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ELRCPartially AllowedELRC Appeal from Mombasa CMELRC No. E131 of 2023· [2024] KEELRC 915 (KLR)

Servicehub Global Enterprise Limited v Nkumu (Appeal E122 of 2024) [2024] KEELRC 915 (KLR)

Employment and Labour Relations Court
18 April 2024
MMM. Mbaru
3,345 words in judgment
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The bottom line

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A Kenyan employer lost its appeal because it gave a cleaner no written contract and could not justify her dismissal, though her compensation was reduced.

What this practically means

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Executive summary

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This is a first appeal from the Magistrates' Court at Mombasa (CMELRC No. E131 of 2023), in which the employer appealed against awards to a cleaner who claimed she was verbally dismissed by her supervisor after requesting maternity leave. The Employment and Labour Relations Court, Mombasa (M. Mbaru, J) re-evaluated the evidence as on a first appeal. It upheld the finding of an employment relationship, founded on the appellant's own witness's admission that he recruited the respondent as a cleaner, noting that verbal employment is lawful but continuous verbal employment obliges the employer to issue a written contract. On termination, the court applied sections 43 and 47(5) of the Employment Act: once the employee establishes prima facie evidence of unfair termination, the burden shifts to the employer to justify it. The employer's flat denial, resting on the absence of a written contract and failure to produce work records it was obliged to keep, discharged no burden; unfair termination was confirmed. However, the court interfered with quantum. The maximum 12 months' compensation was reduced to two months (Ksh.34,963.64) because the magistrate gave no reasons justifying the maximum, consistent with Ol Pejeta Ranching and Kenfreight. Notice pay was recalculated at Ksh.17,481.82 gross; underpayment was assessed afresh against the applicable Wage Orders at Ksh.73,108.75; accrued leave was computed at 33 days on the basic wage, Ksh.16,721.80. The service pay award was set aside since NSSF dues were confirmed remitted. A certificate of service is to issue. The appeal was held largely without merit; only the lower court costs were allowed, without interests.

Key legal issues

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01

Existence of employment relationship

Holding

An employment relationship existed between the parties

Reasoning

The appellant's own witness, Gregory Nyongesa, admitted recruiting the respondent as a cleaner at the SGR Mombasa terminal, albeit by word of mouth with no written contract. Verbal employment is lawful, but for continuous employment Sections 9 and 10 require a written contract; failing that, the court believes the employee whose rights are unsecured. The magistrate's finding could not be faulted.

p. 4
02

Unfair termination and burden of proof

Holding

Termination was unfair because the employer failed to justify it

Reasoning

Under Section 47(5) the employee must establish prima facie evidence of unfair termination; the burden then shifts to the employer under Section 43 to justify the grounds. The employer offered only a flat denial based on absence of a written contract and failed to produce work records it was obliged to keep under Sections 10(6) and 10(7). The termination was therefore presumed unlawful.

p. 5
03

Underpayment claim

Holding

Underpayment established against the applicable Wage Orders

Reasoning

The respondent earned Ksh.12,300 against the Mombasa minimum wage of Ksh.13,572.90 plus 15% house allowance until 30 April 2022, and Ksh.15,201.65 plus allowance thereafter. The total underpayment was recomputed at Ksh.73,108.75, the magistrate having assigned a lower basic wage through oversight.

p. 6
04

Twelve months' compensation

Holding

Maximum compensation unjustified; reduced to two months' gross pay

Reasoning

Following Ol Pejeta Ranching and Kenfreight, the maximum award under Section 49 requires reasoned justification. The magistrate gave none, and the respondent had worked under two years with underpayments separately compensated. Two months' compensation at Ksh.17,481.82 was found appropriate, totalling Ksh.34,963.64.

p. 6
05

Service pay

Holding

Service pay not due where statutory NSSF deductions were remitted

Reasoning

Under Sections 35(5) and (6) service pay is excluded where the employer remits statutory dues. The appellant confirmed NSSF remittance; any non-remittance for particular periods should be reported to the Labour Officer and NSSF for sanctions, not claimed as service pay.

p. 6

Legal principles established

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  • Verbal employment is lawful but for continuous employment the employer bears the legal burden to issue a written contract under Sections 9 and 10 of the Employment Act, and where claims arise the court is inclined to believe the employee without written protection
  • Under Sections 43 and 47(5) of the Employment Act, once the employee adduces prima facie evidence of unfair termination, the burden shifts to the employer to justify the termination
  • The maximum award of 12 months' compensation for unfair termination must be justified with reasons; absent justification an appellate court will interfere

Court orders

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  1. 1.Appeal found without merit save that the trial court's orders are reviewed: compensation reduced to Ksh.34,963.64
  2. 2.Notice pay set at Ksh.17,481.82
  3. 3.Underpayments awarded at Ksh.73,108.75
  4. 4.Accrued leave awarded at Ksh.16,721.80
  5. 5.Costs for proceedings in the lower court awarded to the respondent without interests
  6. 6.Service pay award set aside
On appeal from
Magistrates' Court (CMELRC), Mombasa
CMELRC No. E131 of 2023
Jurisdiction invoked
First appeal under the Employment and Labour Relations Court's appellate jurisdiction from the Magistrates' Court (CMELRC)

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, "Servicehub Global Enterprise Limited v Nkumu (Appeal E122 of 2024) [2024] KEELRC 915 (KLR)", Case Analysis (2024). ELRC Appeal from Mombasa CMELRC No. E131 of 2023. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/915/eng@2024-04-18

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