amend pleadings. More importantly, no documentary evidence was produced to support the allegation. The Respondent produced no— contracts of employment; casual engagement registers; attendance sheets; daily wage vouchers; labour returns; payroll separating permanent employees from casual employees; employment cards. The Respondent merely invited the Court to accept its assertion. That invitation cannot be accepted. 3. Under section 74 of the Employment Act those employment records ought to have been in the Respondent's possession. The Court therefore draws an adverse inference from the Respondent's failure to produce the records which the law obligates it to maintain. Consequently, the Court rejects the Respondent's contention that some Claimants were casual employees. 4. For purposes of this suit, the Court is satisfied that all the Claimants have proved employment relationships attracting the protections afforded under the Employment Act. Whether the Claimants Proved Non-payment of Salaries 1. The Claimants' case is that despite continuing to work until 5th February 2025, they were not paid salaries from July 2022. Each Claimant repeats this assertion in his witness statement. Their resignation letters equally cite prolonged non-payment of salary as the reason for leaving employment. The Respondent denies those allegations. 2. Once the allegation of non-payment was made, the Respondent bore an evidential burden of producing the statutory wage records demonstrating payment. It produced none. No payroll. No wage register. No bank transfers. No payment vouchers. No acknowledgements signed by employees. No electronic payment records. 3. The Court finds that these records were solely within the Respondent's possession. The Court cannot overlook the statutory obligation imposed by section 74 merely because the employer has denied the claim. 4. Indeed, if salaries had been paid throughout the thirty-one-month period alleged, nothing would have been easier than producing the payroll. The Respondent instead relied principally on KRA and statutory remittance documents. Those documents may demonstrate continued statutory remittances. They do not demonstrate payment of wages. 5. Payment of PAYE or NSSF contributions is not synonymous with payment of salary. Consequently, the Court finds that the Respondent failed to rebut the Claimants' evidence on non-payment of salaries. 6. On a balance of probabilities, the Court accepts the Claimants' evidence that the Respondent persistently failed to pay their wages as pleaded. Such conduct strikes at the very foundation of every contract of employment. The payment of wages is the employer's primary contractual obligation. A prolonged failure to pay wages destroys mutual trust and confidence between employer and employee. The Court therefore finds that the Respondent committed a fundamental breach of the contracts of employment. Whether the Resignations Amounted to Constructive Dismissal 1. Having found that the Respondent fundamentally breached the contracts of employment by persistently failing to pay the Claimants' wages, the next issue is whether the Claimants' resignations amounted to constructive dismissal. 2. The Respondent submitted that the Claimants voluntarily resigned and, having done so, cannot maintain claims founded upon unfair termination. 3. It is true that ordinarily an employee who voluntarily resigns brings the contract of employment to an end. However, the law recognises that a resignation procured by an employer's repudiatory conduct is not a truly voluntary act. Such resignation constitutes constructive dismissal. 4. The Court of Appeal in Coca-Cola East & Central Africa Limited v Maria Kagai Ligaga [2015] eKLR explained that constructive dismissal occurs where an employer's conduct leaves the employee with no reasonable option except to resign. 5. The test is objective. The Court must determine whether a reasonable employee placed in similar circumstances would have felt compelled to leave employment. In the present case, the Claimants resigned on 5th February 2025. Their resignation was not abrupt or capricious. It followed a prolonged period during which, according to the evidence accepted by this Court, salaries had remained unpaid. 6. The resignation letters consistently attribute the decision to leave employment to the Respondent's continued failure to pay wages. The Respondent offered no documentary evidence demonstrating that the resignations were prompted by any other reason. Neither did it produce evidence showing that the alleged salary dispute had been resolved before the resignations. In my view, no reasonable employee can be expected to continue rendering services indefinitely without remuneration. 7. Wages are not a gratuity payable at an employer's convenience. They are the principal consideration for which an employee offers labour and skill. Failure to pay wages for a prolonged period fundamentally destroys the mutual trust and confidence that underpins every contract of employment. 8. The Court is therefore satisfied that the Respondent's conduct constituted a repudiatory breach of the contracts of employment. The resignations were a direct consequence of that breach. I accordingly find that the Claimants were constructively dismissed. Whether the Claimants are Entitled to the Reliefs Sought Salary Arrears 1. The Claimants seek payment of salary arrears from July 2022 to March 2025. Salary arrears are recoverable where an employee proves that work was performed but wages were withheld. 