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ELRCPartially AllowedEmployment Appeal at Milimani (appeal against Milimani Chief Magistrates Court Employment Cause No. E1951 of 2021)

Flashcom Security Limited v Malika (Appeal E239 of 2023) [2024] KEELRC 2182 (KLR)

Employment and Labour Relations Court
6 September 2024
2,400 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court cut a security guard's unfair dismissal award from twelve to three months' pay but confirmed employers must pay the legal minimum wage even if a contract says less.

What this practically means

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Executive summary

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Flashcom Security Limited appealed against parts of the judgment of Hon. Hosea Mwangi Nganga (P.M) delivered on 19th October 2023 in Milimani CM Employment Cause No. E1951 of 2021, in which Moses Muyera Malika was declared to have been unfairly and unlawfully dismissed and awarded terminal dues of Kshs 371,660.21 plus costs and interests. The appeal, disposed of by written submissions, challenged the awards for salary in lieu of notice, underpayment, public holidays and maximum 12 months' compensation. The court, as a first appellate court, reanalyzed the evidence on the Selle v Associated Motor Boat Company principles and framed one issue: whether to interfere with the trial court's discretion on statutory awards and compensation. It held that parties' silence on the notice award amounted to admission; the maximum compensation failed the requirement of sound judicial justification given the respondent's 15 months of service and a contract with three months remaining, so it was substituted with three months' pay; the underpayment award was upheld because a Wages Order constitutes minimum terms not variable by agreement; and the public holidays award was reduced from 17 to 15 days, the figure pleaded, since the employer produced no records to rebut the claim. The appeal partially succeeded and each party was ordered to bear its own costs.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether this court should interfere with the trial court's discretion on statutory awards as well as compensation for unfair termination

Key legal issues

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01

Interference with the trial court's award of maximum 12 months' compensation for unfair termination

Holding

Award reduced to 3 months' compensation given the 15 months served and the contract having only three months remaining

Reasoning

Although the award is discretionary, section 49(4) factors must be considered and the trial court had to justify the maximum award. The claimant served only 15 months and his contract had three months to run, so the employment relationship would in any event have ended shortly. Three months' compensation was therefore justified and the maximum award was not.

p. 4
02

Award of underpayment against a contractually agreed salary below the statutory minimum wage

Holding

Underpayment award upheld; the contract rate of Kshs 8,800 could not displace the statutory minimum of Kshs 17,413.24

Reasoning

The trial court relied on section 48 of the Labour Institutions Act, under which a Wages Order constitutes minimum terms that may not be varied by agreement. The contract of employment was subservient to the express provisions of the law, so the shortfall between the minimum wage and the agreed salary was properly awarded.

p. 5
03

Public holidays award without documentary evidence

Holding

Award reduced from 17 to 15 days to conform to the pleadings, since the employer produced no records to rebut the claim

Reasoning

Section 74 of the Employment Act places the duty to produce employment records on the employer; the shift checklists did not capture public holidays. However, the claimant pleaded and submitted on 15 days, not 17, and parties are bound by their pleadings, so only 15 days could be awarded.

p. 5
04

Salary in lieu of notice

Holding

Award upheld as conceded by the Appellant's failure to submit on the ground

Reasoning

Neither party submitted on this ground of appeal, which the court took as an admission that the respondent, having been unfairly terminated without notice, was entitled to payment in lieu of notice under section 36 of the Employment Act.

p. 4

Legal principles established

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  • An appellate court interferes with the exercise of discretion only where the lower court misdirected itself or was clearly wrong, occasioning injustice
  • An award of the maximum 12 months' pay for unfair termination must be justified on sound judicial principles, having regard to section 49(4) of the Employment Act
  • Parties are bound by their pleadings; submissions do not take the place of pleadings

Court orders

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  1. 1.Appeal allowed in part: compensation for unfair termination reduced to 3 months' salary (Kshs 52,239.72)
  2. 2.One month salary in lieu of notice of Kshs 17,413.24 upheld
  3. 3.Underpayments award of Kshs 129,198.63 upheld
  4. 4.Public holidays award reduced to 15 days at Kshs 8,706.62
  5. 5.Total award of Kshs 207,558.21 substituted for the trial court's award
  6. 6.Each party to bear their own costs of the appeal

The bench

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One judgment of the whole court — no separate or dissenting opinions.

Wrote the judgment

On appeal from
Milimani Chief Magistrates Court
Employment Cause No. E1951 of 2021
Jurisdiction invoked
First appellate jurisdiction over the Chief Magistrate's Court employment cause

Relief refused

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Setting aside of the award of one month salary in lieu of notice

Parties never submitted on this head, taken as admission of entitlement under Section 36 of the Employment Act

p. 4

Setting aside of the underpayment award

Minimum wage under the Regulation of Wages (General) (Amendment) Order 2018 could not be contracted out of

p. 5

Appellant's prayer for the appeal to be allowed in full with costs

The appeal only partially succeeded

p. 5

Costs

Each party shall bear their own costs of this Appeal

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

In the upshot the Appeal partially succeeds as follows; _
p. 5disposition
a. 3 months’ salary as compensation for unfair termination Kshs. 52,239.72/= b. One month salary in lieu of Notice Kshs……… 17,413.24 c. Underpayments …………………..Kshs 129,198.63 d. Public Holidays ( 15 days) ………………….. Kshs 8,706.62 Total Kshs 207,558.21
p. 5final orders
The appeal partially succeeds hence each party shall bear their own costs of this Appeal.
p. 5costs
This court notes that parties are bound by their pleadings and submissions do not take place of pleadings.
p. 5pleadings versus submissions
The trial court relied on section 48 of the Labour Institutions Act which states that Wages Order constitutes minimum terms which may not be varied by any agreement.
p. 5minimum wage

Issues in the judgment

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minor

Discrepancy in underpayment figure between submissions (Kshs 129,198.03) and elsewhere in the judgment (Kshs 129,198.63)

minor

Blank figure in the final orders for one month salary in lieu of notice

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, "Flashcom Security Limited v Malika (Appeal E239 of 2023) [2024] KEELRC 2182 (KLR)", Case Analysis (2024). Employment Appeal at Milimani (appeal against Milimani Chief Magistrates Court Employment Cause No. E1951 of 2021). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/2182/eng@2024-09-06

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