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ELRCPartially AllowedMombasa CM ELRC No. E330 of 2021 (Appeal)· [2024] KEELRC 2332 (KLR)

The Dhow House Limited v Gisebe (Appeal E081 of 2023) [2024] KEELRC 2332 (KLR)

Employment and Labour Relations Court
26 September 2024
3,060 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~12 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court confirmed firing a worker for refusing a wage cut is unfair, but slashed the compensation because maximum awards need justification.

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 Mombasa against the judgment of 27 July 2023 in Mombasa CM ELRC No. E330 of 2021, which found unfair termination in favour of a bartender respondent. The employment ran in two phases: from 23 March 2019 to 5 August 2020 (ending in the respondent's resignation) and from re-engagement on 29 August 2020 until termination on 17 March 2021, when the respondent declined a Covid-19-related wage reduction. The appellant argued the respondent resigned, bore the burden of proving unfair termination, and that the trial court's general awards lacked analysis. The court, exercising its first-appeal duty to re-evaluate evidence, upheld the finding of unfair termination: under Section 10(5) of the Employment Act, an employee cannot suffer a fundamental contractual change without written consent, and terminating him for refusing a wage reduction was unlawful. However, the court found the trial court erred in awarding maximum 12 months' compensation without justification, substituting one month's gross wage of Ksh.17,000. It reduced notice pay to Ksh.7,000 (after deducting a Ksh.10,000 loan), allowed the public holiday claim of Ksh.20,769 as the appellant had no compensation records, and rejected claims for severance (no redundancy), service pay (NSSF statement filed), and three years' accrued leave (limited to 18 months under Section 28(4)). The appeal partially succeeded; each party bears its own costs of the appeal, with lower court costs as awarded.

Key legal issues

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01

Unfair termination for refusal of wage reduction

Holding

The termination on 17 March 2021 was unfair as the respondent declined the wage reduction and there was no written consent to the change

Reasoning

Section 10(5) of the Employment Act requires changes to contract terms to be made in consultation with the employee, reflected in the contract and notified in writing. The appellant had no record of consent to the wage reduction or reasons for termination. The trial court's finding of unfair termination, though for different reasons, could not be faulted.

p. 5
02

Maximum compensation requires justification

Holding

The trial court's award of the maximum 12 months' compensation without stated reasons was an error warranting interference; one month's gross wage was justified

Reasoning

The jurisprudence of the Court of Appeal requires that maximum compensation of 12 months be awarded only in exceptional cases with sound judicial principles and stated justification. The respondent worked only 6 months in the last phase, and the employer made an effort to discuss retention despite failing the legal threshold. Compensation of one gross wage of Ksh.17,000 was justified.

p. 5
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Duty of first appellate court

Holding

The court must re-evaluate and re-assess the evidence while bearing in mind the trial court's advantage of observing witness demeanour

Reasoning

Being a first appeal under section 78 of the Civil Procedure Act, the court has a duty to re-evaluate and re-assess the evidence and draw its own conclusions, while remaining mindful that the trial court heard the evidence first-hand and observed witness demeanour.

p. 3

Legal principles established

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  • A maximum award of 12 months' compensation must be justified with stated reasons and is reserved for exceptional cases
  • An employer cannot unilaterally vary fundamental terms of employment; changes must be in writing with the employee's consent
  • Terminating an employee for declining a wage reduction is unlawful and unfair

Court orders

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  1. 1.Notice pay Ksh.7,000 (less the loan amount)
  2. 2.Compensation Ksh.17,000
  3. 3.Work on public holidays Ksh.20,769
  4. 4.For the appeal, each party to bear its costs
  5. 5.For the lower court proceedings, costs as awarded
On appeal from
Magistrates' Court (Mombasa)
CM ELRC No. E330 of 2021
Jurisdiction invoked
First appeal under section 78 of the Civil Procedure Act

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, "The Dhow House Limited v Gisebe (Appeal E081 of 2023) [2024] KEELRC 2332 (KLR)", Case Analysis (2024). Mombasa CM ELRC No. E330 of 2021 (Appeal). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/2332/eng@2024-09-26

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