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ELRCPartially AllowedNot stated in judgment· [2025] KEELRC 256 (KLR)

Ofyze Holdings Limited t/a Harris Tavern v Mutisya (Appeal E191 of 2024) [2025] KEELRC 256 (KLR)

Employment and Labour Relations Court
31 January 2025
2,077 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Employment Court ruled that a Covid-19-forced business closure satisfied redundancy rules despite procedural shortcuts, but employers must still prove salaries include housing allowance.

What this practically means

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Executive summary

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This is a first appeal, disposed of by written submissions, against the judgment of Honourable Mr. Rawlings Musiega SRM delivered on 21st June 2024 in an employment claim by a former employee of the Appellant. The Appellant raised four grounds, principally that the Magistrate erred in finding that the Respondent was terminated despite evidence that the Respondent's establishment was shut down following government directives on Covid-19 and that a settlement agreement had resolved all claims. The Respondent filed no submissions. Adopting the framework in Peters vs Sunday Post Ltd [1958] EA 424, the Court re-evaluated the evidence. It held that section 40 of the Employment Act need not be observed clause by clause: an omission that does not significantly affect the character and purpose of a redundancy and occasions no prejudice cannot vitiate it as unfair termination. The closure of the business was compelled by a government directive, leaving no room or time for compliance with section 40's procedural requirements, and the employer paid leave, severance pay for 7 years of service and underpayment through settlement. The trial court's finding of unfair termination and the consequential award of compensation were set aside. However, the appeal on housing allowance failed: that is a statutory right, and the employer led no evidence that the salary was consolidated and inclusive of housing allowance, so that award stood. The appeal being partially successful, each party was ordered to bear their own costs.

Key legal issues

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01

Whether non-compliance with section 40 of the Employment Act rendered the termination unfair

Holding

The finding of unfair termination was set aside; the employer's actions, including payment of leave, severance pay for 7 years and underpayment pursuant to settlement negotiations, met the standard of reasonableness notwithstanding the Covid-19 compelled closure.

Reasoning

The trial court found non-compliance with section 40 without explaining the basis of that conclusion. The business closure followed a government directive on Covid-19, leaving no room or time to observe the procedural requirements of section 40. The employer entered settlement negotiations and paid leave, severance pay and underpayment, payments consistent with section 40. Substantial compliance without prejudice suffices.

p. 4
02

Whether the award of housing allowance should stand

Holding

The award of housing allowance stands; the appeal on this ground is dismissed.

Reasoning

Housing allowance is a statutory right and the burden lay on the employer to show by evidence that the salary paid was consolidated and inclusive of housing allowance. No such evidence was tendered, so the learned Magistrate was right to award it as prayed.

p. 5

Legal principles established

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  • On a first appeal, the court must re-evaluate the evidence on facts and law and draw its own conclusions, while allowing for the trial court's advantage of seeing witnesses.
  • Section 40 of the Employment Act need not be observed clause by clause; an omission that does not significantly affect the character and purpose of the redundancy and occasions no prejudice cannot vitiate the redundancy as unfair termination.

Court orders

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  1. 1.The finding that the respondent was unfairly terminated for want of compliance with section 40 of the Employment Act is set aside
  2. 2.The consequential award of compensation for unfair termination is set aside
  3. 3.The appeal on the award of housing allowance fails and is dismissed
  4. 4.Each party shall bear their own costs of the appeal
On appeal from
Senior Resident Magistrate's Court
Not stated in judgment
Jurisdiction invoked
First appeal from subordinate court (magistrates' court); appellate jurisdiction not expressly cited

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, "Ofyze Holdings Limited t/a Harris Tavern v Mutisya (Appeal E191 of 2024) [2025] KEELRC 256 (KLR)", Case Analysis (2025). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/256/eng@2025-01-31

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