Mwaghumba & 8 others v Mistry V Naran Mulji & Company Ltd (Cause E398 of 2025) [2026] KEMC 447 (KLR)

The Respondent did not plead which Claimants were casual employees; the alleged classifications surfaced only in submissions, which cannot amend pleadings or introduce evidence. The Respondent produced no contracts, wage vouchers, attendance sheets, casual registers or payroll separating permanent from casual employees, despite the statutory duty under section 74 of the Employment Act to keep such records. The Court accordingly drew an adverse inference from the failure to produce the records and rejected the casual labour defence, finding all nine Claimants were employees attracting statutory protections.

Once non-payment was alleged, the Respondent bore an evidential burden to produce statutory wage records showing payment. It produced none: no payroll, wage register, bank transfers, payment vouchers or electronic payment records. KRA and NSSF remittance documents demonstrated only statutory compliance, not payment of wages, since PAYE and NSSF contributions are not synonymous with salary. The pleaded salary figures were uncontroverted. The Court accepted the Claimants' evidence that wages were withheld for approximately thirty-one months, conduct constituting a fundamental breach of contract.

Applying the Coca-Cola v Ligaga test, the Court assessed objectively whether a reasonable employee would have felt compelled to resign. The resignation letters consistently attributed departure to prolonged non-payment of wages; the Respondent produced no evidence of any other reason or of resolution of the salary dispute. Payment of wages is the employer's primary contractual obligation and its prolonged failure destroyed mutual trust and confidence. The resignations followed thirty-one months of non-payment and were neither abrupt nor capricious, establishing constructive dismissal.

Because constructive dismissal treats the contract as terminated by the employer, notice pay under section 35 was due notwithstanding resignation. Absent leave records, which the employer was bound to keep, accrued leave was allowed as pleaded. No contracts showing consolidated salaries or provision of housing were produced, so house allowance was allowed under section 31. Section 49 compensation was discretionary: considering length of service, the Respondent's conduct and the prolonged wage default, ten months' gross salary per Claimant was held fair and proportionate, not punitive. Certificates of service were ordered under section 51.