2. Having already found that the Respondent failed to rebut the Claimants' evidence of non-payment by producing the statutory payroll records required under sections 10 and 74 of the Employment Act, I am satisfied that the Claimants have established entitlement to unpaid wages. 3. The Respondent neither disputed the monthly salaries pleaded for each Claimant nor produced alternative salary records. Consequently, the salary figures pleaded in the Memorandum of Claim remain uncontroverted. 4. The Court therefore allows the claim for unpaid salaries as pleaded, subject to verification of the arithmetic in the schedules annexed to the Memorandum of Claim at the decree stage. Notice Pay 1. Ordinarily an employee who resigns is not entitled to notice pay. However, where resignation amounts to constructive dismissal, the law treats the contract as having been terminated by the employer. The Claimants are therefore entitled to one month's salary in lieu of notice pursuant to section 35 of the Employment Act. Annual Leave 1. The Claimants pleaded that throughout their employment they were never granted annual leave. The Respondent denied that allegation but produced no leave records. Section 74 of the Employment Act obligates employers to keep leave records. 2. The failure to produce those records shifts the evidential burden to the employer. In the absence of leave registers or leave application records, the Court accepts the Claimants' evidence that the leave pleaded remained outstanding. The claim for accrued leave is therefore allowed as pleaded. House Allowance 1. The Claimants also seek house allowance. Under section 31 of the Employment Act, an employer is required either to provide reasonable housing or to pay sufficient house allowance unless the salary is expressly stated to be consolidated. 2. The Respondent did not produce contracts of employment demonstrating that the salaries pleaded were consolidated salaries. Neither was evidence adduced that housing was provided. 3. In those circumstances, the Court finds that the Claimants have established entitlement to house allowance in accordance with the applicable Wage Orders. The computation pleaded shall therefore be allowed. Compensation for Constructive Dismissal 1. Having found that the Respondent constructively dismissed the Claimants, the Court is empowered under section 49(1)(c) of the Employment Act to award compensation. 2. In determining the appropriate quantum, the Court has considered the factors set out in section 49(4), including— the length of service of each Claimant; the Respondent's conduct; the circumstances leading to termination; the legitimate expectation of continued employment; and the fact that the Claimants lost employment through no fault of their own. 3. The Court has further taken into account that the Respondent failed to discharge its statutory obligations to keep and produce employment records and that the non-payment of wages persisted over an extended period. These were serious breaches of the employment relationship. 4. Nevertheless, compensation under section 49 is discretionary and is not intended to punish an employer but to fairly compensate employees for the loss occasioned by the unlawful termination. 5. Taking all the circumstances into account, I am satisfied that an award equivalent to ten (10) months' gross salary for each Claimant constitutes fair and equitable compensation. Although the Claimants prayed for twelve months' salary, the Court must exercise its discretion judiciously and award compensation proportionate to the circumstances of the case. 6. Accordingly, each Claimant is awarded compensation equivalent to ten months' gross salary. Interest 1. The awards for unpaid salary, notice pay, leave pay and house allowance shall attract interest at court rates from the date of filing suit until payment in full. The compensatory award under section 49(1)(c) shall attract interest at court rates from the date of this judgment until payment in full. Assessment of Reliefs 1. Having found that the Respondent constructively dismissed the Claimants, the Court must now determine the appropriate reliefs. The Court has already found that the Claimants proved: the existence of contracts of employment; persistent non-payment of wages by the Respondent; that such non-payment constituted a fundamental breach of contract; and that the Respondent failed to rebut the Claimants' evidence by producing the employment records which sections 10(6), 10(7) and 74 of the Employment Act required it to maintain. 2. The Court has equally found that the resignations were directly occasioned by the Respondent's repudiatory conduct and therefore amounted to constructive dismissal. The remaining issue is the quantum payable to each Claimant. Salary Arrears 1. The Claimants pleaded and particularised salary arrears in the schedules annexed to the Memorandum of Claim. The Respondent did not dispute the pleaded monthly salaries. Neither did it produce payroll records demonstrating payment. Since the Court has accepted the Claimants' evidence on non-payment, the salary arrears as pleaded are payable. 