Skip to content
AI-generated case briefs sourced from Kenya Law · Not legal advice
AI-generated case brief
Case Brief · caselaw.co.ke
ELRCPartially AllowedAppeal from Butali MC ELR Case No. 2 of 2018 (Memorandum of Appeal dated 3rd July 2023)· [2024] KEELRC 2233 (KLR)

Frodak Kenya Limited v Makunda (Employment and Labour Relations Appeal E005 of 2023) [2024] KEELRC 2233 (KLR)

High Court of Kenya
18 September 2024
2,759 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~11 min to read original · ~4 min brief

The bottom line

#

Kenya's High Court confirmed contract workers deserve minimum wage and service pay, but severance pay is only for genuine redundancy, not expired contracts.

What this practically means

#

Executive summary

#
This is a first appeal to the High Court at Kakamega (J.W. Keli, J) against the judgment and decree of Hon. Reuben Sang (SPM), Butali, delivered on 13th June 2023 in Butali MC ELR Case No. 2 of 2018, in which the trial court found that the claimant's contract had ended by effluxion of time but awarded him leave allowance, severance pay and underpayment. Frodak Kenya Limited appealed, contending the respondent was a piece-rated worker not entitled to those reliefs. The court framed four issues: whether the appeal was fatally defective; the respondent's employment status; whether dismissal was unlawful; and whether the awards were merited. On the first issue the court held itself functus officio, having already reinstated the appeal by a ruling of 27th June 2024. Re-evaluating the evidence as required on first appeal, the court affirmed that the respondent was a contractual worker, not piece-rate, and thus entitled to statutory minimum wages. It declined to disturb the finding that termination was by effluxion of time, there being no cross-appeal. It agreed with the appellant that the award of severance pay was erroneous because severance is due only on redundancy, and instead substituted service pay of Kshs. 18,579/- under section 35(5) of the Employment Act for three completed years. Awards under prayers (b) and (c) were set aside for lack of evidence. The judgment was set aside and substituted with awards of accrued leave in lieu of Kshs. 56,976, service pay of Kshs. 18,579, and underpayment of Kshs. 99,672, subject to discount of amounts paid through the labour office, plus a certificate of service under section 52. Each party was to bear its own costs, with a 30-day stay granted.

Key legal issues

#
01

Terms of engagement - piece-rate versus contract of service

Holding

The trial court's finding that the claimant was a contractual worker and not piece-rate was affirmed.

Reasoning

The appellant urged that the respondent was a piece-rated worker paid per load. The court, exercising its first appellate duty to re-evaluate the evidence, found the respondent worked on a three-month renewable contract, paid fortnightly, with a disciplinary hearing before termination. It affirmed the lower court's finding of a contractual engagement, which entitled him to statutory minimum wage protection.

p. 5
02

Lawfulness of the termination

Holding

The finding that the contract ended by effluxion of time (hence fair termination) stands, as there was no cross-appeal.

Reasoning

The trial magistrate had found the claimant was terminated by effluxion of time of the contract, which amounted to a lawful termination. The respondent did not cross-appeal against that finding, so the appellate court lacked any basis to disturb it, and confined itself to the reliefs awarded.

p. 5
03

Severance pay where termination was by effluxion of time

Holding

The award of severance pay was erroneous; it was substituted with service pay of Kshs. 18,579/- for three completed years.

Reasoning

Severance pay under section 40(1)(g) is payable only to an employee declared redundant. Having affirmed that the employment ended by effluxion of time and not redundancy, the court agreed the award of severance was an error. However, since the respondent had no social security, he qualified for service pay under section 35(5), computed at 15 days' pay per completed year on the minimum wage of Kshs. 12,386.

p. 6
04

Fatal defect in the appeal

Holding

The court held itself functus officio on this issue, having already allowed reinstatement of the appeal on 27th June 2024.

Reasoning

The respondent had contended the appeal was fatally defective following the court's earlier decision of 16th April 2024. The court relied on its own ruling of 27th June 2024, which invoked Intercounties Importers and Exporters and allowed reinstatement of the appeal with leave to file a supplementary record, and therefore declined to revisit the issue.

p. 4

Legal principles established

#
  • A first appellate court must re-evaluate the facts and evidence before the trial court while making allowance for not having seen the witnesses.
  • An employee on a contract of service is entitled to the protection of statutory minimum wages.
  • Severance pay under section 40(1)(g) of the Employment Act is due only on declaration of redundancy, not on expiry of a contract by effluxion of time.
  • An employee whose contract is terminated under section 35(1)(c) of the Employment Act and who has no social security is entitled to service pay.
  • A first appellate court will not disturb an unchallenged finding of the trial court absent a cross-appeal.

Court orders

#
  1. 1.Appeal allowed with regard to the award of severance pay and prayers (b) and (c)
  2. 2.Judgment and Decree of Hon. Reuben Sang (SPM) set aside and substituted: award of accrued leave in lieu of Kshs. 56,976
  3. 3.Payment of service pay of Kshs. 18,579/-
  4. 4.Payment of underpayment of Kshs. 99,672/-
  5. 5.Amounts (a, b and c) subject to discount of amount paid to the claimant through the labour office
  6. 6.Respondent to issue certificate of service to the claimant pursuant to section 52 of the Employment Act
  7. 7.Each party to bear own costs in the appeal
  8. 8.Stay granted of 30 days

Authorities

#

Legislation

  • Employment Actsection 37
  • Employment Actsection 35(1)(c)
  • Employment Actsection 35(5)
  • Employment Actsection 40(1)(g)
  • Employment Actsection 52
  • Legal Notice No. 117 of 2015minimum wages of Kshs. 12,386/-

Cases cited (3)

  • Selle & Another v Associated Motor Boat Co. Ltd & Others
    (1948) EA 123
  • Intercounties Importers and Exporters v Teleposta Pension Scheme Registered Trustees & 5 others
    (2021) eKLR
  • Nanyuki Water and Sewerage Company Limited v Benson Mwiti Ntiritu & 4 others
    Civil Appeal No. 20 of 2017 (2018)
On appeal from
Butali Magistrates' Court (SPM)
Butali MC ELR Case No. 2 of 2018
Jurisdiction invoked
First appellate jurisdiction over the subordinate court's judgment in an employment and labour relations claim (Employment and Labour Relations matters appealed from the magistrates' court)

Key timeline

#

Practical implications

#

Frequently asked questions

#

Cite this brief

#

Cite this brief

Caselaw, "Frodak Kenya Limited v Makunda (Employment and Labour Relations Appeal E005 of 2023) [2024] KEELRC 2233 (KLR)", Case Analysis (2024). Appeal from Butali MC ELR Case No. 2 of 2018 (Memorandum of Appeal dated 3rd July 2023). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/2233/eng@2024-09-18

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