https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1066

Gathimba v Kirinyaga Water & Sanitation Company (Civil Appeal E013 of 2022) [2026] KECA 1066 (KLR) (15 May 2026) (Judgment) Neutral citation: [2026] KECA 1066 (KLR) Republic of Kenya In the Court of Appeal at Nyeri Civil Appeal E013 of 2022 K M'Inoti, S ole Kantai & M Ngugi, JJA May 15, 2026 Between Njoka Muturi Gathimba Appellant and Kirinyaga Water & Sanitation Company Respondent (Appeal from the judgment and decree of the Employment and Labour Relations Court at Nyeri (Marete, J.) dated 26th July 2022 in ELRCC No. 37 of 2019) Judgment 1.The appellant, Njoka Muturi Gathimba, and the respondent, Kirinyaga Water & Sanitation Company entered into a contract of employment dated 23rd September 2015 by which the respondent employed the appellant as Managing Director at a monthly basic salary of Kshs. 173,000.00. The contract was for a period of three years with effect from 1st October 2015 and was renewable upon written request by the appellant six months before the expiry date. 2.The respondent reserved the right to terminate the contract for unsatisfactory performance on the part of the appellant. Otherwise, either party could terminate the contract by giving three months’ notice or paying three months’ gross salary in lieu of notice. 3.On or about 20th December 2019, the appellant filed a claim against the respondent in the Employment and Labour Relations Court (ELRC) at Nyeri for wrongful and unfair termination of employment. He pleaded that the respondent wrongfully and unlawfully terminated his employment on 9th August 2019. He further pleaded that on 1st October 2016, the respondent increased his salary to Kshs. 200,000.00 per month, but from February 2017 to September 2018, the appellant underpaid him by Kshs. 27,000.00 each month. By way of remedies, the appellant prayed for Kshs 5,166.347.00 made up as follows:i.Three months’ salary in lieu of notice - Kshs 600,000.00ii.Money recovered for a laptop - Kshs 88,000.00iii.Underpayment for 20 months - Kshs 540,000.00iv.Telephone allowance for 17 months - Kshs 204,000.00v.Mileage allowance for 17 months - Ksh1,334,347.00vi.12 months salary compensation - Kshs 2,400,000.00Total - Kshs 5,166,347.00 4.The respondent delivered its statement of response to the claim on or about 31st January 2020. The substance of the response was that while the appellant was away on annual leave on or about 7th April 2017, the Tana Water Service Board (TWSB) effected an emergency take-over of the respondent’s operations and supplies by dint of powers vested in it by section 53(2) of the Water Act and Clause 19 of the Service Provision Agreement between the TWSB and the respondent. 5.The respondent further pleaded that as a result of the emergency take-over, a new team was put in place to oversee the provision of water services, but the respondent continued to remunerate the appellant for the remainder of his term of contract of employment. The respondent pleaded that it was the responsibility of the respondent’s Board of Directors to review the appellant’s salary, which it never did. The respondent further averred that pursuant to clause 25 of the contract of employment, it served upon the appellant a three month notice of intention not to renew the contract of employment. Otherwise, the respondent denied the appellant’s claim and pleaded that the termination of the appellant’s employment was fair and lawful and that it paid all the appellant’s dues. 6.The parties elected to have the claim heard through documents and submissions, without viva voce evidence and cross-examination. Marete, J. heard the claim and framed three issues for determination, namely: -i.whether the termination of the employment of the appellant by the respondent was wrongful, unfair or unlawful;ii.whether the appellant was entitled to the reliefs sought; andiii.who should bear the costs of the claim. 7.On the first issue, the ELRC held that the respondent indeed served upon the appellant a 3 months’ notice of termination of contract; that it paid the appellant for the contract period; that the contract of employment expired by effluxion of time and that sections 42 and 43 of the Employment Act had no application in the case. 8.On the second issue, the ELRC held that having failed to prove that the respondent wrongfully, unfairly or unlawfully terminated the contract of employment, the appellant was not entitled to the remedies sought. 9.Lastly, as regards costs, the ELRC directed each party to bear its own costs. 10.The appellant was aggrieved and preferred the present appeal based on eight grounds of appeal which, in his written submissions, he readily concedes raise only two issues, namely:i.Whether the termination of the appellant’s employment was wrongful, unlawful or unfair; andii.Whether the appellant was entitled to the reliefs sought. 11.On the first issue, the appellant submitted that the respondent engineered a coup while he was away on leave so as to replace him. He contended that the respondent appointed someone else and barred the appellant from accessing his office and further, that the respondent advertised a vacancy in the office before the appellant’s contract had expired. 12.It was the appellant’s further submission that the respondent did not afford him an opportunity to be heard before termination of the employment. He cited Article 47 of the Constitution and section 4 of the Fair Administrative Action Act on the right to fair administrative action, which he asserted was violated by the respondent. He also relied on section 41 of the Employment Act on the right to be heard before termination and submitted that the provision was couched in mandatory terms. The appellant relied on Mary Chemweno Kiptui v. Kenya Pipeline Company Ltd [2014] eKLR in support of the proposition. 13.On the second issue, the appellant submitted that having demonstrated that the termination of his employment was wrongful, unlawful or unfair, he was entitled to the reliefs that he had sought before the ELRC. For the foregoing reasons the appellant urged the Court to allow the appeal with costs. 