https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/2297

Naushad Trading Company Ltd v Chomulose (Employment and Labour Relations Appeal E004 of 2026) [2026] KEELRC 2297 (KLR) (30 July 2026) (Judgment) Neutral citation: [2026] KEELRC 2297 (KLR) Republic of Kenya In the Employment and Labour Relations Court at Mombasa Employment and Labour Relations Appeal E004 of 2026 K Ocharo, J July 30, 2026 Between Naushad Trading Company Limited Appellant and Herbert Mmbwanga Chomulose Respondent (Being an appeal against the Judgment and Decree of the Chief Magistrate's Court at Mombasa (Hon. J.B. Kalo, CM) delivered on 15th December, 2025 in Mombasa CM/ELRC Cause No. E432 of 2021, consolidated with CM/ELRC Cause Nos. E430, E431 and E433 of 2021) Judgment I. The Appeal 1.This is an appeal by Naushad Trading Company Limited (“the Appellant”) against the Judgment and Decree of the Chief Magistrate's Court at Mombasa (Hon. J.B. Kalo, Chief Magistrate) delivered on 15th December, 2025 in Mombasa CM/ELRC Cause No. E432 of 2021, Herbert Mmbwanga Chomulose v Naushad Trading Company Limited. That cause was tried together with, and forms one of a consolidated series comprising, CM/ELRC Cause Nos. E430, E431 and E433 of 2021, each brought by a different loader engaged at the Appellant's Mombasa go-downs, and each turning on a common question: whether men who load and offload cargo for the Appellant, paid daily through a “gang leader” on what the Appellant styles a piece-rate basis, are in law its employees. 2.This Court has already pronounced itself on substantially the same facts, the same defence and, in large part, the same grounds of appeal, in the companion appeals arising from the very same consolidated trial: Naushad Trading Company Limited v Munywoki [2026] KEELRC 2014 (KLR) and Naushad Trading Company Limited v Obiayo (ELRC Appeal No. E006 of 2026). Those decisions do not bind this Court in the strict sense, this being a court of coordinate rather than superior jurisdiction, but each arose from the identical documentary record, the identical witnesses, and substantially identical argument, and consistency between sister appeals emerging from one consolidated cause is itself a discipline this Court owes to the parties. I have had regard to those decisions, without treating either as foreclosing independent consideration of the present appeal, which I now undertake on its own record. II. BACKGROUND 3.The Respondent's case before the trial court, as pleaded in his Statement of Claim dated 28th June, 2021, was that he was engaged by the Appellant as a loader from January, 1995 and worked continuously and diligently in that capacity until 13th January, 2021, when, upon returning from annual leave, he was denied entry at the gate, informed that his services had been terminated in his absence and that new casual workers had been engaged, and was never thereafter allowed to resume duty. He deposed to a monthly wage of Kshs. 25,500, to never having been issued a warning letter or subjected to any disciplinary process, to never having been paid house allowance, and to a period of non-registration with the National Social Security Fund. He sought one month's salary in lieu of notice, house allowance for the years worked, service pay, and compensation for unfair termination, together with a certificate of service, costs and interest. 4.The Appellant's Response to the Memorandum of Claim denied the existence of any employment relationship altogether. Its case, supported by the witness statements of its administrator, Khatau Mahmood, and of one Christopher Enock — described as the “gang leader” of a group of casual labourers known locally as “sogis” — was that the Respondent was never on its payroll; that he was one of a pool of handymen whom Mr Enock would summon as needed to load or offload cargo; that payment was made per bag offloaded and shared out by the gang leader; that the Respondent was free to decline work or to work elsewhere; and that such National Social Security Fund contributions as were remitted in the Appellant's name were made only pursuant to a directive from the Fund and did not, of themselves, create an employment relationship. 5.The trial court, proceeding on the documentary record filed pursuant to Rule 59 of the Employment and Labour Relations Court Rules, found that the Respondent's National Social Security Fund statement, running from 2011 to 2020, showed uninterrupted remittances in his favour, and that the Appellant had neither denied that the Respondent commenced working for it in January, 1995 nor stated when it had first sought his services. On that basis, the court found that the Respondent had worked for the Appellant continuously from January, 1995, that by operation of section 37 of the Employment Act his engagement fell to be treated as a monthly contract of service to which section 35(1)(c) applied, and that, in the complete absence of any evidence of the process by which his engagement was brought to an end, the termination was unlawful and unfair. The court adopted the pleaded monthly wage of Kshs. 25,500 as reasonable, having regard to the Appellant's own wage records showing daily payments to the Respondent of between Kshs. 985 and Kshs. 1,640. It awarded one month's salary in lieu of notice (Kshs. 25,500), house allowance limited to a three-year period (Kshs. 137,700), and compensation equivalent to ten months' salary (Kshs. 