Golden Lion International Limited v Tanin

manifestly exaggerated and an exorbitant award I compensation which is biased, unjust and an inconsistent decision. 2. Reasons wherefore the Appellants prayed for orders that:a. This Appeal be allowed and the Learned Trial Magistrates judgment and Order granted on 28th November 2024 be set aside and quashed and be substituted by this Honourable Court's Orders. b. This Honourable Court do adjudicate and determine the appeal and arrive at a just Judgment in light of the evidence on record. c. That the costs of this Appeal and proceedings be awarded to the appellants. 3. The appeal was disposed of through written submissions and Mr. Mwangi for the appellant submitted among others that the honourable trial court erred in awarding a claim that had already been abandoned by the Respondent / Claimant as per the evidence adduced in court and also in the Respondent’s written submissions which fact the trial court misdirected itself based on the principle that parties are bound by their pleadings. According to counsel, this claim was abandoned when the respondent admitted that he was duly paid. In this regard counsel referred the court pages 35, 43, 124, 125, 126 & and ; 127 of the Record of Appeal. 4. Counsel further submitted that the quantum of the award was exaggerated and that the honourable trial court erred in exercising its discretion in awarding compensation for unfair termination which was manifestly high without considering the mandatory guidance, principles mid parameters set out in Section 49 of the Employment Act. In this regard counsel sought reliance on the case of Peter M. Karuiki vs. Attorney General [2014] eKLR among other cases. Mr. Mwangi further contended that judicial restraint must be exercised in exceeding the capping of 12 months’ salary, in compensating employees for the wrongful acts of their employers. Counsel further relied on the case of Ol Pajeta Ranching Ltd v. David Wanjau Muhoro [2107] eKLR and CMC Aviation Limited vs. Mohammed Noor [2015] eKLR. 5. Concerning the issue of when the interest should accrue on the decretal sum, counsel submitted that the court by virtue of section 12(4) of the ELRC Act had the discretion to award interest as it deemed t while exercising appellate jurisdiction. Counsel sought support in the case of Eldomatt Supermarket Limited v. Nagaki [2026]KEELRC 357 (KLR) 6. The respondent’s counsel Ms Awuor on the other hand submitted among other that the learned trial Magistrate considered and appraised the pleadings and evidence led and tendered by both parties to arrive at his decision. For instance, in the Judgment of the lower Court, the learned trial Magistrate stated that: “ Guided by the evidence so far on record this court is satised that at the time of termination, the claimant had not been paid terminal dues and further his termination was without any sucient cause.” 7. These excerpts alone, counsel submitted displaced the averments by the appellant in the grounds of appeal. According to counsel, the learned Magistrate carefully considered the evidence laid down by both parties while reaching a decision. It was therefore not true that the learned trial Magistrate failed to consider the evidence presented 8. Concerning the issue whether learned trial Magistrate erred in law and in fact in failing to consider the fact that the claimant both in his oral evidence and written submissions abandoned a claim for https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/2303/eng@2026-07-28 2

