https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/1891

REPUBLIC OF KENYA IN THE EMPLOYMENT & LABOUR RELATIONS COURT AT NAIROBI APPEAL NUMBER E231 OF 2025 SANA INDUSTRIES LIMITED…………….…………….................................................APPELLANT -VERSUS MARY MOKEIRA OBEIRA…….………....................................................................RESPONDENT *(Being an Appeal from the* *Judgment and Decree of the Hon. D. Orago (SRM) delivered on 24th June 2025 in Ruiru MCELRC Cause No. E086 of 2024)* CORAM Before Lady Justice Jemimah Keli C/A Otieno JUDGMENT 1. The Appellant herein, being dissatisfied with Judgment and Decree of the Hon. D. Orago (SRM) delivered on 24th June 2025 in Ruiru MCELRC Cause No. E086 of 2024 between the parties filed a Memorandum of Appeal dated the 18th of July 2025 seeking the following orders: - 2. This Honourable court allows this appeal. 3. The Judgement of Hon. Diana Orago delivered on 28th June 2025 be wholly set aside and, in its place, the claim be dismissed. 4. The costs of the Appeal as well as costs of the lower court to be awarded to the Appellant. GROUNDS OF THE APPEAL 1. The Honourable Magistrate erred in fact and in law finding that the Respondent’s employment had converted to permanent despite evidence showing that the Respondent never worked continuously. 2. The Honourable Magistrate erred in fact and in law in finding that the Respondent’s employment was unlawfully terminated despite the Appellant having demonstrated that it made all reasonable effort to submit the Respondent to the disciplinary process after the Respondent absconded duty. 3. The Honourable Magistrate erred in failing to find that the Respondent absconded duty, which then entitled the Appellant to terminate her employment. 4. The Honourable Magistrate erred in awarding excessive damages when the Respondent in fact absconded duty, hence abetting her own dismissal from employment. 5. The Honourable Magistrate erred in failing to give a reasoned justification of how she arrived at 12 months’ salary of Kshs. 797,066/- as damages for unfair termination. 6. The Honourable Magistrate erred in fact and in law by awarding Ksh. 95,040/- as unpaid leave contrary to established principles that unpaid leave can only be awarded up to a maximum of 3 years. 7. The Honourable Magistrate erred in awarding one-month salary in lieu of notice despite evidence showing that the claimant had absconded duty. 8. The Honourable Magistrate erred in fact and in law in awarding an amorphous figure as unpaid leave without any systematic calculations. The same ought to be computed as follows: (14,740 x 21/28) x 3 Years = 33,165.00. 9. The Honourable Magistrate in awarding service pay of Kshs. 34,840/- despite having made a finding that the Respondent always remitted the statutory dues. 10. The Honourable Magistrate erred in awarding severance pay of Kshs. 95,810/- despite having made a finding that the Respondent was never declared redundant. 11. The Honourable Magistrate erred in awarding house allowance of Kshs. 344,916/- despite the finding that the Respondent paid an all-inclusive daily wage. 12. The Honourable Magistrate erred in fact and in law by failing to consider the Appellant’s evidence presented in court. BACKGROUND TO THE APPEAL 1. The Respondent filed a suit against the Appellant vide a memorandum of claim dated 24th May 2024 seeking the following orders: - 2. An order declaring that the Claimant’s dismissal was unlawful, invalid and procedurally unfair. 3. An order that the Respondent does issue the Claimant with an acceptable certificate of service. 4. Monetary compensation as follows: 1. One month’s salary in lieu of notice Kshs. 17,420.00 2. House allowance Kshs. 344,916.00 3. Severance pay for 11 years Kshs. 95,810.00 4. Service pay from August 2012-2014 Kshs. 34,840.00 5. 12 months’ salary as compensation for unlawful termination of employment Kshs. 209,040.00 * 1. Accrued unpaid leave for 11 years Kshs. 191,620.00 2. NHIF deducted but never remitted Kshs. 66,000.00 Total Kshs. 959,646.00 1. Certificate of service 2. Costs of this cause 3. Interest at court rates on items (c )(i)-(iv) above (pages 4-6 of Appellant’s ROA dated 19th August 2025). 1. The Respondent filed her list of witnesses dated 24th May 2024, witness statement of even date, and list of documents together with the bundle of documents attached, also of even date (pages 8-14 of ROA). 2. The claim was opposed by the Appellant who entered appearance and filed a memorandum of response dated 22nd July 2023 (pages 15-17 of ROA). They also filed a list of witnesses of even date, witness statement of AGNES KAGWIRIA of even date, witness statement of LUCAS BALA dated 25th February 2025, and list of documents dated 22nd July 2023 with the bundle of documents attached. They later filed a and a further list and bundle of documents dated 25th February 2025 (pages 18-34 of ROA). 3. The Claimant/Respondent’s case was heard on 20th May 2025 with the Claimant testifying. She adopted her witness statement as her evidence in chief and produced her documents as exhibits. She was cross-examined by counsel for the Appellant/Respondent. Ms. Pepela (pages 67-69 of ROA). 