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ELRCPartially AllowedNot stated in the judgment text beyond reference to CMEL No. E1713 of 2024· [2025] KEELRC 2457 (KLR)

Epco Builders Ltd v Lukunga (Appeal E140 of 2024) [2025] KEELRC 2457 (KLR)

Employment and Labour Relations Court, Appeals Division
17 September 2025
AJABUODHA NELSON JORUM
667 words in judgment
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The bottom line

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A Kenyan court cut a house allowance award from Kshs 546,975 to Kshs 105,655, confirming employers must pay house allowance unless salary clearly states it is consolidated.

What this practically means

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Executive summary

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This was an appeal from the judgment of Hon. Selina N. Muchungi delivered on 5th April 2024 in CMEL No. E1713 of 2024, in which the trial court had awarded the respondent house allowance of Kshs. 546,975/-. The appellant, who had employed the respondent as a machine operator at a salary of Kshs. 19,500 per month, contended that the salary was consolidated and inclusive of house allowance, since it exceeded the gazetted minimum wage of Kshs. 17,447.15 for a machine operator under LN 112 of 2017, and that the respondent had never raised the issue during employment. Counsel for the appellant relied on Mwaura v Gelmax Power Solutions and Sani Orine v Hiprora Business Solutions (EA) Ltd. The respondent's counsel primarily addressed termination, an issue not subject to any cross-appeal, and did not submit on the house allowance question. The court held that house allowance is a statutory requirement under section 31 of the Employment Act and that industry practice is 15% of the minimum wage, which would be Kshs. 2,617.07. Since the appellant paid only Kshs. 2,052.85 above the minimum wage, the house allowance was underpaid by Kshs. 565 per month. The trial court was justified in awarding house allowance because the payslip did not state the payment was inclusive of housing allowance. The appeal partially succeeded: the award of Kshs. 546,975/- was set aside and replaced with Kshs. 105,655/-, with each party bearing their own costs of the appeal.

Key legal issues

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01

Whether payment above the gazetted minimum wage covers house allowance

Holding

Payment of Kshs. 19,500 against a minimum wage of Kshs. 17,447.15 was plausible consolidation, but the statutory house allowance (15% of minimum wage, Kshs. 2,617.07) was underpaid by Kshs. 565 per month

Reasoning

The court accepted that the payslip did not state that payment was inclusive of housing allowance, so the trial court was justified in awarding house allowance. Applying the 15% industry practice to the gazetted minimum wage, the surplus of Kshs. 2,052.85 fell short of the Kshs. 2,617.07 house allowance by Kshs. 565 monthly, entitling the respondent to the difference of Kshs. 105,655/- for the period claimed.

Legal principles established

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  • House allowance is a statutory requirement under section 31 of the Employment Act and the industry practice is that it is computed at 15% of the minimum (gross) wage

Court orders

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  1. 1.The judgment of the trial court for Kshs. 546,975/- on account of house allowance is set aside and replaced with a judgment for Kshs. 105,655/-
  2. 2.The appeal succeeds to the extent of the reduction of the house allowance award
  3. 3.Each party shall bear their own costs of the appeal
On appeal from
Magistrates' Court (employment and labour relations)
CMEL No. E1713 of 2024
Jurisdiction invoked
Appellate jurisdiction under the Employment and Labour Relations Court Act (not expressly cited in the judgment; appeal from CMEL No. E1713 of 2024)

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, "Epco Builders Ltd v Lukunga (Appeal E140 of 2024) [2025] KEELRC 2457 (KLR)", Case Analysis (2025). Not stated in the judgment text beyond reference to CMEL No. E1713 of 2024. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/2457/eng@2025-09-17

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