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compensation for one (1) month salary in lieu of notice and also admission of remittance & payment of NSSF, PAYE & NHIF as indicated in the Respondent's pay slip and by dint of Section 35(6) & (d), Counsel submitted that the awarding of the severance pay was not erroneous, wrong and in contravention with Employment Act 9. It was indeed true that the Respondent at the hearing of the suit admitted that the Appellant paid him his l month salary in lieu of claim and he therefore the claim for 1 month salary in lieu of notice was abandoned. A further careful perusal of grounds 3 and 4 of the Memorandum of Appeal showed that the Appellant was of the view that the learned trial Magistrate erred in law and in fact in awarding severance pay to the Respondent because statutory deductions were remitted. However, the learned trial Magistrate, upon considering both the Appellant and the Respondent’s testimony and evidence and upon nding that the Respondent was terminated from employment under redundancy, awarded the Respondent severance pay. Severance pay was provided for under section 40 (i) of the Employment Act, 2007, and was payable in cases of redundancy. Membership in NSSF as alleged by the Appellant did not bar entitlement to severance pay unless it is proven that the employee was a member of a pension or provident fund in lieu of severance. and DETERMINATION 10. The Court has carefully considered the proceedings and judgment of the trial court and notes that the contentious issue was whether the respondent’s service was properly terminated and if so, if he was paid his rightful terminal dues as the law. According to the respondent, they were suddenly terminated and that in the process of terminating their service, they were never issued with any warning, taken through any disciplinary hearing prior to the termination of their service. The respondent on the other hand averred that the respondent’s service were terminated on account of redundancy which was occasioned by the directive by the government that all goods be transported to Nairobi ICD by SGR and the respondent and his aected colleagues being engaged as truck drivers could not remain in service. 11. These facts did not appear in dispute. The Court can therefore safely assume that the respondent and his colleagues were declared redundant. Section 40 of the Employment Act stipulates for the procedure to be followed while declaring redundancy. The section as well as existing case law require that when declaring redundancy, employers have to note the procedures set out in the Act. Further, certain stake holders have to be notied of such decisions. These include, where employees aected are members of a union, such union should be notied together with the Labour Ocer at least one month prior to the date of termination on account of redundancies. Where the employee is not a member of a trade union, sec 40 (1) (b) stipulates that the Employee and Labour Ocer be notied personally in writing. 12. Employees declared redundant have a right to be paid their leave days not taken in cash and severance pay of not less than 15 days' pay for each completed year of service. The Employer also has to pay the Employee declared redundant not less than one month's notice or one month's wages in lieu of notice. 13. In this particular case, the trial court awarded the respondent all the reliefs sought in his statement of claim. According to the statement of claim, the respondent (the claimant in the lower court) sought orders: 14. i. 1 month’s salary in lieu of notice ii. Severance pay iii. 12 month’s salary as compensation for unfair termination The appellant having conceded that the respondent was terminated on account of redundancy, and the trial court as well as this court have seen where the appellant complied with the provisions of section https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/2303/eng@2026-07-28 3

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40 in declaring the respondent redundant, the trial court was justied in awarding the respondent the prayers sought in the statement of claim except that the court ought to have taken into account the fact that the respondent conceded and abandoned the claim for one month’s salary in lieu of notice since he had been paid that upon termination of his service. Further, the trial court ought to have rationalized the award on compensation for unfair termination of service. The twelve months’ salary is the maximum award and ought to be awarded only in deserving cases and not as a matter of course. 15. The respondent was employed as a truck driver in 2012 and his service terminated in 2019 on account of redundancy. The takes judicial notice that around the time the respondent’s service was terminated, there was controversy over whether goods transported by truckers should be transported exclusively by the new SGR or by both trucks and SGR. This might have been a matter beyond the control of the appellant but it was no reason to omit following the laid down procedure in laying o aected workers if it had to. In the circumstances an award of 12 months’ salary as compensation for unfair termination without any explanation was excessive and unjustied in the circumstances. This court taking into account that the respondent had only worked for the respondent for approximately seven years and there was no allegation that he was unable to get another job as a truck driver, an award of 6 months’ salary would have been reasonable in the circumstances and this court so awards. 16. In conclusion, this appeal partially succeeds as follows: - 17. i. One months’ salary in lieu of notice (set aside) ii. Severance pay at 15 days salary for each complete year of service (7 years- (17,610.5 x 7 ) …… Kshs.123,274/- iii. Six months’ salary as compensation for unfair termination … Kshs……………... 211,326 iv. Total …………… Kshs. 334,600 v. Items (ii and iii shall be subject to taxes and statutory deductions but shall attract interest at court rates from the date of this judgment until payment in full. vi. Costs in the lower court to be adjusted to align with revised award but on appeal, the appeal being partially successful, each party to bear their own costs. It is so ordered DATED AT NAIROBI THIS 28TH DAY OF JULY, 2026 DELIVERED VIRTUALLY THIS 28TH DAY OF JULY, 2026 ABUODHA NELSON JORUM PRESIDING JUDGE- APPEALS DIVISION https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/2303/eng@2026-07-28 4

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