255,000), while declining service pay on the footing that the Respondent, being a member of the National Social Security Fund, fell within the statutory exclusion. Judgment was accordingly entered for the Respondent in the sum of Kshs. 418,200, together with interest at court rates and the costs of the suit, and an order that a certificate of service issue within 45 days. 6.Aggrieved, the Appellant filed a Memorandum of Appeal dated 7th January, 2026 setting out twelve grounds of appeal, and has prosecuted the appeal by way of written submissions. The Respondent opposes the appeal, principally on the footing that the trial court correctly evaluated the evidence and applied the law, and that none of the twelve grounds discloses any error warranting interference. III. The Rival Cases on Appeal 7.For the Appellant, it is contended, in summary, that the trial court erred in treating the Respondent as an employee at all, given the undisputed piece-rate, need-based mode of his engagement (ground 1); that section 37 of the Employment Act was misapplied to convert a casual, task-based engagement to a monthly contract without evidence that the Respondent's work could not reasonably have been completed within the statutory period (ground 2); that length of association and National Social Security Fund remittances were wrongly treated as conclusive of permanent employment (ground 3); that the Appellant's own documentary evidence of daily, intermittent engagement was not properly weighed (ground 4); that unfair termination was found without proof that termination occurred at the Appellant's instance (ground 5); that the burden of proof under section 47(5) of the Employment Act was shifted to the Appellant prematurely (ground 6); that the mandatory factors under section 49(4) were not considered in fixing compensation (ground 7); that the resulting award of ten months' salary was in any event excessive and punitive (ground 8); that house allowance was awarded without proof of entitlement or consideration of whether the daily wage was already consolidated (ground 9); that the monthly wage of Kshs. 25,500 was adopted without any factual or mathematical basis, contrary to the evidence of variable daily earnings (ground 10); and, generally, that reliefs were granted that were neither strictly proved nor consistent with the nature of the Respondent's engagement, and that the findings and awards made were against the weight of the evidence and the applicable law (grounds 11 and 12). 8.For the Respondent, it is contended that each of these grounds was substantially addressed by the trial court on a proper evaluation of the record; that the Appellant, having elected not to deny when the relationship began and having produced, in answer to a claim spanning twenty-six years, only a fragment of daily wage records covering some weeks in September, 2019, cannot now complain that the trial court preferred the Respondent's consistent and largely unchallenged account; that the discretion to award compensation under section 49 was properly and visibly exercised, having regard to the circumstances of the termination; and that the appeal, in substance, seeks to relitigate findings of fact that were open to the trial court on the evidence before it. IV. This Court's Mandate on a First Appeal 9.This being a first appeal, this Court's obligation is to re-evaluate and re-analyse the evidence on the record afresh and to reach its own independent conclusions of fact and law, giving allowance for the circumstance that it neither saw nor heard the witnesses testify (Selle & Another v Associated Motor Boat Company Ltd & Others [1968] EA 123). It will interfere with findings of fact only where they are shown to rest on no evidence, on a misapprehension of the evidence, or on the application of wrong principles (see also Abok James Odera t/a A.J. Odera & Associates v John Patrick Machira t/a Machira & Co. Advocates [2013] eKLR). With that mandate in mind, I turn to the twelve grounds, grouping them, as the parties themselves substantially did in argument, by subject matter rather than by strict numerical sequence. V. Determination (1) The existence of an employer-employee relationship and the application of section 37 (grounds 1 to 4) 10.The centrepiece of the appeal is the contention that a piece-rate, need-based arrangement cannot, as a matter of law, ripen into an employment relationship, however long it persists. That proposition proves too much. Section 18 of the Employment Act expressly regulates “a contract of service entered into under which a task or piece-work is to be performed by an employee” — language which presupposes that a piece-rate worker is an employee under a contract of service, the piece-rate being no more than the method of calculating remuneration. The question in every case is not whether the parties labelled the arrangement “piece-rate” but whether, on the facts, an employment relationship in substance existed. 