https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/1540

**REPUBLIC OF KENYA** **IN THE EMPLOYMENT AND LABOUR RELATIONS COURT** **AT MOMBASA** **CIVIL APPEAL NO: E135 OF 2025** **TARMAL WIRE PRODUCTS LIMITED …………..APPELLANT** **VERSUS** **JAMES FUNDI CHARO ………………………………RESPONDENT** ***[Being an appeal from the judgment of the Honourable Kalo delivered on the 8th July 2025 in the Chief Magistrate's Court, ELRC E 327 OF 2023]*** JUDGMENT 1. Claiming that at all material times, he was an employee of the Appellant, the Respondent initiated legal proceedings against the Appellant under the forestated suit, claiming compensatory and declaratory reliefs. 2. The Appellant resisted the Respondent’s claim in the Memorandum of Response dated 5th July, 2023, alleging that at all material times the Respondent was employed under various fixed-term contracts, and that his employment terminated by effluxion of time of the last contract under which he served 3. Upon hearing the parties on their respective cases, the learned trial Magistrate held that the Respondent did not serve under fixed-term contracts as alleged by the Appellant. Accordingly, the Respondent’s employment did not end by the lapse of a contractual period, but at the Appellant’s initiative and unfairly so. 4. Pursuant to the directions of this Court, the appeal herein was canvassed by way of written submissions. The parties’ respective submissions are on record for this Court’s consideration. **Respondent’s case** 1. It was the Respondent’s case that he was employed by the Appellant, Tarmal Wire Products Limited, in September 2018 as a barbed wire operator, earning Kshs. 12,522 per month. He stated that, despite repeatedly requesting one, he was never issued with a written contract of employment. He maintained that he served the Appellant diligently for about four years and never received any oral or written warning in the course of his service. 2. The Respondent stated that on 4th April 2023, while on duty, he and four other employees, namely Sammy, James, Bernard and Omondi, were summoned to the Operations Manager's office, Mr Osman. They were informed of a shortage of work and directed to return their uniforms and go home, with an assurance that they would be contacted if work became available. 3. According to the Respondent, after a period of one week had elapsed without any communication, he returned to the workplace to inquire about the status of his employment but was refused entry without any reason or explanation. He stated that when he lodged a complaint through his legal representatives, the Appellant responded that his contract had concluded on 3rd April 2023, a fact which was not true. 4. The Respondent therefore contended that his termination was unlawful and unfair, and that the Appellant had refused to pay his terminal dues despite demand and notice of intention to sue. He sought salary in lieu of notice, unpaid leave, underpayment, house allowance, severance pay, gratuity, compensation for unlawful termination, a certificate of service, costs and interest, totalling Kshs. 529,719.01. **Appellant’s case in the lower court** 1. The Appellant’s case was that the Respondent was employed in July 2019 on fixed-term contracts, with his last contract running from 2nd January 2023 to 3rd April 2023 as a general labourer. The Appellant stated that the Respondent worked at its Mazeras yard within Kilifi County and earned a consolidated monthly salary of KShs. 9,327, which included house allowance. 2. The Appellant further denied that the Respondent was declared redundant or unfairly terminated. Its position was that the Respondent’s last fixed-term contract naturally expired by effluxion of time on 3rd April 2023, thereby bringing the employment relationship to an end. The Appellant maintained that the Respondent did not work beyond 3rd April 2023 and that there was therefore no unlawful termination. 3. The Appellant also denied the Respondent’s claims for underpayment, house allowance and leave. It stated that the Respondent worked in Mazeras, Kilifi County, which falls within “other areas” for wage determination under the applicable wages order, and that his salary was therefore lawful. It further stated that the salary was consolidated and included house allowance, and that the Respondent had, at all material times, proceeded on leave. 4. The Appellant’s case was that the claim was without merit because the Respondent’s employment ended when his fixed-term contract expired, not by termination or redundancy. It maintained that it had responded to the demand letter with the correct facts, yet the Respondent still filed suit. **Judgement** 1. In its Judgment dated as hereinabove stated, the trial court found that the Appellant did not prove that at all material times, the Respondent was in its employment under fixed term contracts, and that his employment came to termination when the last contract under which he served expired. He consequently held that the Respondent’s employment was unfairly terminated by the Appellant, and granted him relief under the various heads of his claim. 2. He was awarded one month’s salary in lieu of notice at Kshs. 15,201.65, unpaid leave limited to three years at Kshs. 45,603, house allowance limited to three years at Kshs. 82,080.90, and eight months’ salary as compensation for unfair termination at Kshs. 121,613.20. **Appeal** 1. Dissatisfied with the decision, the Appellant filed this appeal on the following grounds; 2. THAT the Learned Magistrate erred in law and in fact in entering judgment for the Respondent against the Appellant. 