4. The Appellant’s case was heard on the same day with ones AGNES KAGWIRIA and LUCAS BALA testifying on behalf of the Appellants, as DW1 and DW2. They adopted their filed witness statements as their evidence in chief, and DW1 produced the Appellant’s documents as exhibits. Both witnesses were cross-examined by counsel for the Appellant/Respondent. Ms. Munyungu (pages 69-70 of ROA). 5. The court delivered a Judgment on 24th June 2025 partially allowing the Respondent’s case to the tune of Kshs. 797,066/- comprising of 12 months’ salary as compensation for unfair termination, one month’s salary in lieu of notice, unpaid leave, house allowance, severance pay and service pay. It also ordered that the Claimant/Respondent be issued with a Certificate of Service (judgment at pages 72-78 of ROA. DETERMINATION 1. The appeal was canvassed by way of written submissions. Both parties complied. Issues for determination 1. In their submissions dated 6th February 2026, the Appellant identified the following issues for determination, namely:- * 1. Whether the trial magistrate erred in finding that the Respondent’s employment converted to permanent? 2. Whether the trial magistrate erred in finding that the Respondent was unfairly terminated from employment? 3. Whether the trial magistrate erred in awarding Kshs. 17,420 one-month salary in lieu notice and Kshs. 209,040.00 being for 12 months’ compensation without reasonable justification? 4. Whether the trial magistrate erred in awarding Kshs. 34,840 as service pay? 5. Whether the trial magistrate erred in awarding Kshs. 95,040.00 being unpaid leave? 6. Whether the trial magistrate erred in awarding Kshs. 95,810.00 being Severance Pay? 7. Whether the trial magistrate erred in awarding Kshs. 344,916 as House Allowance? 2. Conversely, the Respondent identified the following similar issues in her submissions dated 15th February 2026. 3. Whether the Learned Magistrate erred in finding that the Respondent's employment had converted from casual to term contract by dint of Section 37 of the Employment Act. 4. Whether the Learned Magistrate erred in finding that the Respondent's employment was unfairly terminated on account of redundancy. 5. Whether the Learned Magistrate erred in the reliefs granted. 6. Who should bear the costs of the appeal? DETERMINATION 1. The court at the outset finds this matter similar to facts in Appeal E234 OF 2025 by the appellant against Omoke Kemunto Violet. The only difference is the award of housing in the suit. I adopt the said decision to apply mutandis mutandis to the instant appeal save for issue of Housing. 2. The said decision in Appeal E234 OF 2025 is adopted as follows- ISSUE 1: Whether the Learned Magistrate erred in finding that the Respondent’s employment had converted from casual to term contract by dint of Section 37 of the Employment Act 1. It is the Claimant/Respondent’s case that she was employed by the Respondent on 9th September on permanent basis as a general worker in the plaiting weave department with a monthly salary of Kshs.17,280. She was however, never issued with a letter of employment. 2. The Appellant/Respondent counters the Claimant’s version of events by stating that she was engaged as a casual labourer in January 2014 earning a daily wage of Kshs. 652/-, and she worked intermittently depending on availability of work. They deny that she worked on a continuous basis. The Appellant/Respondent states that the Claimant’s total gross monthly wage fluctuated depending on days worked per the Claimant/Respondent’s convenience, but was paid bi-weekly. They point at the Claimant/Respondent’s bank statements which show, according to them, that her wages would fluctuate from month to month. 3. On the first issue of whether the Claimant/Respondent’s employment was converted from casual to a term contract, I note that both parties are in consensus that the Claimant/Respondent was engaged in January 2014, and the parties separated on 31st May 2023. There is however, no meeting of minds on the form of employment, with the Claimant/Respondent insisting that she was employed on permanent basis, while the Appellant/Respondent vehemently pleads that she was a casual labourer, whose hours varied according to her convenience. 4. This being a first appeal, the Court has a responsibility to reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in this respect, as was held in the case of Selle v Associated Motor Boat Co. [1968] EA 123. Further, it was held in Mbogo V Shah [1968] EA Page 93 that the Court will not interfere with the exercise of discretion by an inferior court on appeal unless it is satisfied that its decision is clearly wrong, because it has misdirected itself or because it has acted on matters on which it should not have acted or because it has failed to take into consideration matters which it should have taken into consideration and in doing so arrived at a wrong conclusion. 5. I have seen, in the Claimant/Respondent’s bank statements which are attached to the Record of Appeal at page 13 as part of her bundle of documents filed before the trial court, and note that the first payment indicated from the Appellant/Respondent was made on 29th November 2013 and was for a sum of Kshs. 4,197/-. On 11th December 2013, about two weeks later, she received the sum of Kshs. 3,547/-. She continues to receive payments from the Appellant/Respondent at intervals of approximately two weeks until 30th September 2022. I am therefore persuaded that she was indeed employed as a casual labourer on or about late 2013, and indeed paid bi-weekly as indicated by the Appellant/Respondent. 