Skip to content
AI-generated case briefs sourced from Kenya Law · Not legal advice
Caselaw
AI-generated case brief
Case Brief · caselaw.co.ke
ELRCPartially AllowedNot stated in judgment (memorandum of claim dated 11th July, 2017)· [2025] KEELRC 3026 (KLR)

Nzala & 16 others v Chi-Motors Limited (Cause 1460 of 2017) [2025] KEELRC 3026 (KLR)

Employment and Labour Relations Court
30 October 2025
JKJ.W. Keli
7,041 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~28 min to read original · ~4 min brief

The bottom line

#

A Kenyan court awarded 17 former petrol station workers notice pay, severance and compensation because their employer skipped the legal redundancy procedure.

What this practically means

#

Executive summary

#
Seventeen claimants sued their former employer, a petrol station dealer, alleging unfair, unlawful termination on account of redundancy on 1st January 2017 and claiming notice pay, redundancy notice, severance, leave, public holiday pay, compensation, interest and costs. The respondent admitted the claimants were engaged on short-term contracts tied to its dealership agreement with Engen Kenya Limited, contending the contracts expired on 31st December 2016 when Engen forcibly took over the station, and that all dues, including leave and one month's salary on compassionate grounds, were paid. The court framed three issues: the nature of employment, the lawfulness of termination, and entitlement to reliefs. It found the only written contract ran from 1st January 2016 for six months, was never renewed, and the claimants worked continuously to 1st January 2017, converting their employment into open-ended (permanent) employment, so the expiry defence failed. The reason for termination - closure of the business following loss of the Engen dealership - was held valid under section 43, but the court held this was in substance a redundancy and the respondent failed to comply with the section 40 redundancy procedure: the notice reached the Labour Office only on 25th January 2017, no notice pay or severance was paid, and the respondent ignored Labour Office conciliation. Termination was therefore procedurally unfair. Judgment was entered for the claimants with tabulated awards of notice pay, severance at 15 days per completed year, re-tabulated leave capped at 18 carry-forward days, and one month's salary as compensation for procedural unfairness, with interest at court rates from filing, costs to the claimants and a 30-day stay. Claims for unpaid December 2016 salary and public holiday pay were dismissed.

Key legal issues

#
01

Nature of the claimants' employment

Holding

The claimants were not on short-term/fixed contracts at termination; continued work after expiry of the January 2016 six-month contract converted their employment into open-ended/permanent employment

Reasoning

The only written contract was dated 1st January 2016 for six months and was never renewed, yet the claimants worked continuously up to 1st January 2017. RW1 confirmed no other contract was issued. The court held continued employment after expiry rendered the contract open-ended, so the defence of expiry of fixed-term contracts failed.

p. 5
02

Whether termination was justifiable and lawful

Holding

The reason for termination (loss of the Engen Kenya Ltd dealership and closure of business) was valid, but the termination was unfair for non-compliance with the section 40 redundancy procedure

Reasoning

The court characterised the termination as redundancy since the claimants lost employment involuntarily through no fault of their own when the dealership was terminated. The redundancy notice reached the Labour Office on 25th January 2017, after the 1st January 2017 termination, and no notice pay, severance or consultations occurred; hence procedure under section 40 was breached.

p. 8
03

Entitlement to reliefs

Holding

Notice pay, severance pay (15 days per completed year), re-tabulated leave and one month's salary as compensation awarded; unpaid salary and public holiday claims dismissed

Reasoning

Being a case of redundancy, section 40 entitlements applied. The court re-tabulated severance and leave due to errors in the claimants' tabulations and capped leave at 18 carry-forward days under section 28(4). Compensation was limited to one month's salary because the reason for termination was valid and only procedure was lacking.

p. 11

Legal principles established

#
  • Where a fixed-term contract expires and the employee continues to work without a new contract, the employment converts to open-ended (permanent) employment and the defence of expiry does not arise
  • Loss of employment through involuntary loss of the employer's dealership/closure of business, with no fault of the employee, amounts to redundancy
  • A termination may be substantively valid yet procedurally unfair where the statutory redundancy procedure under section 40 is not complied with
  • The employer, as custodian of employment records under sections 10 and 74 of the Employment Act, bears the consequences of failing to produce records to rebut pleaded years of service

Court orders

#
  1. 1.Judgment entered for the claimants against the respondent
  2. 2.Notice pay of one month's salary awarded to each claimant under section 40 of the Employment Act (amounts tabulated per claimant)
  3. 3.Severance pay at 15 days' pay per completed year of service awarded to each claimant with completed years (nil for those with no complete year)
  4. 4.Pending/unpaid leave re-tabulated per period worked and awarded (capped at 18 carry-forward days under section 28(4))
  5. 5.Compensation equivalent of one month's salary to each claimant for non-compliance with the redundancy procedure
  6. 6.Award to attract interest at court rates from the date of filing the suit
  7. 7.Costs of the suit to the claimants
  8. 8.Stay of 30 days

Authorities

#

Legislation

  • Employment ActSection 9
  • Employment ActSection 10
  • Employment ActSection 28(4)
  • Employment ActSection 35(1)(c)
  • Employment ActSection 37
  • Employment Act, 2007Section 40
  • Employment ActSection 43
  • Employment ActSection 45
  • Employment Act, 2007Section 47(5)
  • Employment ActSection 74
  • Civil Procedure ActSection 27
  • Evidence ActSection 107
  • ILO Convention No. 158 - Termination of Employment Convention, 1982 / Recommendation No. 166Article 13

Cases cited (4)

  • Mberia vs. Majlis Lamu Ltd
    Cause E205 of 2022) [2024] KEELRC 1662 (KLR)
  • Kenya Union of Domestic Hotels, Educational Institutions, Hospital and Allied Workers (Kudheiha) vs. Nairobi Hospital
    (2022) eKLR
  • Walter Ogal Anuro v Teachers Service Commission
    [2013] eKLR
  • Margaret A Ochieng v National Water Conservation & Pipeline Corporation
    [2014] eKLR
Jurisdiction invoked
Original jurisdiction of the Employment and Labour Relations Court over a memorandum of claim for unfair termination/redundancy (Employment Act, 2007; Labour Relations Court Act)

Key timeline

#

Practical implications

#

Frequently asked questions

#

Cite this brief

#

Cite this brief

Caselaw, "Nzala & 16 others v Chi-Motors Limited (Cause 1460 of 2017) [2025] KEELRC 3026 (KLR)", Case Analysis (2025). Not stated in judgment (memorandum of claim dated 11th July, 2017). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/3026/eng@2025-10-30

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