3. THAT the learned magistrate erred in law and in fact in finding and ordering that the Respondent was entitled to; 4. Notice pay 5. Leave pay 6. Damages for unfair termination 7. Cost of suit and interest c) THAT the learned magistrate erred in failing to appreciate and/or consider the pleadings filed and the documentary evidence placed before him, thereby arriving at a wrong conclusion, particularly as regards the determination of the Respondent's employment. d) THAT the learned magistrate erred in law and fact in failing to appreciate the duty /burden imposed on the Respondent under section 47(5) of the Employment Act 2007. **Appellant’s submissions** 1. The Appellant argues that, as a first appellate court, the Court is required to re-evaluate the evidence on the record and reach its own conclusion, relying on Rose Nafula Wanyama v Nusra Nasambu Chibanaga and Another [2020] eKLR. 2. On the merits, the Appellant contends that the trial court erred in finding that the Respondent was unfairly dismissed, despite documentary evidence showing that he had been employed as a general labourer under fixed-term contracts, with the last contract ending on 3rd April 2023. 3. The Appellant argues that the Respondent’s employment ended by effluxion of time, and that once the Appellant produced the contracts, the burden shifted to the Respondent under section 47(5) of the Employment Act, 2007, to prove unfair termination. It submits that the Respondent merely denied signing the contracts and alleged forgery without substantiating the allegation. 4. The Appellant further submits that the trial court erred in awarding notice pay, leave pay and house allowance. It argues that notice pay was not payable because the contract had a fixed end date; leave had either been taken or paid for, as evidenced by signed leave forms; and house allowance was included in the Respondent’s pay, as shown in the contracts and pay slips. 5. The Appellant further submits that the Respondent executed a disclaimer form on 3 April 2023, acknowledging that he had no claims against the Appellant except for three pending leave days, which were paid. The learned trial Court erred in law in awarding him the relief it did. **Respondent’s submissions** 1. Regarding the nature of employment, the Respondent submits that the Appellant failed to prove that he was employed under fixed-term contracts. He denies signing the alleged contracts and job application letter, and argues that the signatures on those documents do not match his true signature. His true signature is that which appears in his verifying affidavit and witness statement. 2. He also points out that the contracts allegedly produced by the Appellant did not bear the Appellant’s signature or stamp, and that the alleged witness to the contracts was not called to testify. He further argues that the Appellant produced only six contracts, leaving unexplained gaps between September 2018 and July 2019 and August 2019 and March 2022, despite the NSSF statement showing continuous statutory remittances from September 2018 to March 2023. 3. The Respondent further contends that the Appellant’s witness, RW1, lacked reliability and consistency. RW1 asserted that the Respondent was employed as a general labourer and that he was not engaged during the intervals for which no contracts were presented; however, he also acknowledged that the Respondent was employed continuously and that NSSF deductions were duly remitted. 4. He submits that, as an employer, the custodian of employment records under sections 10 and 74 of the Employment Act, the Appellant ought to have produced attendance records to disprove his case. He relies on **Abigael Jepkosgei Yator & another v China Hanan International Co. Ltd [2018] eKLR.** 5. On termination, the Respondent submits that the trial court correctly found that the termination was unlawful and procedurally unfair. He argues that the Appellant failed to prove the alleged fixed-term contracts and, therefore, that his contract ended by effluxion of time. As such, it was required to comply with the Employment Act before terminating his employment. 1. According to him, the reason for the termination of his employment was a shortage of work, amounting to redundancy. Yet the Appellant did not issue a redundancy notice, apply any fair selection criteria, or pay redundancy dues as required under section 40 of the Employment Act. 2. Alternatively, even if the matter was treated as an ordinary termination, the Appellant failed to prove a valid reason and failed to afford him a hearing as required under sections 41, 43, 45 and 46 of the Employment Act. He relies on **Walter Ogal Anuro v Teachers Service Commission (2013) eKLR,** as cited in **Judith Atieno Owuor v Sameer Agriculture and Livestock Limited [2020] eKLR,** for the principle that termination must satisfy both substantive justification and procedural fairness. 3. Regarding remedies, the Respondent supports the award of one month’s salary in lieu of notice, as he was not given notice before termination. He also supports the award of unpaid leave, arguing that the leave forms produced by the Appellant were invalid because they lacked the Appellant’s stamp or signature and did not show approval by the employer. 4. The Respondent also submits that the trial court properly awarded unpaid house allowance under section 31 of the Employment Act, as the Appellant neither provided housing nor proved that his salary was consolidated. However, as with leave pay, he argues that the house allowance should not have been capped at three years but should have covered the entire period of employment. 5. He further argues that the trial court ought to have awarded underpayment, severance pay and gratuity. On underpayment, he contends that his salary was below the applicable minimum wage for a machine attendant. On severance pay, he argues that since he was sent away due to a shortage of work, the termination amounted to redundancy. 