Frodak Kenya Limited v Makunda (Employment and Labour Relations Appeal E005 of 2023) [2024] KEELRC 2233 (KLR)
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
#Key legal issues
#Terms of engagement - piece-rate versus contract of service
The trial court's finding that the claimant was a contractual worker and not piece-rate was affirmed.
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.
Lawfulness of the termination
The finding that the contract ended by effluxion of time (hence fair termination) stands, as there was no cross-appeal.
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.
Severance pay where termination was by effluxion of time
The award of severance pay was erroneous; it was substituted with service pay of Kshs. 18,579/- for three completed years.
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.
Fatal defect in the appeal
The court held itself functus officio on this issue, having already allowed reinstatement of the appeal on 27th June 2024.
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.
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.Appeal allowed with regard to the award of severance pay and prayers (b) and (c)
- 2.Judgment and Decree of Hon. Reuben Sang (SPM) set aside and substituted: award of accrued leave in lieu of Kshs. 56,976
- 3.Payment of service pay of Kshs. 18,579/-
- 4.Payment of underpayment of Kshs. 99,672/-
- 5.Amounts (a, b and c) subject to discount of amount paid to the claimant through the labour office
- 6.Respondent to issue certificate of service to the claimant pursuant to section 52 of the Employment Act
- 7.Each party to bear own costs in the appeal
- 8.Stay granted of 30 days
- 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.