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ELRCPartially AllowedNairobi MCELRC Appeal ( memorandum of appeal dated 27th November 2023) arising from Nairobi MCELRC Cause No. E1272 of 2022· [2025] KEELRC 404 (KLR)

Pannju Agencies Co. Ltd v Mwai (Employment and Labour Relations Appeal E245 of 2023) [2025] KEELRC 404 (KLR)

Employment and Labour Relations Court
12 February 2025
4,594 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~18 min to read original · ~4 min brief

The bottom line

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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

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Executive summary

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This is a judgment of the Employment and Labour Relations Court at Nairobi (J.W. Keli, J) in a first appeal and cross-appeal from the judgment of Honourable C. K. Cheptoo (PM) delivered on 8th November 2023 in Nairobi MCELRC Cause No. E1272 of 2022. The appellant challenged the trial court's findings that the respondent was its employee (not an independent contractor) and that his termination was unfair; the respondent cross-appealed on quantum, seeking higher compensation, underpaid salary, untaken leave for the full employment period and overtime. Guided by Selle v Associated Motor Boat Co., the court re-evaluated the evidence. It upheld the finding of employment, applying the control, fourfold and integration tests from Omusamia v Upperhill Springs Restaurant, noting the appellant paid the respondent's salary and that of the turnboys, directed his routes and deducted tax and NSSF, and that a written contract is not the sole proof of employment under section 8 of the Employment Act. On the cross-appeal, the court found employment ran from 1st July 2016 to December 2021 per the payroll. It substituted the three months' compensation with ten months' gross salary (Kshs. 306,270.45) applying section 49(4) of the Employment Act; expanded the underpaid salary award to the full 5 years and 6 months (Kshs. 371,411.70); and expanded untaken leave to the full employment period (Kshs. 117,915.60), both being continuing injuries under section 89. The overtime claim failed for want of strict proof under section 109 of the Evidence Act. The appeal was dismissed with costs to the respondent, and a 45-day stay was granted.

Key legal issues

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01

Whether the respondent was an employee or an independent contractor

Holding

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.

Reasoning

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.

p. 6
02

Whether the compensation for unfair termination of three months' salary was adequate

Holding

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).

Reasoning

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.

p. 7
03

Underpaid salary for the full period of employment

Holding

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.

Reasoning

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.

p. 8
04

Untaken annual leave for the full period of employment

Holding

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.

Reasoning

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.

p. 9
05

Overtime claim

Holding

The trial court's refusal of the overtime claim was not disturbed.

Reasoning

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.

p. 9

Legal principles established

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  • 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

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  1. 1.The appeal is dismissed with costs to the Respondent
  2. 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. 3.Judgment entered for the claimant against the respondent: compensation for unlawful termination equivalent of 10 months' salary totalling Kshs. 306,270.45
  4. 4.Underpayment award of Kshs. 371,411.70
  5. 5.Payment in lieu of untaken annual leave of Kshs. 117,915.60
  6. 6.Cost of the claim and interest at court rates from the date of judgment
  7. 7.Costs of the appeal to the Respondent
  8. 8.A stay of 45 days is granted (post-judgment court order)

Authorities

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Legislation

  • Employment ActSection 8
  • Employment ActSection 28
  • Employment ActSection 49 (including subsection 4)
  • Employment ActSection 50
  • Employment ActSection 74
  • Employment ActSection 89
  • Evidence ActSection 109
  • Limitation of Actions ActSection 4(1) (referred to in section 89 of the Employment Act)
  • Regulation of Wages (General)(Amendment) Order2018

Cases cited (7)

  • Selle v Associated Motor Boat Co.
    [1968] EA 123
  • Kenfreight (E.A) Limited v Benson K. Nguti
    (2019) eKLR
  • Omusamia v Upperhill Springs Restaurant
    (2021) eKLR
  • Ready Mixed Concrete (South East) Limited v Minister of Pensions and National Insurance
  • Stevenson Jordon and Harrison Limited v MCdonald and Evans
    (1952)
  • Kenya Hotel & Allied Workers Union v Alfajiri Villas
    (2014) eKLR
  • Asakhulu v West Kenya Sugar Company Limited
    (2024) eKLR
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

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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, "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.