Skip to content
AI-generated case briefs sourced from Kenya Law · Not legal advice
AI-generated case brief
Case Brief · caselaw.co.ke
ELRCPartially AllowedCause Number 14 of 2015· [2016] KEELRC 445 (KLR)

Erick Chuma Zaka v Rakal Limited [2016] KEELRC 445 (KLR)

Employment and Labour Relations Court (Industrial Court) of Kenya at Mombasa
22 March 2016
1,822 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~7 min to read original · ~4 min brief

The bottom line

#

What this practically means

#

Executive summary

#
The Claimant, employed by the Respondent from 1st March 2010 and terminated on 10th July 2013, claimed unfair and unlawful termination, seeking 12 months' salary in compensation, house allowance arrears of Kshs. 78,000, severance pay, general damages and a declaration. The Respondent conceded employment but maintained the Kshs. 13,000 monthly salary was consolidated (including housing), that the Claimant was heard before termination for operational reasons, and that he received terminal benefits of Kshs. 19,842 without complaint. The Court found the Respondent's evidence on consolidation unclear and inconsistent - one witness put basic pay at Kshs. 11,000 with house allowance of Kshs. 2,000, while the other said house allowance was Kshs. 1,800 - and the pay slip showed basic pay of Kshs. 13,000 with the house allowance slot blank. Relying on Section 31(2)(a) of the Employment Act 2007, the Court held there must be an express contractual provision for consolidation, and awarded house rent allowance at 15% of basic salary, Kshs. 76,700 in arrears. On termination, the Respondent's witnesses gave shifting and unproven reasons - low business, staff reduction, reorganization to combat stock theft - and the Court found the Respondent failed to prove reasons under Section 43. The hearing did not conform to Section 41, and no Section 40 redundancy procedure was followed. The Court declared the termination unfair and awarded six months' gross salary compensation of Kshs. 89,700. Severance pay was refused as redundancy was not established, and general damages were refused as compensation was already granted. Payment was ordered within 30 days, with interest at 14% per annum thereafter, and no order on costs.

Key legal issues

#
01

Entitlement to house rent allowance on a purportedly consolidated salary

Holding

The Claimant was entitled to arrears of house rent allowance because there was no express contractual provision consolidating house allowance into the salary, and the pay slip showed basic pay of Kshs. 13,000 with the house allowance slot blank

Reasoning

The Respondent's two witnesses gave inconsistent figures for basic pay and house allowance (Kshs. 11,000/2,000 vs Kshs. 11,200/1,800), undermining the consolidation claim. Section 31(2)(a) of the Employment Act 2007 requires an express contractual provision for consolidation. The pay slip showed basic pay of Kshs. 13,000 with the house allowance slot blank. The Court therefore awarded house rent allowance at 15% of basic salary per the Wage Guidelines, computed over 39 months and 10 days.

p. 3
02

Proof of reasons for termination under Section 43 of the Employment Act

Holding

The Respondent failed to prove the reason for termination, oscillating between theft of stocks, staff reduction and reorganization without clarity

Reasoning

The Respondent's witnesses gave shifting reasons: Mjomba cited low business without proof; Shah cited low business and staff reduction; there were suggestions of reorganization to combat stock theft, yet Mjomba testified there was no theft. The termination letter was vague, citing only 'changes of staff/personnel'. Under Section 43, the employer must prove the reason for termination, and the Respondent failed to discharge this burden.

p. 3
03

Procedural fairness in termination

Holding

The hearing granted to the Claimant did not conform to Section 41, and if redundancy was intended, Section 40 procedure was not followed

Reasoning

The nature of the meeting of 9th July 2013 was obscure - it was unclear whether it was a hearing on theft allegations or a consultative meeting preceding redundancy. Whatever its nature, the procedure did not conform to Section 41 on hearing of an employee. If redundancy was intended, the Section 40 procedure was not followed. There was neither substantive justification nor procedural fairness in the termination process.

p. 3

Legal principles established

#
  • Where house rent allowance is consolidated into basic pay, the contract of employment must expressly provide for such consolidation under Section 31(2)(a) of the Employment Act
  • In any claim arising out of termination, the employer bears the burden of proving the reason or reasons for termination under Section 43 of the Employment Act
  • House rent allowance is not pegged to the actual rent an employee pays, but is fixed at a minimum of 15% of the basic salary

Court orders

#
  1. 1.It is declared termination was unfair
  2. 2.The Respondent shall pay the Claimant compensation for unfair termination at Kshs. 89,700 and arrears of house rent allowance at Kshs. 76,700, totalling Kshs. 166,400
  3. 3.The sum shall be paid within 30 days of delivery of the decision
  4. 4.Interest granted at the rate of 14% per annum with effect from the end of the 30 days should the sum remain unpaid
  5. 5.No order on the costs

Authorities

#

Legislation

  • Industrial Court (Procedure) Rules 2010Rule 27(1)(a)
  • Employment Act 2007Section 31(2)(a)
  • Employment Act 2007Section 40
  • Employment Act 2007Section 41
  • Employment Act 2007Section 43
Jurisdiction invoked
Industrial Court (Procedure) Rules 2010, Rule 27(1)(a); dispute over unfair and unlawful termination of employment

Key timeline

#

Practical implications

#

Frequently asked questions

#

Cite this brief

#

Cite this brief

Caselaw, "Erick Chuma Zaka v Rakal Limited [2016] KEELRC 445 (KLR)", Case Analysis (2016). Cause Number 14 of 2015. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2016/445/eng@2016-03-22

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.