14.The respondent opposed the appeal vide submissions dated 1st October 2025. On the first issue, it submitted that the respondent did not wrongfully or unlawfully terminate the appellant’s employment. It was contended that the appellant’s contract of employment was for a period of three years, ending on 1st October 2018, and that although the operations of the respondent were taken over by TWSB, upon the appellant’s return from leave on 9th May 2017, the respondent retained him in the payroll and continued paying his salary. 15.The respondent further submitted that on 27th May 2018, the appellant applied for renewal of the contract of employment. The respondent however, elected not to renew the contract and issued the appellant with a notice to that effect on 30th June 2018. It was therefore contended that the respondent did not unlawfully or wrongfully terminate the appellant’s employment, but that the same ended by effluxion of time after the respondent decided not to renew the contract. 16.The respondent relied on the decision of this Court in Registered Trustees of the Presbyterian Church of EastAfrica & Another v. Ruth Gathoni Ngotho [2017] eKLR; the decisions of the ELRC in Anne Theuri v. Kadet Ltd [2013] eKLR and Margaret A. Ochieng v. National Water Conservation and Pipeline Corporation [2014] eKLR and submitted that fixed-term contracts carry no rights, obligations or expectations beyond the date of expiry and that where a contract of employment comes to an end by effluxion of time, a claim for wrongful termination cannot be sustained. It was the respondent’s position that as held by the ELRC, sections 41 and 43 of the Employment Act had no application in the circumstances of this case. 17.Turning to the second issue on remedies, the respondent submitted that having failed to prove that his employment was wrongfully or unlawfully terminated, the appellant was not entitled to the remedies he had sought. It was the respondent’s further submission that having served upon the appellant with three months’ notice of intention to terminate the contract, there was no basis for payment of three months salary in lieu of notice as claimed by the appellant. 18.As regards the underpayment alleged by the appellant, the respondent submitted that under the Human Resource Policy and Procedure Manual (HR Manual), salary increment was by a resolution of the Board of Directors, which was not done. On mileage and telephone allowances, the respondent submitted that the claim was not justified in view of the changes introduced by the TWSB and the new competent management team that was put in place to take over the roles and functions of the respondent. The respondent relied on the decision of ELRC in Stephen M. Kitheka v. Kevita International Ltd [2018] eKLR and submitted that the appellant was not entitled to allowances for the period he did not work. 19.On the recovery for damaged laptop, the respondent submitted that under the Human Resource Policy and Procedure Manual, a member of staff was liable for damaged or lost property of the respondent and that the recovery was for a laptop that the appellant had damaged. It was also contended that section 19 of the Employment Act allowed such recovery. For the above reasons, the respondent urged the Court to dismiss the appeal with costs. 20.We have carefully considered the record of appeal, the memorandum of appeal, the judgment of the ELRC, the submissions by the respective parties and the authorities they relied upon. The appellant’s claim in the ELRC was for alleged wrongful or unlawful termination of his contract of employment by the respondent. 21.It is common ground that the contract of employment was for a period of three years, renewable (see clause 5 of the contract). Further, either party could terminate the employment by giving the other three months’ notice or paying three months salary in lieu of notice (see clause 26). If the appellant wished to have the contract renewed, he was required to apply to the respondent for renewal in writing at least six months before the date of the expiry of the contract (see clause 6). 22.The evidence on record shows that the appellant proceeded on leave from 21st February 2017 to 9th May 2017 and while on leave, on 7th April 2017, there was an emergency takeover of the functions and roles of the respondent by the TWSB. This is confirmed by Gazette Notice No. 3342 of 7th April 2017, headed“Emergency Takeover by the Tana Water Service Board of the Water Service Supplies by Kirinyaga Water and Sanitation Company in Kirinyaga County.” 23.The takeover, which was undertaken pursuant to the Water Act, 2002 and the Service Provision Agreement between the respondent and the TWSB was necessitated by mismanagement of the respondent, leading to frequent industrial actions and unrest by its workers and failure to render services and provision of water to residents of the County. The effect of the takeover was to give TWSB complete control and power to take all measures to normalise water supply operations. In addition, the TWSB took total control of the governance, financial management, technical operations and human resource functions. Pursuant to the takeover, a new board of directors and a core management team was appointed to provide leadership and strategic direction to the water service operations of the County. 24.According to the Gazette Notice we have referred to, the takeover was to last for a period of six months from the date of the notice, but it was extended by Gazette Notice No. 9919 of 6th October 2017 for a further period of six months with effect from 2nd October 2017. 