2. The Court notes that the pleaded computations are arithmetical calculations based on each Claimant's admitted monthly salary. Those computations were not challenged by the Respondent. 3. The Court therefore awards each Claimant the salary arrears pleaded in the Memorandum of Claim. Notice Pay 1. Having found constructive dismissal, the Claimants are entitled to one month's salary in lieu of notice under section 35 of the Employment Act. Annual Leave 1. The Respondent produced no leave records despite being under a statutory duty to maintain them. In accordance with section 74 of the Employment Act, the Court accepts the Claimants' evidence regarding outstanding leave. The leave dues pleaded are therefore allowed. House Allowance 1. Section 31 of the Employment Act requires an employer either to provide housing or pay house allowance unless the salary is expressly shown to be consolidated. The Respondent produced no contracts demonstrating consolidated salaries. Consequently, the Court allows the claim for house allowance as pleaded. Compensation 1. The Court has considered the factors under section 49(4) of the Employment Act. The Respondent fundamentally breached the contracts of employment by persistently failing to pay wages. The Claimants were deprived of the principal benefit of their contracts while continuing to render services. The Respondent neither regularised the default nor produced evidence explaining the prolonged failure. The Court considers this to be a serious violation of employees' statutory rights. 2. Nevertheless, compensation under section 49 remains discretionary. In the circumstances of this case, I consider an award of ten (10) months' gross salary for each Claimant to be fair, just and proportionate. Individual Awards 1. The Court awards each Claimant the following: 2. Henry Mkilo Mwaghumba- Salary arrears – As pleaded. One month's salary in lieu of notice. Accrued leave – As pleaded. House allowance – As pleaded. Compensation equivalent to ten (10) months' gross salary. 3. Barack Mathew Otieno- Salary arrears – As pleaded. One month's salary in lieu of notice. Accrued leave – As pleaded. House allowance – As pleaded. Compensation equivalent to ten (10) months' gross salary. 4. Mwagundu Choga Jangaa- Salary arrears – As pleaded. One month's salary in lieu of notice. Accrued leave – As pleaded. House allowance – As pleaded. Compensation equivalent to ten (10) months' gross salary. 5. Jackson Achuda Lihuzu- Salary arrears – As pleaded. One month's salary in lieu of notice. Accrued leave – As pleaded. House allowance – As pleaded. Compensation equivalent to ten (10) months' gross salary. 6. Gabriel Rogers Mwachengo- Salary arrears – As pleaded. One month's salary in lieu of notice. Accrued leave – As pleaded. House allowance – As pleaded. Compensation equivalent to ten (10) months' gross salary. 7. Mwenda Chuda Mwakaribu-Salary arrears – As pleaded. One month's salary in lieu of notice. Accrued leave – As pleaded. House allowance – As pleaded. Compensation equivalent to ten (10) months' gross salary. 8. Nyale Nyawa Tsuma- Salary arrears – As pleaded. One month's salary in lieu of notice. Accrued leave – As pleaded. House allowance – As pleaded. Compensation equivalent to ten (10) months' gross salary. 9. Mwangala Mwatua Mwadzoya- Salary arrears – As pleaded. One month's salary in lieu of notice. Accrued leave – As pleaded. House allowance – As pleaded. Compensation equivalent to ten (10) months' gross salary. 10. Alexander Kioko Mutua- Salary arrears – As pleaded. One month's salary in lieu of notice. Accrued leave – As pleaded. House allowance – As pleaded. Compensation equivalent to ten (10) months' gross salary. Costs and Interest 1. Costs ordinarily follow the event, and the Claimants have substantially succeeded. The Respondent shall therefore bear the costs of this suit. The awards for salary arrears, notice pay, accrued leave and house allowance shall attract interest at court rates from the date of filing the suit until payment in full. The award for compensation under section 49(1)(c) shall attract interest at court rates from the date of this judgment until payment in full. **Final Orders** 1. Judgment is hereby entered for the Claimants against the Respondent as follows: 2. A declaration is hereby issued that the Claimants were constructively dismissed by the Respondent. 3. Each Claimant is awarded one month's salary in lieu of notice. 4. Each Claimant is awarded salary arrears as pleaded and particularised in the Memorandum of Claim. 5. Each Claimant is awarded accrued annual leave as pleaded. 6. Each Claimant is awarded house allowance as pleaded. 7. Each Claimant is awarded compensation equivalent to ten (10) months' gross salary. 8. The Respondent shall issue certificates of service to all the Claimants within thirty (30) days of this judgment, if not already issued, pursuant to section 51 of the Employment Act. 9. The decretal sums shall attract interest in the terms set out in paragraph 76 above. 10. The Respondent shall bear the costs of the suit. Orders accordingly **DATED, SIGNED AND DELIVERED ONLINE VIA MICROSOSFT TEAMS AT MOMBASA THIS 30TH JULY 2026.** **……………………………………………….** **EMILY M. MWAMUYE** **SENIOR RESIDENT MAGISTRATE**