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ELRCPartially AllowedEmployment and Labour Relations Court Claim (Nairobi), memorandum of claim dated 31st January 2017, filed 9th February 2017 (number not stated in judgment)· [2022] KEELRC 116 (KLR)

Arasa & another v Benori Agencies and Services Limited. (Cause 242 of 2017) [2022] KEELRC 116 (KLR)

Employment and Labour Relations Court of Kenya
17 May 2022
JGJACOB GAKERI
4,629 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~19 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court ruled that long-serving 'casual' workers automatically become permanent employees, and employers cannot dismiss staff for absconding without first attempting to contact them.

What this practically means

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Executive summary

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Two claimants sued Silpack Industries Limited in the Employment and Labour Relations Court at Nairobi alleging unfair dismissal on 20th June 2016, claiming one month's salary in lieu of notice, house allowance, twelve months' compensation, certificates of service, costs and interest. The Respondent denied employing them on the terms pleaded, insisting they were casual employees who absconded duty after an incident in which police were called, and that the payslips produced were forgeries. The court framed three issues: the nature of the employment, whether the employment was terminated or the claimants absconded, and entitlement to reliefs. On the first issue, the court held that having served continuously for about one year three months and three years respectively, the claimants transitioned from casual to permanent terms under Section 37 of the Employment Act, the Respondent having led no evidence of discontinuity, attendance registers, payslips or payroll. On the second issue, the court found the claimants' account of dismissal by Mr Allan inconsistent with their cross-examination, but equally found the Respondent's abscondment case unsupported: it made no attempt to reach the claimants despite having their contacts, and issued no show-cause notice, disciplinary hearing or termination letter. Termination was therefore substantively and procedurally unfair. On reliefs, the court awarded each claimant one month's salary in lieu of notice, awarded the 1st Claimant one month's salary as compensation and the 2nd Claimant two months', and awarded the 2nd Claimant only 15% house allowance computed on the statutory minimum monthly wage, holding that the daily minimum wage already includes house allowance so the aggregate daily wage cannot be used as basic salary. The claim for house allowance by the 1st Claimant and full twelve months' compensation failed. Judgment was entered for the claimants with costs and interest at court rates from the date of judgment until payment in full, delivered virtually at Nairobi on 17th May 2022 by Dr. Jacob Gakeri, Judge.

Key legal issues

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01

Status of employment: casual or permanent

Holding

The Claimants, though engaged on daily wages, served for about one year three months and three years respectively continuously and thus transitioned to permanent employment terms under Section 37 of the Employment Act.

Reasoning

Section 2 defines a casual employee as one paid at the end of each day and not engaged for longer than 24 hours at a time. Section 37 deems a casual employee who works the equivalent of a month or continuously for two months to be on monthly terms. RW1 confirmed the Claimants worked monthly for days worked including overtime, signed contracts not filed, and the Respondent produced no attendance registers or payroll to show discontinuity. The court found the payslips produced by the Claimants unreliable but the statutory transition established.

p. 7
02

Whether employment was terminated or the Claimants absconded duty

Holding

Termination was not proved in the manner alleged, but neither was lawful abscondment established; on a balance of probabilities the termination was substantively and procedurally unfair.

Reasoning

The Claimants' written statements attributed the dismissal to Mr Allan, yet on cross-examination they admitted Mr Abel accused them of being unruly and called police, with no evidence of what followed. The Respondent's claims that the Claimants were drunk or violent were unsupported. Even assuming abscondment, the Respondent took no steps to contact the Claimants although it had their contacts on file, and no show-cause notice, disciplinary hearing or termination letter was produced, contrary to Sections 41 and 45 of the Act.

p. 8
03

House allowance entitlement

Holding

House allowance is a statutory right under Section 31(1), but only the 2nd Claimant was awarded 15% of the minimum monthly wage, as the daily wage relied on by the Claimants already includes house allowance.

Reasoning

The Court of Appeal recognises 15% of basic pay as reasonable house allowance. However, the daily minimum wage under the Regulation of Wages Orders is inclusive of house allowance; computing the monthly figure by multiplying the daily wage by 30 days then adding 15% distorts the minimum wage principle and amounts to double compensation. Equity nonetheless entitled the 2nd Claimant to 15% on the statutory monthly wage from 1st May 2013 to June 2016.

p. 9
04

Quantum of compensation under Section 49

Holding

Compensation of the equivalent of one month's salary for the 1st Claimant and two months' salary for the 2nd Claimant was fair under Section 49(1)(c) read with Section 49(4).