6. On gratuity, he submits that, having worked continuously for 4½ years, he was entitled to gratuity at the rate of 15 days for each completed year of service. 7. On compensation, the Respondent supports the award of eight months’ salary for unfair termination. He submits that the Appellant acted unfairly by terminating him without notice, hearing, valid reason or due process, and by allegedly relying on forged contracts to defeat his claim. He also supports the award of a certificate of service under section 51 of the Employment **Analysis and determination** 1. As this is a first appeal, this Court is required to reconsider and re-evaluate the evidence placed before the trial court and to arrive at its own independent conclusion, bearing in mind that it did not have the benefit of seeing and hearing the witnesses testify. See Selle & Another v Associated Motor Boat Co. Ltd & Others [1968] EA 123. 2. Having considered the record of appeal, the judgment of the lower court, the grounds of appeal and the submissions, the issues that arise for determination in this appeal are as follows: 3. Whether the trial court erred in finding that the Respondent’s employment was unfairly and unlawfully terminated; and 4. Whether the Respondent was entitled to the reliefs awarded by the trial court; and 5. There is no dispute that, at all material times, the Respondent was an employee of the Appellant, and that the Respondent's employment was terminated in the first week of September 2018. However, there is significant controversy over the manner of termination. The Respondent contended that the Appellant initiated the termination, while the Appellant asserted that the employment ended by effluxion of time, following the expiration of the fixed-term contract under which the Respondent last served, which had a specified lapse date. The contract ran from January 2023 to 3rd April 2023 and ended by effluxion of time. 6. The way they are designed and as contemplated under Section 10(3)(c) of the Employment Act, fixed-term contracts which in nature are not intended to be indefinite, must have a specific commencement date and lapse date. In **Mutisya v Machakos County Assembly Service Board [2022] KEELRC 12953 (KLR),** the court stated *“The law on fixed-term contracts is well settled in this Country. Fixed-term contracts have a definite start date and a definite or ascertainable end date in line with the provisions of Section 10(3)(c) of the Employment Act, 2007.”* 1. The legal effect of a valid fixed-term contract is that it lapses automatically on the date agreed by the parties, unless there is evidence of renewal, extension, or a legitimate expectation of renewal. 2. Having stated thus, I now turn to consider whether, at the time of separation from employment, the Respondent had been serving the Appellant under the fixed-term contract hereinabove stated. 3. Before the trial court, the Appellant produced the Respondent’s employment documents, including the last contract for the period between 2nd January 2023 and 3rd April 2023. I have carefully considered the contract of employment and note that it was executed by three parties: the employee, someone acting on behalf of the Appellant, and a witness. The Respondent denied signing the contract. This Court notes that, upon being served with the Appellant’s response and the documents intended to be tendered in evidence, the Respondent did not file a reply to the defence before pleadings closed, nor file a further witness statement to controvert the Appellant’s averment, nor, after the closure of pleadings, seek to amend his pleadings to assert that he did not sign the contract and that the signature on the contract was a forgery. 1. In light of the foregoing, I conclude that the Respondent's denial of the contract and his execution of it were an afterthought. He executed the contract and cannot be allowed to run away from it. 2. On focus before the trial, the Court was the last contract under which the Respondent served. I am unable to see the relevance of the other alleged fixed-term contracts that the learned trial Magistrate relied on to conclude that the contract did not exist. 3. In the upshot, I find that the Respondent last employed the Appellant under fixed-term contracts, which expired on 3rd April 2023. The employment relationship therefore came to an end by effluxion of time, not by unfair termination or redundancy. The learned trial Magistrate erred in holding otherwise. 4. Since the contract expired automatically upon its term completion, the Appellant was not obliged to issue a termination notice pursuant to section 35 of the Employment Act, nor was it necessary to conduct a disciplinary hearing under section 41. These provisions would have been applicable had the Appellant terminated the employment prior to the agreed expiry date. See **Registered Trustees De La Salle Christian Brothers t/a St. Mary’s Boys’ Secondary School v Julius DM Baini[2017]Eklr.** 5. The trial court therefore erred in finding that the Respondent’s employment was unfairly and unlawfully terminated. The finding that the Respondent was entitled to compensation for unfair termination and to one month’s salary in lieu of notice cannot stand. 6. Having found as I have hereinabove that the Respondent was employed under the aforementioned fixed-term contract, and noting that the contract included a provision for a house allowance, it is therefore apparent that the award of the allowance by the learned trial Magistrate lacked a proper legal foundation. 7. In conclusion, the Appellant’s appeal is largely successful. The award of notice pay, compensation for unfair termination, and house allowance are hereby set aside. **Read Signed and Delivered this 28th Day of May 2026.** **OCHARO KEBIRA** **JUDGE**