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ELRCPartially AllowedNairobi ELRC Cause 1035 of 2015 (as cited in submissions; judgment does not state its own cause number)· [2020] KEELRC 1737 (KLR)

Agnes Gesare Ogutu v Fun An Shop Limited & another [2020] KEELRC 1737 (KLR)

Employment and Labour Relations Court
31 January 2020
1,858 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court awarded a cashier Kshs.307,122 after her employer closed her branch without following redundancy rules, showing employers must keep proper records.

What this practically means

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Executive summary

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The Claimant was employed orally as a cashier at the Respondent's New Muthaiga Branch from 22nd September 2007 at a salary of Kshs.16,700. When the Respondent closed the branch, she was neither transferred nor paid her terminal dues. She sought notice pay, accrued leave, severance pay, overtime, house allowance arrears, and salary for the period out of employment. The Respondent denied employing her as pleaded, filed a response but called no witness and produced no employment records. The court framed three issues: whether the Claimant was a casual employee; whether her termination amounted to redundancy; and whether she was entitled to the reliefs sought. Relying on Sections 10(6) and 10(7) of the Employment Act, the court held the burden lay on the employer to disprove the alleged terms and found the Claimant was a regular employee under Section 37(1), having worked continuously beyond 30 days. The closure of the branch without compliance with Section 40(1) of the Employment Act amounted to an unlawful redundancy contrary to Sections 41, 44(2) and 45(1). Notice pay, house allowance, 84 days' leave, severance pay for 4 years and overtime (limited to 12 months) were all awarded; the claim for salary for the period out of employment failed as having no basis in law. Using the cashier's minimum statutory salary of Kshs.17,118 plus 15% house allowance, the court awarded a total of Kshs.307,122, with costs to the Claimant and interest from the date of judgment.

Key legal issues

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01

Nature of the Claimant's employment - casual or regular employee

Holding

The Claimant was a regular employee, not a casual employee, her employment having converted on working more than 30 days continuously.

Reasoning

The Respondent called no witness and produced no records as required under Sections 10(6) and 10(7) of the Employment Act, shifting the burden to it. The Claimant's uncontroverted evidence that she was employed therefore stood, and continuous service beyond 30 days converted her engagement into a regular contract under Section 37(1).

p. 2
02

Whether the termination amounted to a redundancy

Holding

Closing the branch without transferring the Claimant or complying with Section 40(1) of the Employment Act amounted to an unlawful redundancy.

Reasoning

The Respondent conceded it closed the shop where the Claimant worked. It gave no one month's notice to the employee or labour officer, made no selection on seniority or skill, paid no leave in cash, no notice or wages in lieu, and no severance pay. This breached Sections 40(1), 41, 44(2) and 45(1) of the Employment Act.

p. 3
03

Whether the Claimant was entitled to notice pay, house allowance, leave, severance and overtime

Holding

All these claims succeeded as the Respondent led no evidence to controvert them; overtime was however limited to 12 months.

Reasoning

The Respondent produced no records of notice, house allowance payment, leave taken or hours worked. Leave accrues at 21 days per year, giving 84 days over 4 years. Overtime at 2 hours daily for 6 days a week for 52 weeks at 1.5 times rate was awarded, though the correct formula would yield a higher figure.

p. 3
04

The correct basis of salary for computing the awards

Holding

The court read minimum statutory terms into the contract, fixing basic salary at Kshs.17,118 (cashier's rate in 2011) plus 15% house allowance.

Reasoning

Sections 3(6) and 26 of the Employment Act as read with Section 48 of the Labour Institutions Act require minimum statutory terms to be read into every contract. The Respondent denied employing the Claimant but never stated the nature of her employment or produced records, so her testimony that she was a cashier was accepted.

p. 3

Legal principles established

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  • If an employer fails to produce a written contract or written particulars, the burden of proving or disproving an alleged term of employment falls on the employer.
  • Continuous employment exceeding 30 days converts a casual employee's engagement into a regular contract of service.
  • An employer who closes a business and fails to comply with Section 40(1) of the Employment Act renders the affected employee redundant contrary to Sections 41, 44(2) and 45(1).
  • Where the employer fails to adduce any evidence, the uncontroverted averments of the claimant must be taken as correct.

Court orders

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  1. 1.Notice pay of Kshs.19,685.60 being consolidated wage (basic salary of Kshs.17,118 plus 15% house allowance)
  2. 2.Leave pay of 84 days based on basic pay at Kshs.55,304.30
  3. 3.Severance pay for 4 years at Kshs.39,503
  4. 4.House allowance of Kshs.123,249.60 (Kshs.2,567.70 x 4)
  5. 5.Overtime pay of Kshs.69,379.20 (for 12 months only, 2 hours per day, 6 days a week, 52 weeks, at 1.5 times rate)
  6. 6.Total award of Kshs.307,122
  7. 7.Respondent to pay the Claimant's costs
  8. 8.Interest to accrue from date of judgment

Authorities

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Legislation

  • Employment ActSection 10(6)
  • Employment ActSection 10(7)
  • Employment ActSection 37(1)
  • Employment ActSection 40(1)
  • Employment ActSection 41
  • Employment ActSection 44(2)
  • Employment ActSection 45(1)
  • Employment ActSections 3(6) and 26
  • Employment ActSections 10 and 74
  • Employment ActSection 49(1)
  • Labour Institutions ActSection 48
  • Regulation of Wages (General) OrderRule 6

Cases cited (2)

  • KUDHEIHA vs. Fatuma Mohamed
    Nairobi ELRC Cause 1035 of 2015
  • Robert Musinzi vs. Safdar Mohamed Khan
    [2012] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act and Labour Institutions Act (not expressly cited in judgment)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Agnes Gesare Ogutu v Fun An Shop Limited & another [2020] KEELRC 1737 (KLR)", Case Analysis (2020). Nairobi ELRC Cause 1035 of 2015 (as cited in submissions; judgment does not state its own cause number). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2020/1737/eng@2020-01-31

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