Reasoning

Relevant Section 49(4) factors included the relatively short durations of service (one year three months and three years six months), the Claimants' contribution to the termination, the absence of an appeal against the decision, and the absence of any record of misconduct. Full 12 months' compensation as sought was therefore not justified.

p. 10

Legal principles established

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  • A casual employee who works for the equivalent of not less than one month, or continuously for two months or more, is by operation of Section 37 of the Employment Act deemed to be on monthly paid terms and entitled to full statutory terms of service.
  • An employer alleging that an employee absconded duty must demonstrate reasonable steps taken to ascertain the employee's whereabouts, including issue of a notice to show cause, before dismissal for abscondment.
  • The employer bears the burden of proving a valid and fair reason for termination and that a fair procedure was followed; the employee must prove termination and that it was unfair.
  • The daily minimum wage under the Regulation of Wages Orders is inclusive of house allowance, so house allowance cannot be computed on an aggregate daily wage treated as basic salary.

Court orders

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  1. 1.Judgment entered for the Claimants against the Respondent
  2. 2.1st Claimant awarded one month's salary in lieu of notice of Kshs.17,310 and the equivalent of one month's salary as compensation of Kshs.17,310, total Kshs.34,310
  3. 3.2nd Claimant awarded one month's salary in lieu of notice of Kshs.15,813.00, 15% house allowance on the basic monthly salary of Kshs.9,780.95 effective 1st May 2013 to 30th April 2015 (24 months) of Kshs.35,211.42, and the equivalent of 2 months' salary of Kshs.31,626.00, total Kshs.66,837.42
  4. 4.Costs of the suit to the Claimants
  5. 5.Interest at court rates from date of judgment till payment in full

Authorities

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Legislation

  • Employment Act, 2007Section 2 (definition of casual employee)
  • Employment Act, 2007Section 9
  • Employment Act, 2007Section 31(1)
  • Employment Act, 2007Section 35(1)(c)
  • Employment Act, 2007Section 36
  • Employment Act, 2007Section 37(1), (2), (3)
  • Employment Act, 2007Sections 40, 41, 43, 44, 45(1), 45(2)(a) and (b), 47(5), 49(1)(c), 49(4)
  • Regulation of Wages (General) (Amendment) Order 2012 (Legal Notice No. 71 of 2012)Minimum wages effective 1st May 2012
  • Regulation of Wages (General) (Amendment) Order 2013Minimum monthly wage of Kshs.9,780.95 effective 1st May 2013
  • Regulation of Wages (General) (Amendment) Order 2015 (Legal Notice 117 of 2015)Minimum wages effective 1st May 2015
  • Constitution of Kenya, 2010Article 159(2)(d)
  • Constitution of Kenya, 2010Article 48
  • Civil Procedure RulesOrder 21 Rule 1
  • Civil Procedure Act (Chapter 21, Laws of Kenya)Section 1B

Cases cited (12)

  • Christopher Baraza Wasike v Pemco Agencies Limited
    [2018] eKLR
  • David Nyanjui Mburu v Sunmatt Limited
    [2017] eKLR
  • David Gichana Omuya v Mombasa Maize Millers Limited
    [2014] eKLR
  • Kelvin Gitonga Kinyua v Kenya Methodist University
    [2021] eKLR
  • Pius Machafu Isindu v Lavington Security Guards Limited
    [2017] eKLR
  • Seabolo v Belgravia Hotel
    [1997] 6 BLLR 829 (CCMA)
  • Felistas Acheha Ikatwa v Charles Peter Otieno
    [2018] eKLR
  • Julius Kyalo Malonza v Ruth Osolo t/a Eraeva Catering Services
    [2021] eKLR
  • Joseph Nzioka v Smart Coatings Limited
    [2017] eKLR
  • Simon Mbithi Mbane v Inter Security Services Limited
    [2018] eKLR
  • Judith Atieno Owuor v Sameer Agricultural Livestock Limited
    [2020] eKLR
  • Grain Pro Kenya Inc. Ltd v Andrew Waithaka Kiragu
    [2019] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 over a claim of unfair dismissal from employment

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (5)

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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, "Arasa & another v Benori Agencies and Services Limited. (Cause 242 of 2017) [2022] KEELRC 116 (KLR)", Case Analysis (2022). Employment and Labour Relations Court Claim (Nairobi), memorandum of claim dated 31st January 2017, filed 9th February 2017 (number not stated in judgment). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2022/116/eng@2022-05-17

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