6. That being said, from my analysis of the produced bank statements, which the Appellant/Respondent admits are valid and even relies on to advance their case, the Claimant/Respondent worked continuously since about the year 2013. 7. Section 37 of the Employment Act 2007 provides as follows:- 37. Conversion of casual employment to term contract (1) Notwithstanding any provisions of this Act, where a casual employee— (a) works for a period or a number of continuous working days which amount in the aggregate to the equivalent of not less than one month; or (b) performs work which cannot reasonably be expected to be completed within a period, or a number of working days amounting in the aggregate to the equivalent of three months or more, the contract of service of the casual employee shall be deemed to be one where wages are paid monthly and section 35(1)(c) shall apply to that contract of service. (2) In calculating wages and the continuous working days under subsection (1), a casual employee shall be deemed to be entitled to one paid rest day after a continuous six days working period and such rest day or any public holiday which falls during the period under consideration shall be counted as part of continuous working days. (3) An employee whose contract of service has been converted in accordance with subsection (1), and who works continuously for two months or more from the date of employment as a casual employee shall be entitled to such terms and conditions of service as he would have been entitled to under this Act had he not initially been employed as a casual employee. (4) Notwithstanding any provisions of this Act, in any dispute before the Industrial Court on the terms and conditions of service of a casual employee, the Industrial Court shall have the power to vary the terms of service of the casual employee and may in so doing declare the employee to be employed on terms and conditions of service consistent with this Act. (5)A casual employee who is aggrieved by the treatment of his employer under the terms and conditions of his employment may file a complaint with the labour officer and section 87 of this Act shall apply.” 1. Turning to the dispute before the court, the Claimant/Respondent’s bank statements, which I have referenced hereinabove indicate that she worked for continuous period of 2 weeks after which she was paid. These continuous two-week periods of payment span the minimum statutory period of three months of engagement with no breaks in continuity. In other words, from late November 2013 to the end of February 2014, and beyond, the Claimant is paid every two weeks like clockwork. The court has reviewed the Appellant/Respondent’s documents filed before the trial court and notes that the Respondent has not demonstrated/proved that there were breaks in the Claimant/Respondent’s employment so as to fail to work for a number of working days amounting in the aggregate to the equivalent of three months or more. 2. In the circumstances, this Court is persuaded that, although the Claimant was first engaged as a casual worker, her employment was converted into a monthly term contract pursuant to Section 37 of the Employment Act 2007. As such she was entitled to the entitled to such terms and conditions of service as she would have been entitled to under the Employment Act had she not initially been employed as a casual employee, and to the protections for employees provided by the Act. 3. I find no basis for interfering with the learned Trial Magistrate’s finding on this issue. ISSUE 2: Whether the Learned Magistrate erred in finding that the Respondent’s employment was unfairly terminated 1. The Claimant/Respondent pleads that she reported to work as usual on 31st May 2023, and after she had concluded her work day, her supervisor known as Philomena informed the Claimant/Respondent and her colleagues that they should pass by the notice board and take note of the pinned notice. They were further informed that the employment of those whose names appeared on the notice was being terminated with immediate effect for reasons that the Respondent was experiencing reduced work/business and needed to reduce the number of its employees. The Claimant/Respondent confirms that he name appeared on the notice. 1. The Claimant/Respondent was aggrieved that although she was terminated from employment on account of redundancy, the Respondent failed to comply with the laid down procedure including by granting them an opportunity to he heard, and issuing them with notice prior to the termination. 