Mutuku v Zheng Hong (K) Limited (Appeal E356 of 2025) [2026] KEELRC 2443 (KLR)
The bottom line
#Kenya's Employment Court ruled that a contract's termination clause cannot replace the Employment Act's mandatory process for redundancy.
What this practically means
#Executive summary
#Key legal issues
#Whether a contractual termination clause alone suffices to terminate employment
No. The Employment Act supersedes the contractual clause; valid, genuine and reasonable reasons must be given under sections 41 and 43.
The court held there is a paradigm shift under the Employment Act: termination is no longer at the employer's will. Recourse must be had to the Act as the bare minimum, and a termination clause in a contract is regulated in law.
Whether operational reasons for termination amount to redundancy under section 40
Yes. Termination due to KRA closure of the business was redundancy requiring section 40 procedure; failure to comply rendered it unfair.
The termination was not disciplinary but operational, translating to redundancy. Both employer and employee are insulated under the law; section 40 procedure had to be followed, and the employer's effort to explain reasons was devoid of due process.
Entitlement to compensation
3 months' compensation (KSh. 72,450) was appropriate given 3 years of service and the respondent's effort to explain reasons despite lack of due process.
Having served from August 2018 to October 2021 (3 years), compensation of 3 months was found appropriate, noting the respondent made an effort to explain the reasons for termination though devoid of due process.
Legal principles established
#- Even where an employment contract contains a termination clause, the employer must give valid, genuine and reasonable reasons under sections 41 and 43 of the Employment Act
- Operational reasons for termination constitute redundancy regulated by section 40 of the Employment Act, and failure to follow due process renders termination unfair under section 45(3)
Court orders
#- 1.Employment terminated unfairly
- 2.Compensation KSh. 72,450
- 3.50% costs of the appeal and the trial court proceedings
- On appeal from
- Magistrates' Court (Employment and Labour Relations)
- MCELRC E1332 of 2023
- Jurisdiction invoked
- First appeal from the trial magistrate's judgment in MCELRC E1332 of 2023
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Mutuku v Zheng Hong (K) Limited (Appeal E356 of 2025) [2026] KEELRC 2443 (KLR)", Case Analysis (2026). ELRC Appeal No. E356 of 2025. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/2443/eng@2026-08-31
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.