Karachi v Rugu (Sued as the Legal Administrator of the Estate of Paul Rogo Itotia - Deceased) & 3 others (Employment and Labour Relations Cause E060 of 2021) [2025] KEMC 150 (KLR)
The bottom line
#A Nakuru court awarded a former salesperson over Kshs 5.1 million because his employer skipped the legal steps required for redundancy and kept no employment records.
What this practically means
#Executive summary
#Key legal issues
#Compliance with the redundancy procedure under section 40 of the Employment Act 2007
The redundancy in both periods was procedurally flawed: no prior notice, no severance pay, no consultation or hearing; the termination was unfair and unlawful.
Section 40 requires written notice to the employee and labour officer at least one month prior, fair selection criteria, consideration of alternatives and payment of severance pay at 15 days per completed year. The claimant received no notice in either period, was neither consulted nor heard contrary to section 41(2), and no severance was paid. The respondent admitted hiring new staff after the Covid-19 reopening, undermining the operational-reasons justification.
Burden of proof where the employer keeps no written contract or records
The employer's failure to keep records shifted the burden of proof to it under section 10(7) and the claimant's assertions on unpaid dues were accepted.
Sections 10 and 94 oblige employers to keep written contracts and records of wages, hours, leave and social security contributions. The respondent admitted payment in cash without pay slips or written contract and produced no records of overtime, leave, house allowance or NSSF contributions. This violated statutory obligations and prejudiced the respondent's defence, corroborating the claimant's claims on those heads.
Entitlement to certificate of service
The claimant was entitled to a certificate of service, which the respondent admitted it never issued.
Section 50/51 of the Employment Act mandates the employer to issue a certificate of service upon termination. The respondent admitted non-issue. The court held the certificate is a statutory right whose denial prejudices future employment, and ordered its issuance.
Claim for unpaid annual leave
The claim for annual leave was dismissed for lack of evidence that leave was applied for and denied.
Although the claimant pleaded unpaid annual leave for both periods, he adduced no oral or documentary evidence that he applied for leave and was refused. In contrast, claims for overtime, off days, rest days and holiday work succeeded because the respondent produced no records to controvert them.
Legal principles established
#- Redundancy must strictly comply with section 40 of the Employment Act, including written notice to the employee and labour officer one month prior, fair selection criteria, consideration of alternatives and payment of severance pay of at least 15 days per completed year of service; failure renders the termination unfair.
- Where an employer fails to produce a written contract or employment records, the burden of proving or disproving an alleged term of employment shifts to the employer under section 10(7) of the Employment Act.
- A certificate of service is a statutory right, not a favour, and its denial prejudices an employee's future employment prospects.
- An employee must be accorded a hearing before termination on redundancy under section 41(2) of the Employment Act, and failure to follow the mandatory provisions renders the process unfair.
- Where an employer obligated to produce records under section 74 of the Employment Act fails to do so, an adverse inference may be drawn that the claimant's assertions on the point are true.
Court orders
#- 1.Declaration that the termination of the claimant's services on 1st February 2018 and 20th March 2020 on account of redundancy was unlawful and unfair
- 2.Compensation for unlawful termination in both the first and second periods totaling Kshs 627,498.84
- 3.Payment of monies owed in lieu of notice for both periods totaling Kshs 52,291.57
- 4.Payment of all monies emanating from underpayment for both periods totaling Kshs 1,246,730.49
- 5.Payment of all monies emanating from unpaid overtime and days worked during holidays for both periods totaling Kshs 2,865,256.55
- 6.Payment of severance pay of Kshs 436,363.32 for both periods of service
- 7.Issuance of a certificate of service to the claimant
- 8.Net amount payable of Kshs 5,173,735.79 after subtraction of Kshs 660,940.00 previously paid, with costs and interest
- Jurisdiction invoked
- Original employment and labour relations jurisdiction of the magistrates' court under the Employment Act 2007 (specific enabling provision not cited in the judgment)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Karachi v Rugu (Sued as the Legal Administrator of the Estate of Paul Rogo Itotia - Deceased) & 3 others (Employment and Labour Relations Cause E060 of 2021) [2025] KEMC 150 (KLR)", Case Analysis (2025). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/kemc/2025/150/eng@2025-07-01
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.