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ELRCPartially Allowed· [2021] KEELRC 113 (KLR)

John Munyao Nguyo v Pacific Stationers (K) Limited [2021] KEELRC 113 (KLR)

Employment and Labour Relations Court
9 December 2021
2,552 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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What this practically means

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Executive summary

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This is a first appeal to the Employment and Labour Relations Court at Nairobi (Mathews N. Nduma, J) against the decision of Hon. E. Wanjala (Miss), Senior Resident Magistrate, delivered on 30 June 2020 in Milimani C.M.E.L. Cause Number 1338 of 2019. The appellant, a driver, challenged the trial court's award for unlawful termination on five grounds: failure to apply the minimum wage, inordinately low compensation, denial of housing allowance, denial of overtime pay, and denial of payment for untaken leave days. Guided by Selle v Associated Motor Board Co., the court re-evaluated the evidence afresh. It upheld the trial court's finding that the respondent unlawfully and unfairly terminated the appellant's employment by denying him access to the workplace after his release from police custody, the desertion claim being unproven. The court held that parties cannot lawfully contract below the statutory minimum wage, relying on Nicholas Juma Ojuok v Pentagon Elite Security Services Limited, and awarded arrears under Legal Notices 112 of 2017 and 2 of 2019, plus a 15% housing allowance component (net of allowances already paid). It awarded overtime for one hour per day over the full employment period, the appellant's testimony being uncontradicted. However, the claim for untaken leave days failed for want of evidence. Setting aside the award of three months' salary as compensation because the magistrate failed to apply the thirteen considerations in Section 49(4) of the Employment Act, the court awarded six months' gross salary following the Supreme Court's guidance in Kenfright v Nguti. Judgment was entered in the appellant's favour with notice pay, arrear salary, house allowance, compensation, interest at court rates, a certificate of service within 30 days, and costs in both courts.

Key legal issues

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01

Minimum wage and illegal contracting below statutory standards

Holding

The appellant was entitled to the minimum wage prescribed by Legal Notice No. 112 of 2017 and Legal Notice No. 2 of 2019 despite signing for lower pay; arrears of the difference, less statutory payments, were awarded

Reasoning

The trial magistrate held that the appellant, having signed for his salary without complaint, could not claim underpayment. The ELRC held this reasoning faulty: wage orders made under the Labour Institutions Act constitute minimum statutory standards that cannot be contracted below. The applicable wage orders prescribed higher pay for his vehicle class, so the difference for both periods was payable.

p. 2
02

Lawfulness of the termination

Holding

The trial court's finding that the respondent unlawfully and unfairly dismissed the appellant was upheld; the respondent failed to prove desertion or valid reasons

Reasoning

On a fresh evaluation of the evidence under first-appeal principles, the court found no reason to fault the magistrate's application of Sections 43, 45(2) and 47(5) of the Employment Act. The respondent's claim of desertion was unproven; the appellant was denied access to the workplace upon release from police custody without any disciplinary process, amounting to unlawful dismissal.

p. 2
03

Compensation under Section 49 of the Employment Act

Holding

The trial court's award of 3 months' salary was set aside and substituted with 6 months' salary because the magistrate failed to apply the Section 49(4) considerations

Reasoning

Section 49(1)(c) read with Section 49(4) requires the court to consider thirteen enumerated factors in awarding compensation. The trial court ignored them, rendering the award arbitrary. Weighing the appellant's 2.5 years of service, clean record, false theft accusation, week-long detention without charge, loss of income, unpaid terminal benefits and lack of a certificate of service, six months' gross salary was awarded following Kenfright.

p. 3
04

Overtime

Holding

The trial court erred in not awarding overtime; the appellant was entitled to one hour of overtime pay per day for the entire period worked, the uncontradicted evidence showing roughly 9-hour working days

Reasoning

The appellant's testimony that he worked from about 7 a.m. to 5 p.m. without a lunch break was not contradicted by the respondent's witness. Even discounting the lunch-break claim as unproved, the hours still translated to one hour of overtime per day under Rule 6 of the Regulation of Wages (General) Order and the Employment Act, entitling him to overtime payment for the whole period.

p. 3
05

Leave days

Holding

The claim for payment in lieu of untaken leave failed for lack of evidence; the trial court's decision on this head was upheld

Reasoning

The appellant neither testified verbally nor included in his adopted witness statement any evidence of leave days not taken or non-payment in lieu of leave. Without such proof, the head of relief could not be sustained, and the magistrate's rejection of it was affirmed.

p. 3

Legal principles established

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  • Terms of employment falling below statutory minimum wage standards are illegal and unenforceable; parties cannot contract below minimum statutory standards
  • An appeal court should not interfere with a trial court's exercise of discretion merely because it would have reached a different decision
  • Failure to apply the Section 49(4) considerations in exercising discretion on compensation renders the award arbitrary and subject to being set aside

Court orders

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  1. 1.The judgment by the trial Court is set aside and substituted with an order for payment of Kshs 26,494.95 in lieu of one month notice
  2. 2.Payment of Kshs 11,481 being 13 days arrear salary for April 2019
  3. 3.Payment of Kshs 55,280 being unpaid house allowance for the period worked at the rate of Kshs 3,455.85 per month
  4. 4.Payment of Kshs 158,966 being the equivalent of six months' salary in compensation for the unlawful and unfair termination
  5. 5.Issuance of Certificate of Service within 30 days of the judgment
  6. 6.The award is payable with interest at Court rates from date of judgment till payment in full
  7. 7.Costs of the suit in the Court below and at this Court to the appellant

Authorities

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Legislation

  • Employment ActSection 27
  • Employment Act, 2007Section 43
  • Employment Act, 2007Section 45(2)
  • Employment Act, 2007Section 47(5)
  • Employment Act, 2007Section 49(1)(c)
  • Employment Act, 2007Section 49(4)
  • Labour Institutions Act, 2007Section 48(2)
  • Labour Institutions Act, 2007Section 63
  • Regulation of Wages (General) OrderLegal Notice No. 112 of 2017
  • Regulation of Wages (General) OrderLegal Notice No. 2 of 2019
  • Regulation of Wages (General) OrderRule 6

Cases cited (4)

  • Selle –vs- Associated Motor Board Co. Limited
    (1968) E.A. 123
  • Swalahdin Abound Mohammed –vs- Tahmeed Coach Limited
    (2019) eKLR
  • Nicholas Juma Ojuok –vs- Pentagon Elite Security Services Limited
    [2018] eKLR
  • Kenfright (E.A.) Limited –vs- Benson K. Nguti
On appeal from
Chief Magistrate's Court, Milimani (Employment and Labour Relations Cause)
Milimani C.M.E.L. Cause Number 1338 of 2019
Jurisdiction invoked
First appeal from the magistrates' court in an employment cause

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "John Munyao Nguyo v Pacific Stationers (K) Limited [2021] KEELRC 113 (KLR)", Case Analysis (2021). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2021/113/eng@2021-12-09

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