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ELRCPartially AllowedELRC Appeal from Bungoma CM ELRC Cause No. 12 of 2019· [2023] KEELRC 3479 (KLR)

Bonito Hotels & another v Museywa (Employment and Labour Relations Appeal E008 of 2022) [2023] KEELRC 3479 (KLR)

Employment and Labour Relations Court
4 May 2023
JKJemimah Keli
3,821 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenyan employers must follow proper legal procedures before terminating staff—a pay cut refusal alone doesn't justify dismissal, but employees can't claim statutory dues owed to NSSF and NHIF.

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 Kakamega against the judgment of Hon. CAS Mutai (SPM) of 25th February 2022 in Bungoma CM ELRC Cause No. 12 of 2019, which had awarded a claimant payment in lieu of notice, severance pay, compensation for unfair termination, unpaid rest days, and NHIF and NSSF remittances. The appeal was canvassed by written submissions; the respondent filed none. Applying the Selle v Associated Motor Boat Company principles of re-evaluation, the court upheld the finding of unfair termination: the claimant rejected a pay cut in writing and stated he would keep working pending his dues; no termination letter was issued and no section 41 hearing occurred, so the alleged desertion was unproved. The compensation of Kshs. 201,132 (about six months' salary for four years' service) and notice pay of Kshs. 16,761 were upheld. However, the award of Kshs. 192,192.80 for unpaid rest days was set aside as the claimant admitted one rest day weekly per section 27(2); the severance pay award was set aside since severance is payable only on redundancy and NSSF membership excludes service pay; and the NHIF/NSSF awards were set aside as such dues belong to statutory bodies and the magistrate lacked jurisdiction to award them to the claimant. The judgment below was set aside and substituted with the declaration, notice pay, compensation, interest and costs of the suit. The appeal being partially successful, no order as to costs was made on the appeal.

Key legal issues

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01

Whether the claimant deserted or was unfairly terminated

Holding

The finding of unfair termination was upheld; the employer failed to prove desertion or any fair process of separation

Reasoning

The claimant was not issued a termination letter and never resigned formally; he rejected the pay cut in writing and stated he would continue working awaiting his dues. The burden under sections 43 and 45 lay on the employer to prove valid reason and fair procedure under section 41. No notice of intention to terminate or hearing followed the alleged desertion, so the termination was unfair.

p. 5
02

Entitlement to unpaid rest days

Holding

Award set aside; the claimant admitted receiving one rest day per week as required by section 27(2)

Reasoning

During cross-examination the claimant admitted taking one day off weekly, which satisfies section 27(2) of the Employment Act. Records produced by the appellant corroborated that rest days and public holidays were taken. The trial magistrate's award of Kshs. 192,192.80 had no evidential basis and was illegal.

p. 7
03

Entitlement to severance pay

Holding

Award set aside; severance pay is only payable on redundancy under section 40(1)(f)/(g) and service pay is excluded for NSSF members under section 35(6)

Reasoning

There was no evidence the claimant was declared redundant. Section 35(6)(d) excludes employees registered with the NSSF from service pay entitlement. The trial magistrate erred in awarding both severance pay and NSSF remittances.

p. 7
04

Entitlement to NHIF and NSSF unremitted deductions

Holding

Awards set aside; the magistrate had no jurisdiction to award such dues to the claimant

Reasoning

Although the burden of proving remittance shifted to the appellant as custodian of employee records under section 74, the court held that unremitted statutory deductions belong to statutory bodies which have mechanisms under their enabling laws to pursue them. The trial court also erred in awarding 45 months when only 43 were pleaded.

p. 9
05

House allowance and leave allowance

Holding

Issues misplaced as the lower court's judgment made no such awards and there was no cross-appeal

Reasoning

The magistrate's judgment contained no award on housing or leave allowance. In the absence of a cross-appeal, the appellate court found it futile to address issues not in the judgment of the lower court.

p. 6

Legal principles established

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  • An employee cannot be forced to take a pay cut; on rejection the employer must invoke a proper separation process such as redundancy or insolvency, failing which termination is unfair
  • Even desertion requires compliance with the section 41 notification and hearing process before termination
  • An employee who is a member of NSSF is not entitled to service pay, and severance pay is payable only on redundancy
  • A party cannot be awarded claims outside their pleadings
  • Unremitted statutory dues are payable to statutory bodies which have mechanisms to pursue them, not to the employee

Court orders

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  1. 1.The judgment of Hon. Charles Soi Mutai (SPM) delivered on 25th February 2022 in Bungoma CM ELRC Cause No. 12 of 2019 is set aside and substituted
  2. 2.A declaration is issued that the termination of the employment of the claimant was unlawful and unfair
  3. 3.Payment in lieu of notice of Kshs. 16,761/-
  4. 4.Award for compensation for the unfair termination of employment of Kshs. 201,132/-
  5. 5.Interest at court rates from the date of judgment of the trial court of 25th February 2022 until payment in full
  6. 6.Costs of the suit
  7. 7.No order as to costs on the appeal
  8. 8.The award for unpaid rest days (Kshs. 192,192.80) is set aside in its entirety
  9. 9.The award for severance pay is set aside
  10. 10.The awards for unremitted NHIF and NSSF dues are set aside

Authorities

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Legislation

  • Employment Actsection 66
  • Employment Actsection 49(e)
  • Employment Actsection 49
  • Employment Actsection 51
  • Employment Actsection 47(5)
  • Employment Actsection 45
  • Employment Actsection 43
  • Employment Actsection 41
  • Employment Actsection 42(1)
  • Employment Actsection 44(3) and (4)
  • Employment Actsection 27
  • Employment Actsection 35
  • Employment Actsection 40(1)(g)
  • Employment Actsection 67
  • Employment Actsection 74
  • Employment Actsection 21
  • Retirement Benefits Actregistered pension or provident fund scheme

Cases cited (3)

  • Selle and another v Associated Motor Boat Company Ltd & others
    [1968] EA 123
  • David Kahuruka Gitau & Another v Nancy Ann Wathithi Gatu & Another
    Nyeri HCCA No. 43 of 2013
  • Catherine Moraa Omwansa v Mr. and Mrs. Hussein Dado
    (2019) eKLR
On appeal from
Bungoma Chief Magistrate's Court (ELRC)
Bungoma CM ELRC Cause No. 12 of 2019
Jurisdiction invoked
First appellate jurisdiction over the subordinate court's decision 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, "Bonito Hotels & another v Museywa (Employment and Labour Relations Appeal E008 of 2022) [2023] KEELRC 3479 (KLR)", Case Analysis (2023). ELRC Appeal from Bungoma CM ELRC Cause No. 12 of 2019. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/3479/eng@2023-05-04

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