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ELRCPartially AllowedAppeal from Milimani Chief Magistrates Court Employment Cause No. E827 of 2020

Thomas & Piron Grand Lacs Limited v Momanyi (Appeal E097 of 2023) [2024] KEELRC 2186 (KLR)

Employment and Labour Relations Court
6 September 2024
4,025 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~16 min to read original · ~4 min brief

The bottom line

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A Kenyan court cut a worker's unfair termination payout but confirmed employers must follow strict redundancy rules or face liability.

What this practically means

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Executive summary

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The Appellant, Thomas & Piron Grand Lacs Limited, appealed parts of a judgment of Hon. G.M Gitonga (Milimani CM, Employment Cause No. E827 of 2020, 17 May 2023) awarding Dalvin Bosibori Momanyi Kshs 603,302 for unfair redundancy-based termination, including 12 months' compensatory damages (Kshs 420,000), severance pay (Kshs 66,635) and untaken leave (Kshs 46,667). The appeal was canvassed by written submissions. The court framed three issues: whether the termination was unfairly found unfair, whether damages and severance could coexist, and whether the leave award was justified. On the first, the court upheld the trial court: the Appellant produced no financial statements to prove the Covid-19 financial hardship it alleged, defeating the validity test under section 43, and failed to comply with sections 40 and 41 - no month's notice to the union or employee, no selection criteria, and no proved consultation. On the second, the court held severance pay under section 40(1)(g) is statutory and distinct from section 49(1)(c) compensatory damages, so both may be awarded; but severance must be computed on complete years only, reducing it to Kshs 52,500. The 12-month compensation award was reduced to four months (Kshs 140,000) for want of justification, the court taking judicial notice of Covid-19's economic impact. On the third, the leave award stood: the employer, as custodian of records under section 74, bore the burden of disproving untaken leave. Uncontested heads (one month's notice, March 2020 salary, costs of the lower court, Kshs 122,500 paid by consent) remained undisturbed. The appeal partially succeeded, with each party bearing its own costs of the appeal.

Questions the Court framed

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

  1. 1.Whether the trial court erred in finding that the Respondent was unfairly terminated
  2. 2.Whether the trial court erred in awarding compensatory damages and severance pay at the same time
  3. 3.Whether the trial court erred in awarding the Respondent leave days not taken

Key legal issues

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01

Validity of reason and fairness of procedure in redundancy

Holding

The termination was unfair: the employer did not prove financial difficulties justifying the redundancy and failed to comply with sections 40 and 41 of the Employment Act.

Reasoning

The employer alleged Covid-19-driven financial hardship but produced no financial statements, failing the validity test under section 43. No month's notice was issued to the union or the employee, no selection criteria were set down, and no consultation meeting was proved. Termination on account of redundancy must satisfy both a valid reason and fair procedure under sections 40, 41, 43 and 45.

p. 5
02

Whether compensatory damages and severance pay can be awarded together

Holding

Yes; severance pay under section 40(1)(g) is statutory and distinct from compensatory damages under section 49(1)(c).

Reasoning

Severance pay attaches to redundancy declarations regardless of unfairness, while section 49(1)(c) compensation addresses terminations for invalid reasons or by unfair procedure. The two serve different purposes, so both awards may stand. However, severance is calculated on complete years only: 15/30 x 35,000 x 3 years = Kshs 52,500, not the prorated formula the trial court used.

p. 7
03

Quantum of compensation for unfair termination

Holding

The maximum 12 months' award lacked justification; four months' salary (Kshs 140,000) substituted, taking judicial notice of Covid-19's business impact.

Reasoning

Citing Kenya Broadcasting Corporation v Geoffrey Wakio, an award of maximum 12 months' pay must rest on sound judicial principles, not be capricious or whimsical. The trial court gave no justification. Though the employer proved no financial hardship, the court took judicial notice that Covid-19 negatively impacted businesses, making a four-month award reasonable.

p. 7
04

Leave days not taken - burden of proof

Holding

The trial court did not err; once the employee alleged untaken leave, the employer bore the burden of disproving it.

Reasoning

Leave is a statutory entitlement under section 28 of the Employment Act. Claims limited to the three years preceding the suit are not time-barred under section 90. As custodian of employment records under section 74, the employer had to produce evidence of leave taken; it could not demand that the employee seek court-ordered production.

p. 8

Legal principles established

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  • Severance pay under section 40(1)(g) of the Employment Act is statutory and payable regardless of whether the termination is found unfair; it is distinct from compensatory damages under section 49(1)(c), which may be awarded simultaneously.
  • Severance pay is calculated at 15 days' salary for each complete year of service, with no proration for a portion of a year.
  • An award of the maximum 12 months' compensation for unfair termination must be justified on sound judicial principles.
  • Once an employee alleges untaken leave, the burden shifts to the employer, as custodian of employment records under section 74 of the Employment Act, to prove the leave was taken.

Court orders

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  1. 1.The 12 months' salary compensation for unfair termination is substituted with four months' salary as compensation at Kshs 140,000/=
  2. 2.Severance pay is substituted from Kshs 66,635/= to Kshs 52,500/=
  3. 3.Leave days not taken remains at Kshs 46,667/=
  4. 4.The other prayers not challenged in this appeal remain the same
  5. 5.Each party shall bear their own costs for this 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. E827 of 2020
Jurisdiction invoked
First appeal from the Chief Magistrate's Employment Cause under the Employment and Labour Relations Court's jurisdiction under the Employment Act, 2007

Relief refused

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Appellant's challenge to the award of leave days not taken (Kshs 46,667)

The burden shifted to the Appellant as custodian of employment records to disprove the claim, which it failed to discharge

p. 8

Appellant's challenge to the finding of unfair termination

The Appellant failed to prove valid reason and fair procedure under sections 40, 41, 43 and 45 of the Employment Act

p. 6

Costs

Each party shall bear their own costs for 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.

a. The 12 months' salary compensation for unfair termination is substituted with four months' salary as compensation at Kshs 140,000/= b. Severance pay is substituted from Kshs 66,635/= to Kshs 52,500/= c. Leave days not taken remains at Kshs 46,667/=
p. 8Final orders - partial success on appeal
The other prayers not challenged in this appeal remain the same and since the appeal partially succeeds each party shall bear their own costs for this Appeal.
p. 8Costs order
This award is statutory regardless whether the termination is found to be unfair or not. An award under section 49(1)(c) is compensatory and is intended to compensate an employee who has been terminated for invalid reasons and or using an unfair procedure.
p. 7Coexistence of severance pay and compensatory damages
An employee in entitled to 15 days salary for each complete year of service. There is no provision for payment of a portion of the year. That is to say, the Act does not provide for a prorated payment.
p. 7Severance pay calculation formula
This Court has established the rule that an award of the maximum 12 months' pay must be based on sound judicial principles.
p. 7Justification required for maximum compensation award
The Appellant is the custodian of employment records as provided for under section 74 of the Employment Act and it ought to have produced evidence to the contrary without stating that the Respondent must have applied to court for the production of the documents.
p. 8Burden of proof on leave records

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (2)

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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, "Thomas & Piron Grand Lacs Limited v Momanyi (Appeal E097 of 2023) [2024] KEELRC 2186 (KLR)", Case Analysis (2024). Appeal from Milimani Chief Magistrates Court Employment Cause No. E827 of 2020. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/2186/eng@2024-09-06

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