Erick Chuma Zaka v Rakal Limited [2016] KEELRC 445 (KLR)
The bottom line
#What this practically means
#Executive summary
#Key legal issues
#Entitlement to house rent allowance on a purportedly consolidated salary
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
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.
Proof of reasons for termination under Section 43 of the Employment Act
The Respondent failed to prove the reason for termination, oscillating between theft of stocks, staff reduction and reorganization without clarity
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.
Procedural fairness in termination
The hearing granted to the Claimant did not conform to Section 41, and if redundancy was intended, Section 40 procedure was not followed
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.
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.It is declared termination was unfair
- 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.The sum shall be paid within 30 days of delivery of the decision
- 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.No order on the costs
- 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.