11.Here, the Appellant's Response to the Memorandum of Claim did not deny that the Respondent commenced work for it in January, 1995, nor did it assert any alternative date on which the relationship, in whatever form, began. Its documentary evidence — a set of “Sogis Daily Record” sheets spanning a handful of weeks in September, 2019, and a 2021 master roll — addressed, at most, a few weeks out of a claimed twenty-six years of continuous engagement. Against that, the Respondent produced a National Social Security Fund statement showing uninterrupted contributions remitted in his name from 2011 to 2020. As this Court observed in Naushad Trading Company Limited v Munywoki [2026] KEELRC (KLR), on materially identical facts arising from the same trial, an employer who is registered as such on a statutory contribution scheme for close to a decade, and who neither denies nor particularises when its dealings with a claimant began, cannot resist a finding of continuous employment merely by producing an unrepresentative sample of daily pay records from a single month of a multi-decade relationship. The trial court's finding that the Respondent worked continuously for the Appellant from January, 1995 was accordingly open to it on the evidence, and I decline to disturb it. 12.Ground 2 complains that section 37 of the Employment Act was applied without evidence of continuous service or that the Respondent's work could not reasonably be completed within the statutory period. Section 37 converts a casual engagement to a deemed monthly contract, attracting section 35(1)(c), where the casual employee works for an aggregate period of not less than one month, or performs work that cannot reasonably be expected to be completed within an aggregate of three months. Twenty-six years of continuous engagement, unrebutted on the record, self-evidently exceeds either threshold many times over; there was no misdirection in applying section 37 to these facts, and the trial court's reliance on Evans Ketiezo Aligulah v Eldomatt Wholesale and Supermarket Ltd [2019] eKLR, where a daily-paid contract of a mere fifteen months was held to have converted by the same operation of law, was, if anything, conservative rather than erroneous. 13.Ground 3 asserts that length of association and National Social Security Fund remittances were treated as conclusive of permanent employment, contrary to established jurisprudence. That is not, with respect, an accurate characterisation of the trial court's reasoning, which considered these two features not in the abstract but against the Appellant's own failure to controvert the starting date of the relationship or to produce records capable of displacing it. Where an employer bears the burden, in the absence of a written contract, of proving the terms and duration of an engagement it asserts to be casual or task-based (section 10(7) of the Employment Act), and elects not to discharge that burden, a court does no wrong in treating the unrebutted length of service and the contemporaneous statutory registration as together sufficient to found a finding of continuous employment. Ground 4, that the Appellant's documentary evidence of daily, intermittent engagement was insufficiently weighed, fails for the same reason: a handful of daily records from one month of a twenty-six-year relationship was properly regarded as of limited probative value against the weight of the rest of the record, and its limited character does not translate into an error of appreciation by the trial court. (2) Fairness of the termination and the burden of proof (grounds 5 and 6) 14.It is next contended that the trial court found unfair termination without proof that termination occurred at the Appellant's instance, and that the burden under section 47(5) of the Employment Act was shifted to the Appellant before the Respondent had discharged his own burden. Section 47(5) requires an employee to place before the court prima facie evidence that a termination occurred and did not fall within the four corners of section 45; once that threshold is met, the burden shifts to the employer to justify both the reason for and the manner of the termination (Galgalo Jarso Jillo v Agricultural Finance Corporation [2021] eKLR; Josephine M. Ndungu & Others v Plan International Inc [2019] eKLR). 15.The Respondent's account — that he was denied entry at the gate on return from leave and told that his services had been terminated and new casuals engaged — was neither pleaded against nor displaced by any competing account from the Appellant, whose own case throughout was a denial that any employment relationship, and therefore any termination of one, existed at all. It is not open to the Appellant, having pleaded and led no evidence of any alternative version of how the engagement ended, to complain on appeal that the Respondent failed to prove termination occurred at its instance; the Respondent's account stood unrebutted, and it amply discharged the modest threshold under section 47(5). Thereafter, the burden lay squarely on the Appellant to justify the termination, and it adduced no evidence whatsoever of any disciplinary process, notice, or hearing. The trial court's finding of unlawful and unfair termination was correctly arrived at, and grounds 5 and 6 must fail. (3) Compensation under section 49 (grounds 7 and 8) 16.The Appellant next complains that the mandatory factors under section 49(4) of the Employment Act were not considered, and that the resulting award of ten months' gross salary was excessive and punitive. The trial court's judgment records, in terms, that it considered “the circumstances under which the claimant's employment was terminated” before arriving at the equivalent of ten months' salary as adequate compensation. A trial court is not required to recite each of the section 49(4) factors as a checklist; it suffices that the circumstances bearing on those factors were considered, and an appellate court will not interfere with an award of compensation under section 49 unless the trial court is shown to have acted on wrong principles or the award is so high or so low as to be erroneous in principle (Ol Pejeta Ranching Limited v David Wanjau Muhoro [2017] eKLR). 