2. The Appellant/Respondent on its part denied the allegations that the Claimant/Respondent was declared redundant, and instead posited that she absconded duty on 31st March 2023 without permission. In response to her desertion from work, the Appellant/Respondent states that they sought to establish the whereabouts of the Claimant/Respondent by formally issuing a Notice to Show Cause letter on 9th June 2023, which was served upon the labour office and the union shop stewards, for dispatch to the Claimant/Respondent, but was never collected. Thereafter, the Appellant/Respondent invited the Claimant to report to her workstation vide a Return to Work Notice, which again remained uncollected. A disciplinary hearing was subsequently organized and the Claimant/Respondent invited thereto but she did not show up, leading to her termination from employment for neglect/ refusal to participate in the fair process as stipulated by the Employment Act, 2007. The Appellant/Respondent argues that the Claimant/Respondent waived the right to comply with due employment procedures and facilitated her own termination from employment. 3. On this issue, the learned Trial Magistrate held that the Claimant/Respondent was unfairly terminated from employment for the reason that the employer did not prove that the reason for termination was valid and genuine or that he complied with the statutory requirements on procedural fairness by ensuring that the notices issued by the Respondent reached the Claimant. 4. The learned Trial Magistrate did not pronounce herself to the issue of redundancy. I have looked at the Claimant/Respondent’s evidence produced before the trial court and fail to find any that supports a finding that she was declared redundant. If as per the Claimant/Respondent’s claim she was among a number of employees whose names were published on a list, nothing would have been easier or more prudent than to obtain corroborating evidence from one of her fellow affected employees. It is the court’s finding that the Claimant/Respondent’s case was one of simple termination of employment. 5. It is trite law that unfair termination is defined under Section 45 of the Employment Act 2007 as follows: “(2) A termination of employment by an employer is unfair if the employer fails to prove— 1. that the reason for the termination is valid; (b)that the reason for the termination is a fair reason— (i)related to the employees conduct, capacity or compatibility; or (ii)based on the operational requirements of the employer; and (c)that the employment was terminated in accordance with fair procedure.” 1. The existence of substantive justification and fair procedure in a termination of employment comprises the two-prong test for unfair termination. The aforementioned test was applied in the case of Walter Ogal Anuro –v- Teachers Service Commission (2013) eKLR where the Court held that: “…. For a termination of employment to pass the fairness test, there must be both substantive justification and procedural fairness. Substantive justification has to do with establishment of a valid reason for the termination while procedural fairness addresses the procedure adopted by the employer to effect the termination.” 1. Under Section 43 of the Employment Act 2007, a duty is imposed on the employer to prove the reason or reasons for the termination, and where the employer fails to do so, the termination shall be deemed to have been unfair within the meaning of section 45. 2. Other than the reason for termination Section 45 (2) imposes on the employer an additional burden of proving that the procedure followed during the termination was fair. Fair procedure under the Section 41 of the Act means that the employer must explain to the employee, in a language the employee understands, the reason for which the employer is considering termination and the employee shall be entitled to have another employee or a shop floor union representative of his choice present during this explanation, the employer must hear and consider any representations which the employee make, and the employer must consider those representations while making a final decision. 3. A careful perusal of the Appellant’s evidence indicates that although a union shop floor representative, one LUCAS BALA, adduced evidence under oath that he was issued with the various Notices by the Appellant/Respondent for onward transmission to the Claimant/Respondent, he states that he sought to physically to locate her for purposes of service in vain. No evidence, is, however, adduced that he attempted to reach the Claimant/Respondent through a known phone number, email address post box address. His admission is that the Notices never reached the Claimant/Respondent due to his inability to physically locate her. 4. It cannot be gainsaid enough that the employer, as the custodian of employment records, particularly for an employee who had worked for them for over ten years at this point, was saddled with the obligation to ensure that any communication by them reached the Claimant/Respondent. No proof of efforts made to reach her, such as text messages, emails or even letters have been produced. 5. This court has held repeatedly that in cases where the employer alleges desertion, they must provide tangible proof of the efforts they made to reach the employee. The Respondent had not discharged this duty in the present case. Further, the Respondent has not demonstrated that the Claimant was issued with a Notice to Show Cause explaining the charges against her, that she was accorded an opportunity to respond to the charges brought against her and/or that she was issued with one month’s notice of termination of employment. 