25.Notwithstanding the changes that arose from the emergency take over of the respondent’s functions and operations, the respondent retained the appellant in its employment and continued paying his dues. On 27th March 2018, the appellant applied in writing to the respondent for renewal of the contract of employment, which he noted would expire on 30th September 2018. The application was made more than six months before the expiry of the contract as required by clause 6 of the contract. By a letter dated 30th June 2018, the respondent served the appellant with a notice of intention not to renew the contract of employment in line with clause 5 of the contract, which allowed either party to terminate the contract by serving a three months’ notice or paying three months’ salary in lieu of notice. 26.It is common ground that the appellant’s contract of employment came to an end on 30th September 2018, and that save for the claims made by the appellant, the respondent paid him his dues, including gratuity. 27.Having carefully considered this appeal, we agree with the ELRC that the appellant’s contract ended by effluxion of time and that there is no basis for the assertion that the respondent wrongfully or unlawfully terminated the contract. To that extent, we also agree with the ELRC that there was no basis for the application of sections 41 and 43 of the Employment Act in this case. Having so found, the claim for 12 months’ salary as compensation for wrongful or unlawful termination of employment does not lie. Similarly, the respondent having served upon the appellant three a month notice of intention not to renew the contract as required by clause 5, there was no basis for the appellant’s claim for three months’ salary in lieu of notice. 28.The ELRC similarly rejected the appellant’s claim for Kshs. 27,000 which the respondent recovered from the appellant’s dues for a damaged laptop. This issue was covered by the HR Manual, which was incorporated into the contract of employment by clause 24 of the contract. Clause 18.5 of the HR Manual provided as follows on the issue:“Liability of Staff:Members of staff shall be liable for any loss or damage to the property or loss of funds entrusted under their care. If such loss occurs due to negligence, the amount shall be recovered from the salary or any other funds held on account of the employee. In addition, disciplinary action will be preferred where deemed necessary.” 29.A report dated 22nd October 2018 on the condition of the laptop assigned to the appellant found that the laptop had a cracked screen and faulty battery. When procured on 26th June 2015, the laptop was worth Kshs. 88,000.00 and the recovery of Kshs 27,000 for repairs does not seem unreasonable. In light of clause 18.5 of the HR Manual, the respondent did not err by making recovery for the damaged laptop from the appellant. This claim equally has no merit. 30.The appellant also claimed a sum of Kshs. 540,000.00 being underpayment for a period of twenty months from February 2017 to September 2018. The basis of the claim was that while the appellant’s starting basic monthly salary was Kshs. 173,000.00, the respondent increased it to Kshs. 200,000.00 with effect from 1st October 2016, and that for the twenty months complained of, the respondent underpaid the appellant by Kshs. 27,000 each month. In response, the respondent pleaded that under the contract of employment, it was the Board of Directors which was responsible for reviewing and increasing the appellant’s salary and that the Board of Directors made no such decision to increase the appellant’s salary as alleged. 31.Clause 4.12 of the respondent’s HR Manual provided as follows regarding salary review:“The salary scales and levels may be reviewed by the Board yearly, or on the basis of strenuous national economic circumstances or sudden significant change of the Company’s for any possible reason. Such reviews shall be based upon, inter alia: cost of living adjustments. ability of the company to pay, especially long term projected prospects for the company to sustain new salary levels. prevailing market rates based on salary market surveys.” 32.While the respondent is right in maintaining that it was the responsibility of the Board to review the appellant’s salary, the evidence on record indicates that the respondent advised the appellant that his salary had indeed been reviewed by the Board of Directors. By a letter dated 3rd October 2016, the Chairman of the Board of Directors addressed the appellant as follows:“Re: Salary ReviewWe wish to inform you of the Board’s decision to review your salary after successful completion of one year service as per the HR & Procedure Manual clause 4.6 (4.6.1) which states that salary increments shall be based on satisfactory performance and conduct and clause 4.7 which states that incremental credits for approved experience acquired after obtaining the minimum prescribed experience for the grade will be awarded at the rate of one increment for each completed year of approved experience, provided the maximum salary point on the scale is not exceeded.” 33.The appellant’s pay slip for October and November 2016 indicates his basic pay as Kshs. 200,000.00 per month, up from Kshs. 173,000.00 per month. However, from February 2017, the basic pay is indicated to have reverted back to Kshs. 173,000.00 per month. From the evidence on record, we are satisfied that the respondent’s Board of Director’s reviewed the appellant’s gross salary from Kshs. 173,000.00 per month to Kshs. 200,000 per month with effect from October 2016 and that there is no rational explanation for the respondent’s decision to underpay the appellant after the salary review. 34.Taking into account all the foregoing, we find no merit in the appeal, save as regards the sum of Kshs. 540,000.00 wrongfully deducted from the appellant’s salary after it was reviewed to Kshs. 200,000.00 in October 2016. We award the said sum to the appellant, which shall attract interest at court rates from the date of the judgment of the ELRC. 35.As regards costs, each party has partially succeeded and the order that best commends itself to us is that each party shall bear its own costs. It is so ordered. DATED AND DELIVERED AT NYERI THIS 15TH DAY OF MAY, 2026.K. M’INOTI………………………………JUDGE OF APPEALS. ole KANTAI ………………………………JUDGE OF APPEALMUMBI NGUGI……………………………JUDGE OF APPEALI certify that this is a true copy of the originalSignedDEPUTY REGISTRAR