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ELRCPartially AllowedNot stated in judgment· [2025] KEELRC 753 (KLR)

Muga v G. North & Son Limited (Cause E716 of 2023) [2025] KEELRC 753 (KLR)

Employment and Labour Relations Court
13 March 2025
1,934 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~8 min to read original · ~4 min brief

The bottom line

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A Kenyan court awarded an employee Kshs. 3.74 million for unpaid salary, deductions and an unlawful surcharge, but COVID-19 salary cuts were lawful.

What this practically means

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Executive summary

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The Claimant, employed by the Respondent in 2001 as a Management Trainee and later confirmed as Sales Engineer, sued for unpaid and reduced salaries, unremitted statutory and loan deductions, an unlawful surcharge, salary for imposed unpaid leave, damages for constructive dismissal, notice pay, a certificate of service and costs. The Respondent, though duly served, did not defend the claim, and the matter proceeded as an undefended cause. The Court framed two issues: whether constructive dismissal was proved, and whether the remedies sought were payable. On the first issue, the Court applied the contractual and unreasonable tests from Coca Cola v Ligaga and held that the salary reduction and unpaid leave, communicated to staff and justified by the COVID-19 pandemic, amounted to an allowable variation of terms under Section 10(5) of the Employment Act, which requires consultation and notification but not agreement, following Rika J in Emmanuel Wambua Muthusi. Constructive dismissal was therefore not proved, and damages for unlawful termination and notice pay were disallowed, as was the claim for salary during unpaid leave. On the monetary claims, the uncontroverted salary arrears succeeded (at the reduced salary of Kshs. 198,250 effective June 2020), as did the unremitted loan and pension deductions supported by payslips and bank correspondence. Relying on Kenya National Library Services Board v Beatrice N. Ayoti, the Court held that the unilateral surcharge of Kshs. 93,750 was unlawful for want of Section 41 procedural fairness. The Court entered judgment for Kshs. 3,741,300 with interest at court rates from the date of judgment, ordered a certificate of service, and awarded costs to the Claimant.

Key legal issues

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01

Whether the Claimant was constructively dismissed

Holding

The claim of constructive dismissal was not proved; the salary reduction and unpaid leave constituted an allowable variation of terms under Section 10(5) of the Employment Act

Reasoning

The Court adopted the contractual and unreasonable tests from Coca Cola v Ligaga. The Respondent communicated impending salary cuts to all staff and issued the Claimant a specific letter; the variation was justified by the COVID-19 pandemic and satisfied Section 10(5), which requires consultation and notification but not agreement. The Court therefore found no repudiatory breach going to the root of the contract.

p. 4
02

Whether the surcharge of Kshs. 93,750 was lawful

Holding

The surcharge was unlawful; the sum is due to the Claimant

Reasoning

Relying on Kenya National Library Services Board v Beatrice N. Ayoti, the Court held that a surcharge is a disciplinary action requiring procedural fairness under Section 41 of the Employment Act. No show-cause notice or personal hearing was afforded to the Claimant, rendering the unilateral surcharge unlawful.

p. 5
03

Entitlement to salary arrears, unremitted loan deductions and pension dues

Holding

These uncontroverted claims succeeded, with salary from June 2020 reckoned at Kshs. 198,250

Reasoning

The Respondent did not defend the claim. The Claimant produced payslips and communication from KCB Bank and Eagle Africa supporting the unremitted deductions and pension dues. In the absence of contrary evidence, the Court allowed these claims, adjusting the salary arrears figure to reflect the reduced salary effective June 2020.

p. 5

Legal principles established

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  • A unilateral surcharge on an employee is unlawful and unfair unless preceded by the procedural fairness under Section 41 of the Employment Act
  • Consultation under Section 10(5) of the Employment Act does not require agreement; the employer must consult, revise the contract and notify the employee

Court orders

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  1. 1.Judgment entered in favour of the Claimant in the total sum of Kshs. 3,741,300 comprising salary arrears for March 2020-May 2020 (Kshs. 915,000), salary arrears for June 2020-August 2020 (Kshs. 594,750), unremitted loan deductions (Kshs. 1,182,300), unremitted pension dues (Kshs. 955,500) and unlawful surcharge (Kshs. 93,750)
  2. 2.Interest on the decretal sum at court rates from the date of judgment until payment in full
  3. 3.Issuance of a certificate of service to the Claimant
  4. 4.Costs of the case awarded to the Claimant

Authorities

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Legislation

  • Employment ActSection 10(5)
  • Employment ActSection 41

Cases cited (5)

  • Nathan Ogada Atiagaga v David Engineering Limited
    [2015] eKLR
  • Milton M. Isanya v Aga Khan Hospital
    [2017] eKLR
  • Coca Cola East & Central Africa Limited v Maria Kagai Ligaga
    [2015] eKLR
  • Emmanuel Wambua Muthusi & 6 others v Khoja Shia Ithna Shari Education Board t/a Jaffery Academy
    [2020] eKLR
  • Kenya National Library Services Board v Beatrice N. Ayoti
    [2014] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act (first-instance employment claim)

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, "Muga v G. North & Son Limited (Cause E716 of 2023) [2025] KEELRC 753 (KLR)", Case Analysis (2025). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/753/eng@2025-03-13

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