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ELRCPartially AllowedNot stated in the judgment (appeal from Bungoma Chief Magistrate's Court ELRC Cause No. 1 of 2021)

Mwabaka v Bungoma Branch Manager, Kenya Farmers Association Limited & another (Appeal E018 of 2023) [2025] KEELRC 1677 (KLR)

Employment and Labour Relations Court
5 June 2025
5,382 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~22 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court in Bungoma boosted a dismissed sales clerk's award from Kshs40,000 to over Kshs759,000, ruling his 'casual' job had become permanent and his dismissal unfair.

What this practically means

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Executive summary

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The Employment and Labour Relations Court at Bungoma, per David Nderitu J, heard a first appeal by a former sales clerk against the judgment of Hon. T.M. Olando (PM) of 9th November 2023 in Bungoma CM ELRC Cause No. 1 of 2021, which had partially allowed his unfair termination claim and awarded Kshs40,000. The court framed four issues: the nature of the employment, the fairness of the termination, the correctness of the trial court's awards, and the appropriate orders. It held that although engaged on casual terms, the appellant's continuous engagement from 1st November 2017 to 15th May 2020 converted the employment to permanent/regular status under Section 37(1)(a) of the Employment Act, applying Krystalline Salt v Mwakele. The dismissal was unfair both substantively and procedurally: no show-cause letter, warning or disciplinary hearing preceded the alleged theft-based dismissal, contrary to Section 41. On remittals, the court recalculated pay using the correct wage orders, finding the pleaded Kshs28,822.10 rate applied only to a salesman-driver. It awarded Kshs525,144.55 in underpayment, Kshs21,418.50 in lieu of one month's notice, Kshs97,071.69 house allowance, Kshs29,985.90 leave allowance and Kshs85,674 as four months' compensation, entering judgment of Kshs759,296.24 in place of Kshs40,000. It set aside the gratuity award (confusing gratuity with severance pay), refused unpaid holidays, overtime and NHIF/NSSF claims for want of proof, ordered issuance of a certificate of service within 30 days, and awarded the appellant the costs of the appeal. The appeal partially succeeded.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.What was the nature and length of the appellant's employment with the respondent?
  2. 2.Was the appellant's termination unfair and unlawful?
  3. 3.Did the lower trial court arrive at the correct decision in regard to the above issues and the reliefs awarded?
  4. 4.What are the appropriate orders for this court to make in regard to the above issues and on costs?

Key legal issues

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01

Nature of the employment relationship

Holding

The appellant's engagement, though begun on casual terms, converted to permanent/regular employment under Section 37(1)(a) of the Employment Act after one month

Reasoning

The parties agreed the appellant worked continuously from 1st November 2017 to 15th May 2020 as a sales clerk. Section 2 defines a casual employee as one paid at the end of each day and not engaged for longer than 24 hours at a time. Continuous engagement of over three months meant the relationship was regular permanent employment, consistent with Krystalline Salt v Mwakele.

p. 6
02

Fairness of the dismissal

Holding

The dismissal was substantively and procedurally unfair; the respondent failed to prove a valid reason or follow Section 41 procedure

Reasoning

RW1 confirmed no warning, show-cause letter or disciplinary hearing preceded the dismissal for alleged theft, and no police report was made. The respondent failed to justify the reason and procedure under Sections 41, 43, 44 and 45 of the Employment Act. The trial court's finding on unfairness was therefore upheld.

p. 7
03

Salary underpayment

Holding

The appellant was underpaid; the applicable wage orders yielded underpayment of Kshs525,144.55, not the pleaded Kshs28,822.10 rate which applied only to a salesman-driver

Reasoning

The 2017 wage order (Kshs20,398.55 for a salesman in other areas) applied to November 2017–April 2018 and the 2018 order (Kshs21,418.50) from May 2018 to May 2020. The Kshs28,822.10 figure was the rate for a salesman-driver, a capacity neither pleaded nor proved. Consent to underpayment is no defence to the statutory minimum wage.

p. 8
04

Gratuity vs severance pay

Holding

The trial court confused gratuity with severance pay; neither was payable, so the gratuity award was set aside

Reasoning

Severance pay is payable only on redundancy under Section 40 of the Employment Act, while gratuity is payable only if agreed in the contract or granted at the employer's discretion. The appellant was summarily dismissed, not declared redundant, and no contractual gratuity existed.

p. 9
05

Compensation under Section 49

Holding

Compensation of four months' salary at the correct gross salary of Kshs21,418.50 (Kshs85,674) substituted the trial court's award

Reasoning

Compensation remedies loss from unfair dismissal and is not for unjust enrichment. The court considered the length of service (two years six months and 14 days), the lack of evidence of mitigation or comparable employment, and the employee's contribution, and found four months appropriate.

