https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/1300

**REPUBLIC OF KENYA** **IN THE EMPLOYMENT AND LABOUR RELATIONS COURT** **AT MOMBASA** *(Before Hon. Lady Justice Monica Mbarũ)* **APPEAL NO. E217 OF 2025** **VIPINGO WORKERS CO-OPERATIVE SAVINGS AND** **CREDIT SOCIETY LIMITED APPELLANT** *VERSUS* 1. **ERIC MWACHIRO ZIRO** 2. **DAVID CHARO YAA** 3. **SABINA MAKE TUNJE** 4. **ELIUM MWAVTER MWAMUYE** 5. **KILIFI KARSA KALAMA RESPONDENT** **[Being an appeal from the judgment of Hon. Charles Obulutsa delivered on 30 September 2025 in Kilifi CMELRC No. E043 of 2023, which consolidated CMECLR Causes No. E044, E045, E046, E048 of 2023]** **JUDGMENT** The appeal arises from the judgment delivered on 30 September 2025 in Kilifi CMELRC No. E043 of 2023. The judgment consolidated Kilifi CMELRC Causes No. E044, E045, E046, E048 of 2023. The appeal is on the grounds: 1. The learned trial magistrate erred in law and fact by holding that the respondent was terminated unfairly. 2. The learned trial magistrate erred in law and fact by holding that the appellant failed to involve the labour officer in the redundancy process, rendering the entire termination procedurally irregular. 3. The learned trial magistrate erred in law and fact in finding that there was no meaningful consultation with the respondents. 4. The learned trial magistrate erred in law and fact in awarding the respondents the maximum compensation of 12 months' gross salary for alleged unfair termination. 5. The learned trial magistrate erred in law in upholding the respondent's claim for underpayments from 2014 to 2023. 6. The learned trial magistrate erred in law in the computation of the severance pay owed to the following respondents: Eric Mwacharo Ziro Sabina Mkare Tunje Elium Mwaviter Mwamuye Kilifi Kalama. 1. The learned trial magistrate erred in law and fact by adopting an overly technical and rigid approach while disregarding the appellant’s substantive efforts of compliance. 2. The learned trial magistrate erred in law and fact by failing to consider judicially or analyse the pleadings, evidence and submissions by the appellant. The background to the appeal is a claim filed by the respondent. Under the consolidated suit, Kilifi CMELRC No. E043 of 2023 – Eric Mwchiro Ziro v Vipngo Workers Co-operative Savings & Credit Society Limited, the claim was that the respondent was employed by the appellant as a machine operator from 1 February 2014 to 31 August 2023. His wage was Ksh. 9,610 per month. The claim was that, on 3 August 2023, the appellant issued a notice terminating the appellant's employment on account of redundancy. The notice dated 31 July 2023 indicated that the applicant’s business was being restructured and that the restructuring would take effect on 31 August 2023. The claim was that there was no notice issued as required under section 40(1)(b), and it did not meet the statutory requirements of section 40(1)(f) of the Employment Act (the Act). The termination of employment was thus unlawful because redundancy dues were not paid. He thus claimed that during his employment there were underpayments contrary to the Wage Orders, salary arrears from January to August 2023, redundancy dues and accrued leave days. He thus claimed the following: 1. Damages for unfair termination of employment, Ksh. 115,320. 2. Salary for 8 months Ksh. 76,880. 3. Notice pay Ksh. 9,610. 4. Underpayments from 2014-2023 Ksh. 561,009.60 5. Accrued leave from 2015 to 2018 Ksh. 31,046.40 6. Prorated leave Ksh. 5,174.40 7. Severance pay Ksh. 55,442,31 8. Service pay Ksh. 55,442.31 9. Costs of the suit. In reply, the appellant filed a response and counterclaim. The response was that the claims made were without merit. From January to August 2023, the respondents were not actively reporting to work but were paid a reasonable monthly salary despite the company's financial difficulties. The counterclaim concerned the loan advanced to the respondents while they were employed. The loans related to: 1. Kilifi Karisa kalama Ksh. 305,298. 2. David Charo Yaa Ksh. 82,924. 3. Elium Mwaviter Mwamuye Ksh. 17,583. The learned magistrate heard the parties and held that there were admissions that the respondents were owed various dues including: 1. Certificate of service. 2. Salary for 8 months from January to August 2023 at Ksh. 76,880, and 3. One month's notice pay Ksh. 9,610. On the procedure applied in declaring the redundancy, the learned magistrate further analysed the evidence and held that the motions of section 40 of the Act were not adhered to. The appellant failed to demonstrate that there was a need for restructuring and that the criteria applied in the termination of employment were met. That the appellant failed to comply with the law. However, the learned magistrate appreciated that the appellant had offered to pay the following: 1. Salary up to 31 August 2023. 2. Accrued leave days. 3. Notice pay. 4. Severance pay of 15 days for each full year worked. 