Mistry V. Naran Mulji & Co v Ali (Civil Appeal E055 of 2023) [2026] KECA 497 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed firing a worker by phone without written reasons or a hearing is unfair, but cut his award to about Kshs.346,000.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the respondent was employed from 4th April 2009 or only from February 2017, and from what date his employment was converted from casual to a term contract under Section 37 of the Employment Act
- 2.Whether the respondent's termination on 7th July 2019 was substantively and procedurally fair
- 3.Whether the claims for underpayment and unpaid leave were time-barred under Section 90 of the Employment Act
- 4.Whether the quantum of the awards for compensation, salary in lieu of notice, unpaid leave and underpayment made by the ELRC was proper
Key legal issues
#Date of commencement and conversion of the respondent's employment
While the respondent was once a casual employee, the conversion to a term contract under Section 37(1) is presumed from 8th February 2016, the date statutory remittances to NSSF were demonstrated, not from 4th April 2009.
The Court held there was no evidence the respondent worked continuously from 2009; payment vouchers for October 2015 to February 2016 showed daily-wage casual engagement. The letter to NSSF of 8th February 2016 and subsequent remittances provided the evidential anchor for the presumption of permanent employment under Section 37(1)(a) and (b).
Fairness of the termination
The termination by telephone call without written reasons or a hearing was a summary dismissal that was both substantively and procedurally unfair under Sections 44(1) and 45(2) of the Employment Act.
The Court adopted Highlands Mineral Water and Janet Nyandiko: an employer must prove a valid reason and follow fair procedure, including explaining reasons to the employee in the presence of a fellow employee or union representative and hearing representations. None of this was done, so the termination was unfair and un-procedural regardless of the redundancy assertion.
Limitation of the underpayment and unpaid leave claims
The claims were not time-barred as the cause was filed within three years of the 7th July 2019 termination under Section 90 of the Employment Act.
Relying on The German School Society and Nganga, the Court distinguished continuing wrongs from recurring wrongs but found it unnecessary to extend the analysis: the claim filed on 11th March 2020 fell squarely within the three-year statutory period measured from termination.
Quantum of awards
The Court recalibrated the awards: compensation reduced to four months' salary (Kshs.60,567.80) reflecting four years of permanent employment, unpaid leave reduced to three years (Kshs.45,425.85), and underpayment recomputed as Kshs.195,075.95, while upholding one month's pay in lieu of notice.
The Court used the Regulations of Wages (General) (Amendment) Order, 2018 monthly wage for a night watchman (Kshs.15,141.95) as the baseline, applied 21 working days per month, and substituted awards that had been based on a 10-year service span inconsistent with its conversion finding.
Legal principles established
#- A second appellate court is confined to matters of law and will not interfere with findings of fact unless the two courts below considered matters they should not have, failed to consider matters they should have, or the decision is perverse.
- A casual employee who works continuously for the equivalent of three months or more is converted by operation of law under Section 37 of the Employment Act to a term contract, but the date of conversion must be anchored on evidence; a demonstrated statutory remittance date may ground the presumption of permanent employment.
- Termination of employment must be both substantively and procedurally fair; even a summary dismissal requires that reasons be communicated in writing and the employee be heard, failing which the termination is unfair under Section 45(2) of the Employment Act.
- A claim for underpayment and unpaid leave accruing during employment is not a continuing injury under Section 90 of the Employment Act beyond the statutory period; where the claim is filed within three years of termination, it is not time-barred.
Court orders
#- 1.The award of 6 months' salary compensation for unfair termination of Ksh.90,851.70 is set aside and substituted with an award of Kshs.60,567.80
- 2.The award of one month's salary in lieu of notice of Kshs.15,141.95 is upheld
- 3.The award of unpaid leave of Kshs.105,000.00 is set aside and substituted with a sum of Kshs.45,425.85
- 4.The award of salary underpayment of Kshs.700,701.95 is set aside and substituted with a sum of Kshs.195,071.95
- 5.Total payable Kshs.346,491.45 to the respondent
- 6.The respondent is awarded half the costs of this appeal
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- Employment and Labour Relations Court, Mombasa
- ELRC Appeal No. E002 of 2022
- Jurisdiction invoked
- Section 72(1) of the Civil Procedure Act - second appeal on matters of law only
Relief refused
#Claim that respondent was a permanent employee from 4th April 2009 (and corresponding quantum based on 10 years' service)
No evidence of continuous employment from 2009; conversion under Section 37(1) presumed only from 8th February 2016 when NSSF remittances were demonstrated
Claim that termination was on account of lawful redundancy attracting Section 40 benefits including severance pay
Downsizing assertion was not sufficient proof of redundancy; the termination was instead a summary dismissal without fair procedure
Costs
The respondent is entitled to half costs of this appeal, which the Court granted
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
In a second appeal however, such as this one before us, we have to resist the temptation of delving into matters of facts.
We are therefore ready to accept the evidence that the respondent was formally employed as a permanent employee on 8th February 2016.
In our view, the sudden termination by telephone call constituted summary dismissal as provided for under Section 44(1) of the Employment Act.
In order for termination to be fair in the eyes of the law, it has to be both substantively and procedurally fair.
The claim was filed before the Magistrate's Court on 11th March 2020, which was a date within the three years' statutory period.
Since the appeal partially succeeds, the respondent is entitled to half costs of this appeal, which we hereby grant.
The award of 6 months' salary compensation for unfair termination of Ksh.90,851.70 is hereby set aside and substituted therefor with an award of Kshs.60,567.80.
Issues in the judgment
#Inconsistent dates for the trial court's judgment within the same judgment: 'Judgment dated 15th December 2021' versus the ELRC having 'set aside the decision of the trial court of 15th November 2021'.
The substituted award for underpayment in the final orders (Kshs.195,071.95) does not match the Court's own computation of Kshs.195,075.95 earlier in the judgment.
Apparent typographical errors in cited material: the Highlands Mineral Water appeal number appears as 'Civil Appeal 183 of 2028' and a submission refers to the respondent stopping work 'in January 2029'.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Mistry V. Naran Mulji & Co v Ali (Civil Appeal E055 of 2023) [2026] KECA 497 (KLR)", Case Analysis (2026). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2026/497/eng@2026-03-13
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.