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ELRCPartially Allowed· [2023] KEELRC 1467 (KLR)

Otunga v Hydro Build Limited (Employment and Labour Relations Appeal E147 of 2022) [2023] KEELRC 1467 (KLR)

Employment and Labour Relations Court
15 June 2023
3,545 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Employment Court ruled that employers without written contracts bear the burden of proving salary terms, awarding an engineer five months' compensation.

What this practically means

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Executive summary

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This Employment and Labour Relations Court decision, delivered by B. O. M. Manani, Judge, on 15th June 2023, disposed of an appeal against a trial magistrate's judgment. The Respondent hired the Appellant on 11th March 2020 as a mechanical engineer at a claimed monthly salary of Ksh 90,000.00 and terminated the contract in May 2021, citing incompetence and doubts about his qualifications. The trial magistrate found the termination unfair and issued a declaration, but declined to award the section 49 reliefs or other damages on the ground that the Appellant had not specifically pleaded and proved his salary; costs were nonetheless granted to the Appellant. The Appellant appealed on three grounds, all directed at the refusal to quantify and award compensation. The court allowed the appeal in part. It held that the Appellant had clearly pleaded his agreed salary of Ksh 90,000.00 in the Memorandum of Claim, and that the burden of disproving an alleged term of employment lay on the Respondent under sections 9, 10(7) and 74 of the Employment Act because the Respondent failed to reduce the contract into writing or produce employment records. The pay slips and bank statement established an exit gross salary of Ksh 77,034.00. The court held that compensation for unfair termination is assessed on exit salary and that the authorities relied on by the trial court concerned salary arrears under the old legal regime and could not justify denying statutory compensation. The court set aside the portion of the trial court's decision refusing compensation, awarded Ksh 385,170.00 (five months' gross salary) with interest at court rates from the date of the trial court's decision, subject to statutory deductions, granted costs of the appeal, and left the trial court's other orders intact.

Key legal issues

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01

Whether the Appellant pleaded his salary

Holding

The Appellant pleaded Ksh 90,000.00 as his agreed salary and later pleaded the adverse variations; the plea was clear and unambiguous.

Reasoning

Reading paragraph 7 of the Memorandum of Claim, the Appellant asserted a monthly salary of Ksh 90,000.00 on engagement, followed by alleged reductions to Ksh 40,000.00 then Ksh 60,000.00. To plead is to assert or allege in a pleading; the memorandum did both. The variations did not derogate from the fact that the agreed salary was pleaded.

p. 2
02

Burden of proof regarding the disputed term of remuneration

Holding

Because the Respondent failed to reduce the contract into writing under sections 9 and 10 of the Employment Act, the burden lay on the Respondent to disprove the Appellant's asserted salary.

Reasoning

Section 9 obliges employers to reduce contracts exceeding three months into writing; section 10(7) places the burden of proving or disproving an alleged term on an employer who fails to produce written particulars. The Respondent tendered no evidence at trial, so the pay slips and bank statement produced by the Appellant stood as prima facie proof of an exit gross salary of Ksh 77,034.00.

p. 4
03

Whether the trial court could deny compensation for wrongful termination for failure to plead salary

Holding

The trial court's refusal was misconceived; the established exit salary of Ksh 77,034.00 permitted assessment of statutory compensation under section 49.

Reasoning

The authorities relied on by the trial court concerned claims for salary arrears under the old employment law regime, not the statutory compensation for unfair termination introduced by section 49 of the Employment Act. Since the exit salary was ascertainable from the pay slips, the court should have applied it to assess compensation.

p. 6

Legal principles established

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  • Where an employer fails to reduce a contract of service of three months or more into writing as required by section 9 of the Employment Act, the burden of proving or disproving an alleged term of employment lies on the employer under section 10(7).
  • Compensation for unfair termination under section 49 of the Employment Act is calculated on the employee's established exit salary.
  • A claimant's failure to specifically plead his salary cannot justify denial of compensation for wrongful termination where the figure is established from the evidence on record; such pleadings objections apply to salary arrears claims, not statutory compensation claims.

Court orders

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  1. 1.Set aside the part of the trial court's decision declining the prayer for compensation for unfair termination
  2. 2.Award compensation for wrongful termination equivalent to five months' gross salary, i.e. Ksh 77,034.00 x 5 = Ksh 385,170.00
  3. 3.Award interest on the sum at court rates from the date of the trial court's decision until payment in full
  4. 4.Award subject to applicable statutory deductions
  5. 5.Appellant granted costs of the Appeal
  6. 6.All other orders of the trial court to remain in force

Authorities

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Legislation

  • Employment Actsections 9(1)(a), 9(2), 10, 10(1), 10(6), 10(7), 20, 49, 74
  • Employment and Labour Relations Court (Procedure) RulesRule 28(3)

Cases cited (8)

  • Jackson Kaio Kivuva v Penina Wanjiru Muchene
    [2019] eKLR
  • Nanyuki Water & Sewage Company Limited v Benson Mwiti Ntiritu & 4 others
    [2018] eKLR
  • Abigael Jepkosgei Yator & another v China Hanan International Co. Ltd
    [2018] eKLR
  • Jackson Muiruri Wathigo t/a Murtown Supermarket v Lilian Mutune
    [2021] eKLR
  • Consolata Hospital Mathari v Bianka Matens
    [2008] eKLR
  • Nelson Mwangi Kibe v Attorney General
    [2003] eKLR
  • Beatrice Everlyn Atieno Abong'o v National Oil Corporation
    [2015] eKLR
  • Ruth Wairimu Kahoro v Nairobi Upperhill Hotel Limited
    [2021] eKLR
On appeal from
ELRC trial court (magistrate's court)
Jurisdiction invoked
First appellate jurisdiction over the ELRC subordinate court / magistrates' court decision

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, "Otunga v Hydro Build Limited (Employment and Labour Relations Appeal E147 of 2022) [2023] KEELRC 1467 (KLR)", Case Analysis (2023). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/1467/eng@2023-06-15

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