6. For the above reasons, I agree with the Trial Court’s finding that the Claimant/Respondent was unfair terminated from employment. ‘ 7. Having so held the issue of redundancy does not arise and subsequently the award of severance pay payable under section 40 of the Employment Act on redundancy, is set aside. ISSUE 3: Whether the Learned Magistrate erred in the reliefs granted 1. The Trial Magistrate awarded the Claimant/Respondent the following reliefs: 2. 12 months’ salary as compensation for unfair termination Kshs. 209,040 3. One month’s salary in lieu of notice Kshs. 17,420/= 4. Severance pay Kshs. 95,810/= 5. Service pay Kshs 34,840/= 6. Unpaid leave Kshs 344,916/= 7. Housing allowance Kshs. 344,916/= 8. Unpaid leave Kshs 95,040/- Total Kssh. 797,066 Half cost Interest Certificate of service to be issued to the claimant ( Page 78 of ROA) 1. As the Claimant/Respondent had worked for the Appellant/Respondent for a period of almost 11 years; the court applies the factors under section 49 (4) of the Employment Act to find the respondent’s employment had converted from casual employment to a term contract as stated hereinabove thereby her right to be issued with one month’s termination notice under Section 35 (1) (c ) of the Employment Act had crystallized; and the Appellant/Respondent did not provide any statements to prove remittance of the Claimant/Respondent’s NSSF deductions or payment of dues to any other pension fund. The court having upheld the termination as unlawful and unfair I find no basis to interfere with the compensation for the termination, notice pay and service pay. The court found the wages paid of Kshs. 672 for 26 working days in a month would be Kshs. 17,472 which is approximately the pleaded monthly salary of Kshs. 17,420. 2. On the issue of leave pay, failed with a claim that the Claimant did not go on leave for the entire duration of her employment, the Appellant/Respondent nonetheless failed to produce employment records to rebut this position. As such, I find that the Trial Magistrate’s award on leave was deserved the casual engagement having converted to term contract and employee then being entitled to accrued leave in entire period. This decision would have been different if the employee was not casual as section 28 (4) of the employment act would have applied to limit the leave that is carried forward to 18 months. The court uphold the claim for leave as held by the trial court. 3. Severance pay is payable under Section 40 (1) (g) of the Employment Act once the court makes a finding of redundancy. In the instant case the termination was on basis of misconduct and not redundancy. The award of severance pay is set aside. Whether the trial court erred in award of housing allowance. 1. This was not an issue in Judgment in E234 OF 2025(supra). The trial court on the issue of housing held as follows- ‘Section 31 of the Employment Act provides that an employer must provide for reasonable housing for the employees or in the event that the employer cannot provide this, to pay at least 15% of the employees basic pay as housing allowance. This section shall however not apply to an employee whose contract of service contains a provision which consolidates as part of the basic wage or salary an element intended to be used by the employee as rent. I am guided by the case of Mulei v Total Kenya PLC [2024] KEELRC 1743 KLR. In this case, the claimant was never issued with a payslip and there was no proof adduced before this court that the salary given was an 'all inclusive' sum. I therefore uphold the award of housing allowance of Kshs 344, 916/-. (15%x17, 420x11yrsx12). The court finds the casual work having converted the appellant was entitled to statutory housing allowance as she was not housed. The trial court found no evidence the wage paid was consolidated and I find that the Learned Magistrate rightly applied the law in finding housing was payable and is upheld. CONCLUSION 1. The appeal is allowed only on the award of severance pay which is set aside. The Judgment and Decree of the Hon. D. Orago (SRM) delivered on 24th June 2025 in Ruiru MCELRC Cause No. E086 of 2024is set aside and substantiated as follows- Judgment is entered for the claimant against the respondent as follows- The termination is held as unlawful and unfair Compensation for unlawful and procedurally unfair termination equivalence of 10 months compensation Kshs. 209,040/- Salary in lieu of notice Kshs. 17,420/- Service pay Kshs. 34, 840 Unpaid leave Kshs. 95,040 Housing – Kshs 344,916 Total sum Kshs . 701,256/- Half costs Interest at court rate from judgment date Certificate of service to be issued to the claimant 1. The judgment to apply in determination of E232 of 2025 where the severance pay is set aside in entirety. It is so Ordered. 1. The appellant barely succeeded in the appeal. The appellant is granted half costs in the appeal. 2. Stay of 30 days granted. 3. It is so Ordered. DATED, SIGNED, AND DELIVERED IN OPEN COURT AT NAIROBI THIS 3RD DAY OF JULY, 2026. JEMIMAH KELI, JUDGE. IN THE PRESENCE OF: Court Assistant: Otieno appellant -Eredi Respondents- absent