5. Leave fare one way. 6. Less what was owed to the company. For severance pay, the learned magistrate held that it was not payable to Kilifi Karisa Kalume and Eric Mwachiro Ziro, who had resigned, and that redundancy did not apply to them. On the counterclaims, the respondents conceded to owing the appellant the following: David Charo Yaa Ksh. 82,924. Elium Mwaviter Mwamuye Ksh. 17,583. Kilifi Karisa Kalama Ksh. 503,298. Sabina Mkare Tunje Ksh. 216,100. On this basis, the trial court made the following awards: Eric Mwachiro: 1. Employment terminated unfairly. 2. Certificate of service. 3. 12 months' damages for unfair termination, Ksh. 115,320. 4. Salary for one month worked Ksh. 9,610. 5. Underpayments from 2014-2023 Ksh. 561,009. 6. Severance pay ksh. 55,442.31. David Charo Yaa 1. A declaration that employment was terminated unfairly. 2. Certificate of service. 3. 12 months' damages Ksh. 151,404. 4. Salary for one month worked Ksh. 12,617. 5. One month's notice pay Ksh. 12,617 6. Underpayment 2014 – 2023 Ksh. 267,896.40 7. Severance pay Ksh. 116,464.62. Sabina Mkare 1. A declaration that employment was terminated unfairly. 2. Certificate of service. 3. 12 months' damages Ksh. 222,492. 4. Salary for one month worked Ksh. 18,541. 5. One month's notice pay Ksh. 18,541. 6. Underpayment 2014 – 2023 Ksh. 246,876.60 7. Severance pay Ksh. 288,811.73. Elium Mwaviter 1. A declaration that employment was terminated unfairly. 2. Certificate of service. 3. 12 months' damages Ksh. 151,404. 4. Salary for one month worked Ksh. 12,617. 5. One month's notice pay Ksh. 12,617 6. Underpayment 2014 – 2023 Ksh. 267,896.40 7. Severance pay Ksh. 116,464.62. Kilifi Karisa Kalama 1. A declaration that employment was terminated unfairly. 2. Certificate of service. 3. 12 months' damages Ksh. 187,068. 4. Salary for one month worked Ksh. 15,589. 5. One month's notice pay Ksh. 15,589. 6. Severance pay Ksh. 107,923.85. The learned magistrate also allowed the counterclaim in the following terms: 1. David Charo Yaa to pay the applicant Ksh. 82,924. 2. Elium Mwavter Mwamuye t pay Ksh. 17,583. 3. Kilifi Karisa Kalama to pay Ksh. 305,298. 4. Sabina Mkare Tunje to pay Ksh. 216,100 On the appeal, the parties agreed to address the issue by filing written submissions. These are analysed in the body of the judgment. **Determination** This is a first appeal. The court may review the records, reassess the findings, and reach a conclusion. However, consider that the trial court had the chance to take evidence and appreciate the demeanour of the witnesses. By a notice dated 31 July 2023, the appellant terminated the employment of the respondent, together with other employees who were claimants in **Kilifi CMELRC Causes No. E044, E045, E046, E048 of 2023.** The termination of employment was to take effect on 31 August 2023. The reasons given for the notice were due to redundancy and that: *…due to the sacco restructuring its business activities, your services will be declared redundant with effect from 31 August 2023. …* *You will be paid the following:* 1. *Salary up to 31 August 2023.* 2. *Accrued leave days.* 3. *One month pay in lieu of notice.* 4. *Severance pay at the rate of 15 days for each full year worked.* 5. *Leave fares one way.* 6. *Less statutory deductions.* The notice was copied to the labour officer, Kilifi County. The respondent’s claim was that the termination of employment was unfair and that the application was filed to issue the required notices under section 40(1) (f) or to make redundancy payments as required under section 40(1) (e), (f), and (g). Under section 40 of the Act, the employer may terminate employment in the event of redundancy. Under these provisions, the conditions to be satisfied are that notice is issued to employees on the condition that there is an operational reason, such as restructuring or reorganisation. Upon notice to the employees and to the Labour Office on the extent and breadth of the redundancy. In **Barclays Bank of Kenya, Barclays Africa Group (SA) Ltd v Gladys Muthoni & 2 Others [2018] eklr,** the court held that the employer should first give general notice of that intention to declare a redundancy to the employees likely to be affected or totheir union. It is that notice that will elicit consultation between the parties. The intention then invites consolations regarding the mode of its implementation, where found justifiable. This position is reiterated in **Kenya Airways Limited v Aviation & Allied Workers Union Kenya & 3 others [2014] eKLR**, where there exist valid reasons arising from operational requirements, employment can be terminated lawfully. In this case, the respondent and other employees admitted that the appellant convened a meeting on the existing operational challenges. Indeed, their salaries from January to August 2023 had not been paid. The learned magistrate, in analysing the facts, established that a meeting was held with all employees on operational challenges, save that it did not meet the threshold under section 40 of the Act. However, the fact of this meeting is not challenged. Under section 40 of the Act, the general notice to employees was undertaken