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ELRCPartially AllowedNairobi MCELRC No. E2218 of 2021 (Appeal from judgment delivered 25th April 2023)· [2025] KEELRC 662 (KLR)

East Africa Eagle Kenya Limited v Shivachi (Employment and Labour Relations Appeal E073 of 2023) [2025] KEELRC 662 (KLR)

Employment and Labour Relations Court
28 February 2025
JKJ.W. Keli
3,102 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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What this practically means

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Executive summary

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This is a first appeal by the employer, Health Care of Africa, against the judgment of Honourable Muthoni Mwangi (SRM) delivered on 25th April 2023 in Nairobi MCELRC No. E2218 of 2021, which awarded the claimant, Stanley Shivachi, Kshs. 1,654,480.77 for unfair termination, house allowance, accrued leave and severance pay. The claimant's employment as a watchman was terminated in June 2020 while he was away burying his mother; the employer relied on a redundancy letter of 7th September 2020. Guided by Selle v Associated Motor Boat Co. and Mbogo v Shah, the court re-evaluated the evidence. On the first issue, it upheld the finding that the termination was unlawful and unfair: the employer failed to comply with section 40(1)(b) of the Employment Act by neither notifying the non-unionised employee personally in writing of the redundancy nor notifying the area labour officer, and the termination letter did not mention redundancy, the earlier 6th April 2020 letter being only a salary-reduction proposal. On reliefs, the court set aside the house allowance award, finding the salary was gross and all-inclusive; corrected the gross salary to Kshs. 24,000 and reduced compensation for unfair termination to Kshs. 144,000 (six months' salary); prorated untaken leave for six months of 2020 to Kshs. 8,400; and set aside the severance pay award because it had not been sought, the claimant was an NSSF member not entitled to service pay, and severance had already been paid. Notice pay was upheld. The appeal was partially successful: the trial judgment was set aside and substituted with an award totalling Kshs. 176,400, plus a certificate of service under section 51, costs and interest from the date of judgment, with each party bearing its own costs of the appeal.

Key legal issues

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01

Whether the termination of the respondent was unlawful and unfair despite being characterised as redundancy

Holding

The termination was unlawful and unfair because the employer did not comply with section 40(1)(b) of the Employment Act - no notice of redundancy was given to the employee personally in writing and to the area labour officer prior to termination

Reasoning

The appellant pleaded redundancy but the termination letter of 18th June 2020 did not mention redundancy; the later letter of 7th September 2020 referenced a 6th April 2020 letter which was in fact a salary-reduction proposal. Section 40(1)(b) requires personal written notice to a non-unionised employee and notification of the labour officer. Absent that notice, the redundancy procedure was not followed and the reason was not justified, justifying fear of abuse of the redundancy process.

02

Whether the trial court erred in awarding house allowance

Holding

Yes - the evidence showed a gross, all-inclusive salary, so the house allowance award was set aside

Reasoning

The claimant's witness statement was silent on house allowance; the uncontroverted letter of 6th April 2020 showed a gross salary; RW1 admitted having no documents showing the salary was all-inclusive but the payslip showed house allowance as 0.0; the salary was above minimum wage for a watchman. On re-evaluation the court found the salary gross and all-inclusive.

p. 6
03

What was the correct gross salary for computing compensation

Holding

The gross salary was Kshs. 24,000, not Kshs. 25,000 or 28,000; compensation reduced to Kshs. 144,000 (6 months)

Reasoning

The letter of 6th April 2020 reduced gross salary to Kshs. 24,000; the appellant pleaded Kshs. 25,000; the respondent produced no evidence to contradict the contract letter, so the employer's written evidence was uncontroverted and the award was disturbed accordingly.

p. 6
04

Whether the trial court erred in awarding accrued leave and severance pay

Holding

Leave was prorated for 6 months of 2020 to Kshs. 8,400; the severance pay award was set aside as it was not sought and the claimant was on NSSF

Reasoning

Termination was in June 2020, so leave had to be prorated under section 28 (21 days annually): 24000 x 21/30 x 6/12 = 8,400. The claim sought service pay (not severance), which under section 35 is not payable to an NSSF member; severance was in any event paid at termination.

p. 6

Legal principles established

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  • The burden of proving unfair termination or wrongful dismissal rests on the employee, while the burden of justifying the grounds for termination rests on the employer
  • Where the employer fails to prove the reason for termination, the termination is deemed unfair; procedural compliance with section 40 is mandatory for a fair redundancy
  • A court cannot award prayers that were not sought by the parties

Court orders

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  1. 1.Judgment and Decree of the Honourable Muthoni Mwangi (SRM) delivered on 25th April 2023 in Nairobi MCELRC No. E2218 of 2021 set aside and substituted
  2. 2.Judgment entered for the claimant against the respondent: Notice pay Kshs. 24,000; Compensation for unfair termination Kshs. 144,000; Untaken annual leave in lieu Kshs. 8,400; Total Kshs. 176,400
  3. 3.Issuance of certificate of service under section 51 of the Employment Act
  4. 4.Costs and interest at court rates from the date of judgment until payment in full
  5. 5.Each party to bear own costs at appeal

Authorities

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Legislation

  • Employment Actsection 47(5)
  • Employment Actsection 43(1) and (2)
  • Employment Actsection 40(1)(a)-(g)
  • Employment Actsection 45
  • Employment Actsection 28
  • Employment Actsection 35
  • Employment Actsection 51
  • Employment Actdefinition of 'redundancy'

Cases cited (2)

  • Selle v Associated Motor Boat Co.
    [1968] EA 123
  • Mbogo v Shah
    [1968] EA (at page 94, per De Lestang V.P.)
On appeal from
Magistrates' Court (Nairobi), MCELRC
Nairobi MCELRC No. E2218 of 2021
Jurisdiction invoked
First appellate jurisdiction over the subordinate court's judgment (appeal against judgment of Honourable Muthoni Mwangi, SRM, in Nairobi MCELRC No. E2218 of 2021)

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, "East Africa Eagle Kenya Limited v Shivachi (Employment and Labour Relations Appeal E073 of 2023) [2025] KEELRC 662 (KLR)", Case Analysis (2025). Nairobi MCELRC No. E2218 of 2021 (Appeal from judgment delivered 25th April 2023). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/662/eng@2025-02-28

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