p. 10

Legal principles established

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  • Casual employment converts to permanent/regular employment where the engagement continues beyond the statutory period, attracting protection under Section 37(1)(a) of the Employment Act
  • Procedural fairness under Section 41 of the Employment Act is mandatory even where summary dismissal for gross misconduct is contemplated
  • An employer cannot rely on an employee's acquiescence to defeat the statutory minimum wage
  • A first appellate court must evaluate the evidence on record and reach its own conclusions while bearing in mind it did not hear the witnesses

Court orders

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  1. 1.This appeal is partially allowed
  2. 2.The award of gratuity is hereby set aside
  3. 3.Judgment entered in favour of the appellant in the sum of Kshs759,296.24 in substitution of Kshs40,000 (comprising salary underpayment Kshs525,144.55; pay in lieu of notice Kshs21,418.50; house allowance Kshs97,071.69; leave allowance Kshs29,985.90; compensation for unlawful termination Kshs85,674.00)
  4. 4.A certificate of service be issued by the 2nd respondent to the appellant and delivered to the appellant's counsel on record within 30 days of the judgment
  5. 5.The findings and holdings on unpaid holidays, overtime, unremitted deductions to NHIF, and costs in the lower court shall remain undisturbed
  6. 6.The appellant is awarded the costs of this appeal

The bench

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One judgment of the whole court — no separate or dissenting opinions.

majority

Wrote the judgment

On appeal from
Bungoma Chief Magistrate's Court (ELRC)
ELRC Cause No. 1 of 2021
Jurisdiction invoked
First appellate jurisdiction over the Bungoma Chief Magistrate's Court ELRC Cause No. 1 of 2021

Relief refused

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Unpaid public holidays (2017-2020)

The appellant did not call any witness to prove he worked on public holidays, in light of RW1's testimony that the respondent did not operate on holidays

p. 9

Overtime allowance

The claim was not specifically pleaded and proved; the appellant should have sought a production order for the hours-worked records

p. 9

Unremitted NHIF/NSSF deductions

No evidence of deductions from the appellant's salary; NHIF is empowered by statute to enforce non-remittances itself

p. 10

Maximum compensation of 12 months' salary

The court considered the appellant's service of two years six months and 14 days and failure to show mitigation, and found four months' salary appropriate

p. 11

Costs

The appellant is awarded the costs of this appeal; the lower court's award of costs to the appellant remains undisturbed.

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

the appellant's employment with the respondent had converted from casual employment to a permanent and pensionable or what is sometimes referred to as regular employee
p. 6Conversion of casual to permanent employment under Section 37(1)(a)
Procedural fairness is mandatory even where an employer contemplates summary dismissal for gross misconduct under Section 44 of the Act.
p. 7Mandatory procedural fairness before summary dismissal
The 2nd respondent was obligated under the provisions of the Labour Institutions Act 2007, to ensure that the appellant received at least the minimum wage.
p. 8Minimum wage cannot be contracted out of
Severance pay is only payable in instances of redundancy under Section 40 of the Act while gratuity is only granted if and where the same is agreed upon and or provided for in the contract of service or at the discretion of an employer.
p. 9Distinction between gratuity and severance pay
This appeal is partially allowed.
p. 11Final orders - disposition
Judgment be and is hereby entered in favour of the appellant in the sum of Kshs759,296.24 in substitution of Kshs40,000=.
p. 11Final orders - substituted judgment sum
A certificate of service be issued by the 2nd respondent to the appellant and the same be delivered to the appellant's counsel on record within 30 days of this judgment.
p. 11Final orders - certificate of service
The appellant is awarded the costs of this appeal.
p. 11Final orders - costs

Issues in the judgment

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material

The compensation award is internally contradictory: the court states the award of four months' salary is Kshs85,674 but then says the trial court's award of Kshs20,000 is 'substituted with Kshs5,674'

minor

The final orders state the judgment total as Kshs759,296.24 but the tabulated breakdown totals Kshs759,294.64 (printed as 'Kshs759.294.64')

minor

The wage order applicable to November 2017 to April 2018 is stated as the 2017 order 'up to 30th April, 2017', which appears to be a misprint for 30th April, 2018

minor

The claim for unremitted statutory deductions is listed twice in the reliefs, both times as NHIF dues with different amounts, while the claimant elsewhere asserted one related to NSSF

minor

The trial court's award on compensation is inconsistently described as both 12 months' and five months' salary in the judgment

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, "Mwabaka v Bungoma Branch Manager, Kenya Farmers Association Limited & another (Appeal E018 of 2023) [2025] KEELRC 1677 (KLR)", Case Analysis (2025). Not stated in the judgment (appeal from Bungoma Chief Magistrate's Court ELRC Cause No. 1 of 2021). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/1677/eng@2025-06-05

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