17.Here, a twenty-six-year relationship was terminated without any process whatsoever, in circumstances the Respondent found humiliating — turned away at the gate he had reported to for over two decades — and no evidence was placed before the trial court, nor before this Court, of any mitigating circumstance personal to the Respondent that would render ten months, two months short of the statutory maximum, unwarranted. Comparable awards of the maximum twelve months have been upheld in materially similar circumstances of summary, process-free termination after long service (Kenya Union of Domestic, Hotels, Educational Institutions & Hospital Workers v North Coast Beach Hotel [2015] eKLR). Against that yardstick, an award of ten months cannot be said to be excessive, let alone punitive, and I maintain that multiplier below, applying it to the wage figure as revised. Grounds 7 and 8 fail as to entitlement and as to the multiplier applied. (4) House allowance (ground 9) 18.Section 31(1) of the Employment Act imposes a default obligation on an employer to provide reasonable housing accommodation, or to pay a sum in lieu, for each of its employees. The exception in section 31(2)(a) — where the contract of service consolidates a housing element into basic wages — is precisely that: an exception, the burden of establishing which rests on the party asserting it. The Appellant, having at no stage produced a written contract of service, whether consolidated or otherwise, cannot complain that the Respondent failed to prove the absence of consolidation; it was for the Appellant to prove its presence, and it did not attempt to do so. The trial court's award, moreover, was not open-ended: it was expressly limited to a three-year period, a self-restraint in the Respondent's favour that this Court sees no reason to disturb further. Ground 9 fails as to entitlement and as to the three-year limitation; the quantum flowing from the applicable fifteen per cent formula is, however, necessarily affected by the revised wage figure arrived at immediately below. (5)The monthly wage figure (ground 10) 19.The Appellant complains that a monthly wage of Kshs. 25,500 was adopted without factual or mathematical basis, given the variable daily amounts reflected in its own wage records. On the arithmetic of this file taken alone, the complaint is not obviously made out: the trial court cross-checked the pleaded figure against the Appellant's own daily payment records, which disclosed sums to the Respondent of between Kshs. 985 and Kshs. 1,640 a day, and a monthly average of Kshs. 25,500 sits comfortably within the range that daily record supports. Considered in isolation, this appeal's own record does not disclose the same stark internal inconsistency that attended the pleadings in the companion appeals arising from the same consolidated trial. 20.It is, however, not possible to consider ground 10 in isolation from the companion appeals concerning the three other claimants engaged on the same terms, at the same go-downs, through the same gang-leader system, and tried together with the present cause. In Naushad Trading Company Limited v Munywoki (ELRC Appeal No. E005 of 2026) and, more directly still, in Naushad Trading Company Limited v Obiayo (ELRC Appeal No. E006 of 2026), this Court, confronting the identical structural difficulty — pleaded monthly wage figures unsupported by any primary evidence of actual payment, no wage slip, bank record or mobile-money statement having been produced by any of the four consolidated claimants, and an employer's daily wage records covering, in each instance, only a handful of weeks out of a multi-decade relationship — held that neither party had discharged the burden of proving the wage actually paid, and that the Court was accordingly obliged to arrive at a fair and principled figure rather than accept an unproved assertion by default. In both companion appeals the Court found the statutory minimum wage prescribed for the relevant class of work the most reliable available proxy, and adopted the rate prescribed by the Regulation of Wages (General) (Amendment) Order, 2018 (Legal Notice No. 1 of 2019) — in force from 1st May 2018 and unrevised until 1st May 2022 — for a general labourer within Mombasa City, namely Kshs. 13,572.90 per month, that being the cadre properly encompassing a loader in the absence of proof of any specialised trade. 