Pannju Agencies Co. Ltd v Mwai (Employment and Labour Relations Appeal E245 of 2023) [2025] KEELRC 404 (KLR)
The bottom line
#A Kenyan court confirmed a truck driver was an employee despite no written contract, and nearly tripled his compensation award to about Kshs. 795,000.
What this practically means
#Executive summary
#Key legal issues
#Whether the respondent was an employee or an independent contractor
The respondent was an employee of the appellant; the appellant paid his salary and that of the turnboys, directed him where to drive the lorry, and deducted tax and NSSF.
Applying the control test, fourfold test and integration test from Omusamia v Upperhill Springs Restaurant, and re-evaluating the trial evidence including the RW testimony and the payroll, the court found the appellant exercised control and treated the respondent as an employee. A written contract is not the only proof of employment since section 8 of the Employment Act recognises oral contracts.
Whether the compensation for unfair termination of three months' salary was adequate
The three months' award was on the lower side; substituted with the equivalent of 10 months' gross salary under section 49(4) of the Employment Act, at the minimum statutory wage of a lorry driver (Kshs. 30,627.45).
The trial court did not explain the basis of the three months' award as required under section 50 read with section 49(4). Considering length of service (July 2016 to December 2021), the unlawful and unprocedural termination, the appellant's non-cooperation with the labour office and the claimant's failure to mitigate, the court found the award low and raised it to 10 months.
Underpaid salary for the full period of employment
The trial court's award limited to three years was set aside and substituted with an award for the entire employment period (July 2016 to December 2021), i.e. 5 years and 6 months, totalling Kshs. 371,411.70.
Underpayment is a continuing injury renewed monthly; the claim, filed within twelve months of the January 2022 termination, complied with section 89 of the Employment Act and was not time-barred. The respondent was therefore entitled to the difference between the minimum statutory wage and the amount paid for the whole period of employment.
Untaken annual leave for the full period of employment
The cross-appeal succeeded; the award limited to three years was set aside and substituted with payment in lieu of untaken leave for the entire employment period, totalling Kshs. 117,915.60.
Section 28 of the Employment Act grants statutory annual leave as a minimum right. Untaken leave is a continuing injury under section 89. Because the appellant never treated the respondent as an employee, he never had the opportunity to take leave, so the section 28(4) limitation did not apply.
Overtime claim
The trial court's refusal of the overtime claim was not disturbed.
Overtime must be proved strictly; the claim that the respondent worked from Monday to Sunday was unsupported by evidence such as a work ticket, and it was not unreasonable to expect a document of travel for a commercial motor vehicle. Under section 109 of the Evidence Act the burden lay on the respondent, who could have served a notice to produce documents.
Legal principles established
#- A written contract of employment is not the only proof of a contract of service; the Employment Act applies to oral and written contracts, and courts apply the control, fourfold and integration tests to determine employment status.
- An NSSF statement with gaps is not, by itself, sufficient proof of continuous employment and must be corroborated by other evidence.
- Discretion on remedies for unfair termination must be exercised in accordance with the factors in section 49(4) of the Employment Act.
- Underpaid salary and untaken leave are continuing injuries under section 89 of the Employment Act; a claim filed within twelve months of cessation is not time-barred and accrues for the full period of employment.
- Overtime must be proved strictly and the burden lies on the person asserting it under section 109 of the Evidence Act.
Court orders
#- 1.The appeal is dismissed with costs to the Respondent
- 2.The Cross-appeal is allowed partially; the Judgment and Orders of the Honourable C. K. Cheptoo (PM) delivered on 8th November 2023 in Milimani MCELRC No. E1272 of 2022 is set aside and substituted
- 3.Judgment entered for the claimant against the respondent: compensation for unlawful termination equivalent of 10 months' salary totalling Kshs. 306,270.45
- 4.Underpayment award of Kshs. 371,411.70
- 5.Payment in lieu of untaken annual leave of Kshs. 117,915.60
- 6.Cost of the claim and interest at court rates from the date of judgment
- 7.Costs of the appeal to the Respondent
- 8.A stay of 45 days is granted (post-judgment court order)
- On appeal from
- Magistrates' Court (Nairobi, Milimani), Honourable C. K. Cheptoo (PM)
- Nairobi MCELRC Cause No. E1272 of 2022
- Jurisdiction invoked
- Appellate jurisdiction of the Employment and Labour Relations Court over appeals from the magistrates' court in employment causes (first appellate court)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Pannju Agencies Co. Ltd v Mwai (Employment and Labour Relations Appeal E245 of 2023) [2025] KEELRC 404 (KLR)", Case Analysis (2025). Nairobi MCELRC Appeal ( memorandum of appeal dated 27th November 2023) arising from Nairobi MCELRC Cause No. E1272 of 2022. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/404/eng@2025-02-12
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.