within the admitted meeting. The respondent and other employees do not claim to have been unionised. The filed payment statement does not indicate remittance of trade union dues. Thus, under section 40(1) (a) of the Act, the requisite notice was to the affected employee and to the labour officer. The court finds there were valid reasons existing to justify termination of employment under section 40 of the Act. Due process was adhered to, as the relevant notice was issued to all employees, and then a personal notice was issued to the respondent pursuant to sections 40(b) and 45(2) of the Act. In[**Cargill Kenya Limited v Mwaka & 3 others [2021] KECA 115 (KLR)**](https://new.kenyalaw.org/akn/ke/judgment/keca/2021/115/eng%402021-10-22) and **The German School Society & another v Ohany & another [2023] KECA 894 (KLR),** the courts have emphasised that the personal notice due to the employee can be paid pursuant to section 40 (1) (f) of the Act. See also [**Juma v Ketty Tours Travels and Safari Limited [2026] KEELRC 920 (KLR)**](https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/920/eng%402026-04-09) and **Ondego v Winguard Security Services Limited [2026] KEELRC 1098 (KLR).** Upon the employer issuing the notice to the affected employee, the same can be served in full or paid in lieu thereof. In this case, the appellant issued a notice dated 31 July 2023 to take effect on 31 August 2023. A full month's notice as required under section 40(1) (f) of the Act was issued. However, the appellant further offered to make a payment of one month pay in lieu of notice in the tabulation of the terminal dues. Notice had already been issued, and the extra offer to pay in lieu of notice was in addition to what was due, given the finding that there was a valid and justified reason for termination of employment due to redundancy. The award of compensation and notice pay is not justified. Part of the parties' consent was to pay the salary due for January to August 2023. The consent also included payment of one month's notice pay. Whereas the salary arrears are payable, the offer to include notice pay is gratuitous in view of the notice dated 31 July 2023 and the same taking effect on 31 August 2023 in view of section 40(1)(f) provisions and the rationale addressed in [**Cargill Kenya Limited v Mwaka & 3 others [2021] KECA 115 (KLR)**](https://new.kenyalaw.org/akn/ke/judgment/keca/2021/115/eng%402021-10-22)**,** cited above. Regarding underpayment, the respondent and other employees were based in Vipingo, Kilifi. Under the General Wage Orders applicable for Kilifi in August 2023, a machine operator, as the respondent, is defined as having a basic wage of KSh. 12,995.25. Under the Memorandum of Claim, he asserted that he was paid Ksh. 9,610 per month. **With the additional benefit of 15% house allowance to this position, the due wage is KSh. 1,949.25 + 12,995.25= Ksh. 14,995.** There was an underpayment of Ksh.5, 334 per month. The filed payment statement confirms payment of KSh. 9,610 as the gross wage. However, an underpayment of wages is a continuing injury and only accrues within 12 months, as held in [**The German School Society & another v Ohany & another [2023] KECA 894 (KLR)**](https://new.kenyalaw.org/akn/ke/judgment/keca/2023/894/eng%402023-07-24)**.** Under section 89 of the Act, such a continuing injury must be addressed within 12 months. In this case, the respondent can only be paid up to 12 months of the underpayment. Ksh. 5,334 x 12 = 64,008. On the accrued leave, the claim relates to leave due from 2015 to 2018. Although annual leave is a right under section 28 of the Act, it cannot be accumulated beyond 18 months pursuant to section 28(4) of the Act. As such, under section 89 of the Act, such claim abated as at 31 August 2023. The claimed prorated leave is due for the period ending 31 August 2023. The claim for Ksh. 5,174.40 is justified. On severance pay, employment was terminated due to redundancy; the lawful termination dues also offered by the appellant included 15 days' severance pay for each full year worked. The respondent worked from 1 February 2014 to 31 August 2023. This is 8 full years. On the due gross wage of Ksh. 14,995/30 x 15 x 8 = Ksh. 59,980 in severance pay. In the claim for service pay, the filed pay statements included statutory deductions. Under section 35(5) and (6) of the Act, service pay is not due. On costs, the appeal addressed above, it is only fair that each party should meet its costs. **Accordingly, the judgment in Kilifi CMELRC No. E043 of 2023 is hereby reviewed n the following terms:** 1. **Underpayments Ksh. 64,008.** 2. **Severance pay Ksh. 59,980.** 3. **Prorated leave Ksh. 5,174.40.** 4. **Each party to bear its costs.** **The findings above shall apply under the consolidated suits in Kilifi consolidated CMECLR Causes No. E044, E045, E046, E048 of 2023.** **Delivered in open court at Nairobi, this 18th day of May 2026** **M. MBARŨ** **JUDGE** **In the presence of:** Court Assistants: Catherine, Kemboi and Omar ……………………………………………… and …………………………………..…………..