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ELRCPartially AllowedELRCA E019 of 2023 (lead file; consolidated with ELRCA E018, E020, E021 and E022 of 2023)· [2024] KEELRC 1422 (KLR)

Radar Limited v Nyauma & 4 others (Appeal E019, E018, E020, E021 & E022 of 2023 (Consolidated)) [2024] KEELRC 1422 (KLR)

Employment and Labour Relations Court
26 April 2024
2,884 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
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The bottom line

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Kenya's Employment Court at Malindi confirmed a guard's dismissal was unfair but cut the compensation and threw out the house allowance award.

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 Malindi against the judgment of the learned magistrate in Kaloleni CMELRC No. E010 of 2021 delivered on 20 September 2023, consolidated with four sibling appeals (ELRCA E018, E019, E020, E021 and E022 of 2023) arising from the same cause of action, with ELRCA E019 of 2023 as the lead file. The respondent, a security guard employed from 1 October 2013 at a gross wage of Ksh.17,966, had his employment terminated by letter dated 1 October 2018 effective 1 November 2018. The trial court found unfair termination and awarded notice pay, house allowance of Ksh.61,560 and six months' compensation. The appellant employer appealed on grounds including failure of proof, entitlement to house allowance under consolidated pay, excessive compensation, notice pay, the date of receipt of the termination letter, and interest from the date of filing suit. The court, on a first appeal rehearsing the evidence, held that the termination notice did not state reasons as required by section 45(2)(a) and, the employer's real reason (loss of the KRA contract) being known, the failure to comply with sections 41, 43 and 44 rendered the termination unfair. However, the award of house allowance was unjustified since the gross wage exceeded the statutory minimum wage incorporating the 15% house allowance and the pay slips did not omit it. Compensation was recalibrated to one month's gross salary per year of service for each consolidated file, and interest on general damages was held to run from judgment, with the lower court's unreasoned allocation of interest and costs not standing. The appeal was partially allowed and each party ordered to bear its own costs of the appeal and the lower court.

Key legal issues

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01

Validity of termination without stated reasons

Holding

The termination notice dated 1 October 2018 did not state the reason for termination, breaching section 45(2)(a); the magistrate's finding of unfair termination could not be faulted.

Reasoning

The termination letter gave no reasons. The employer knew the real reason (loss of the KRA contract/tender) as its witness confirmed in cross-examination. Under sections 43, 45 and 47(5) of the Employment Act the employer bears the burden of proving valid and fair reasons, and failure renders termination unfair. However, notice was issued and admitted, so the notice pay award stands.

p. 5
02

Quantum of compensation for unfair termination

Holding

Six months' compensation was excessive for two years of service; the court substituted compensation of one month's gross salary per year of service across the consolidated files.

Reasoning

Compensation under section 49 is discretionary but must be justified, reserving maximum awards for gross breaches. Given the short service (two years and four months in the lead file), the court applied a formula of one month's gross wage per year of service for each of the five consolidated files.

p. 6
03

House allowance where wages exceed the minimum wage

Holding

The house allowance award was unjustified because the gross wage paid exceeded the statutory minimum wage which incorporates the 15% house allowance, and the pay slips did not exclude it.

Reasoning

Following Vipingo Ridge Limited v Swalehe Ngonge Mpitta, consolidated pay does not automatically include house allowance, but the party may prove inclusion or exclusion via pay slips. Here the pay slips did not omit house allowance, and the gross wage of Ksh.17,966 exceeded the 2018 minimum basic wage plus 15%, so the claim failed.

p. 6
04

Interest on awards for unfair termination

Holding

Interest on the general damages for unfair termination should run from the date of judgment, not from filing suit; the trial court's award of interest and costs lacked stated reasons.

Reasoning

Relying on Elizaphen Mokaya Bogonko v Fredrick Omondi Ouna, interest on general damages accrues from judgment while special damages accrue from filing. In employment claims costs are discretionary and reasons must be given; the lower court's allocation of costs and interest was unexplained and did not survive the appeal.

p. 6

Legal principles established

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  • An employer must give and prove the reasons for termination of employment; a termination clause allowing termination upon notice alone is insufficient under the Employment Act.
  • Where an employer fails to prove reasons for termination, the termination is deemed unfair.
  • Compensation for unfair termination should be calibrated to length of service, with one month's gross salary per year of service, reserving maximum awards for gross breaches.
  • House allowance is not automatically included in a consolidated salary; a party may show by pay slip entries that it was omitted.
  • Interest on general damages accrues from the date of judgment, not from the date of filing suit.

Court orders

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  1. 1.ELRCA No. 018 of 2023 reviewed: notice pay Ksh.17,966 and compensation Ksh.35,932
  2. 2.ELRCA E019 of 2023: notice pay Ksh.17,966 and compensation Ksh.35,932
  3. 3.ELRCA E020 of 2023: notice pay Ksh.19,127 and compensation Ksh.76,508
  4. 4.ELRCA E021 of 2023: notice pay Ksh.19,900 and compensation Ksh.137,200
  5. 5.ELRCA No. E022 of 2023: notice pay Ksh.17,160 and compensation Ksh.34,320
  6. 6.Award of house allowance set aside as not justified
  7. 7.Each party to bear its own costs of the appeal and the lower court

Authorities

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Legislation

  • Employment Act, 2007Sections 35, 40, 41, 43, 44, 45(2)(a), 47(5), 49, 90
  • Regulation of Wages (General) (Amendment) OrdersVarious years (2013-2018)

Cases cited (13)

  • Postal Corporation of Kenya v Andrew K. Tanui
    [2019] eKLR
  • Banking, Insurance & Finance Union (Kenya) v Maisha Bora Sacco Society Ltd
    [2018] eKLR
  • Jared Mangera & 11 Others v Professional Clean Care Limited
    [2018] eKLR
  • Eric Odhiambo Owade & 2 others v Professional Cleaning Care Limited
    [2018] eKLR
  • Morgan Air Cargo Limited v Everest Enterprises Limited
    [2014] eKLR
  • Joseph Mwaniki Nganga v United Millers Limited
    [2022] eKLR
  • Wanyera v Central Isiolo Investment Limited
    (Appeal E002 of 2023) [2024] KEELRC 596 (KLR) (8 March 2024)
  • Pius Machafu Isindu v Lavington Security Guards Limited
    [2017] eKLR
  • Kenya Broadcasting Corporation v Geoffrey Wakio
    [2019] eKLR
  • Gas Kenya Limited v Odhiambo
    (Appeal E006 of 2022) [2022] KEELRC 3930 (KLR) (22 September 2022)
  • Ol Pejeta Ranching Limited v David Wanjau Muhoro
    [2017] eKLR
  • Elizaphen Mokaya Bogonko v Fredrick Omondi Ouna
    [2022] eKLR
  • Vipingo Ridge Limited v Swalehe Ngonge Mpitta
    [2022] eKLR
On appeal from
Principal Magistrate's Court, Kaloleni (CMELRC)
Kaloleni CMELRC No. E010 of 2021
Jurisdiction invoked
First appeal to the Employment and Labour Relations Court from the Magistrates' Court (employment and labour relations jurisdiction)

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, "Radar Limited v Nyauma & 4 others (Appeal E019, E018, E020, E021 & E022 of 2023 (Consolidated)) [2024] KEELRC 1422 (KLR)", Case Analysis (2024). ELRCA E019 of 2023 (lead file; consolidated with ELRCA E018, E020, E021 and E022 of 2023). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/1422/eng@2024-04-26

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