21.The Respondent's own engagement here — as a loader, performing the same manual, unskilled cargo-handling work, at the same go-downs, terminated on 13th January, 2021, comfortably within the currency of the same wage order — is, in every material respect, indistinguishable from that of his three former colleagues. That the daily record placed before the trial court in this particular file happens to be arithmetically reconcilable with the pleaded figure, while the records in the companion files were not, is not a principled basis on which four claimants engaged on identical terms in a single consolidated trial should have their notice pay, house allowance and compensation calculated on four different wage figures, three of which this Court has already found to be unproved. The Appellant's own records in every one of the four files share the same defect this Court identified in the companion appeals: each covers only a fragment — weeks, not years — of a relationship measured in decades, and none amounts to the complete wage record section 74 of the Employment Act required the Appellant to maintain and produce. That the fragment in this file happens not to contradict the pleaded figure does not cure its unrepresentative character, nor does it supply the primary proof of actual earnings that is, in truth, absent from all four files alike. Consistency between sister appeals arising from a single consolidated trial and a common evidentiary defect is a discipline this Court owes equally to all four claimants and to the Appellant, and I decline to allow the outcome on this narrow point to turn on which of four near-identical case files happened to contain a daily record that could, after the fact, be reconciled with the sum pleaded. 22.For these reasons, and for consistency with the approach taken in the companion appeals concerning Charles Kaunda Munywoki and Gerishon Ambaka Obiayo, I set aside the wage of Kshs. 25,500 adopted by the trial court and substitute in its place the statutory minimum wage of Kshs. 13,572.90 per month, applicable to a general labourer within Mombasa City under the Regulation of Wages (General) (Amendment) Order, 2018 (Legal Notice No. 1 of 2019) as at the date of the Respondent's termination. Ground 10 succeeds to that extent. Consequential recomputation of quantum 23.Notice pay. One month's salary in lieu of notice is accordingly reduced from Kshs. 25,500 to Kshs. 13,572.90. 24.House allowance. Applying the same fifteen per cent formula invoked before the trial court, and preserving, as unchallenged in principle at paragraph 18 above, the three-year limitation period applied below, house allowance is recomputed at Kshs. 13,572.90 × 15% = Kshs. 2,035.94 per month, giving Kshs. 73,293.84 over thirty-six months, in place of the Kshs. 137,700 awarded below. 25.Compensation for unfair termination. Having found at paragraph 17 above that a multiplier of ten months, two short of the statutory maximum, is neither excessive nor punitive on the Respondent's twenty-six years of unrebutted, process-free service, I maintain that multiplier and recompute it only for the substituted wage: Kshs. 13,572.90 × 10 = Kshs. 135,729.00, in place of the Kshs. 255,000 awarded below. 26.Service pay. The trial court's refusal of this head, the Respondent being registered with the National Social Security Fund and thus within the exclusion in section 35(5) and (6) of the Employment Act, was not specifically impugned on appeal and is not disturbed by the revision of the wage figure. (6) The omnibus grounds (grounds 11 and 12) 27.Grounds 11 and 12 — that reliefs were granted which were not strictly proved and were inconsistent with the nature of the Respondent's engagement, and that the findings generally ran against the weight of the evidence — add nothing to the specific grounds already considered and disposed of above. Each head of relief awarded by the trial court has, save as to quantum varied above, been shown, on independent re-evaluation, to rest on a proper appreciation of the pleadings, the documentary record and the applicable law. These omnibus grounds accordingly fail together with the specific grounds from which they are drawn. VI. Disposal 28.For the reasons set out above, ground 10 of the appeal succeeds, to the extent of substituting the statutory minimum wage of Kshs. 13,572.90 per month for the Kshs. 25,500 adopted by the trial court, with consequential effect on the notice pay, house allowance and compensation awarded; the remaining eleven grounds fail. The findings that the Respondent was an employee of the Appellant, and that his termination was unlawful and unfair, are upheld, and the appeal against those findings is dismissed. The appeal against quantum succeeds to the extent set out above. 29.It is hereby ordered that the Judgment and Decree of the trial court delivered on 15th December, 2025 in Mombasa CM/ELRC Cause No. E432 of 2021 be and is hereby set aside as to quantum only, and substituted with judgment for the Respondent against the Appellant in the following revised sums:Head of award Kshs.One month's salary in lieu of notice Kshs. 13,572.90House allowance (limited to three years / 36 months) Kshs. 73,293.84Compensation for unfair termination (10 months' gross salary) Kshs. 135,729.00Total Kshs. 222,595.74 30.The claim for service pay remains declined, the Respondent being a member of the National Social Security Fund and thereby falling within the exclusion in section 35(5) and (6) of the Employment Act, a finding not challenged by either party on this appeal and, in any event, unaffected by the substitution of the wage figure. 31.The sum of Kshs. 222,595.74 shall attract interest at court rates from the date of judgment of the lower court until payment in full. As to the costs of this appeal, given the divided outcome, each party shall bear its own costs of this appeal. For the avoidance of doubt, the order that the Appellant issue the Respondent with a certificate of service, made below, stands undisturbed. It is so ordered. DATED, SIGNED AND DELIVERED AT MOMBASA THIS 30TH DAY OF JULY 2026.OCHARO KEBIRAJUDGE