Hightech Cylinder Manufacturing Company Ltd v Kerich

4. The learned magistrate erred in law and fact by failing to appreciate that no factual evidence had been tendered by the Respondent that sufficiently demonstrates that he was procedurally and unfairly terminated from employment. 5. That the learned Magistrate erred in law and fact by failing to consider the applicant's submissions which were duly filed. 6. That the learned Magistrate erred in law and fact by failing to appreciate and consider the Appellant's submissions only to the prejudice and detriment of the appellant. 7. That the Learned Magistrate erred in law and fact in misapprehending the evidence on record. 8. That the Learned Magistrate erred in law and fact by failing to properly and exhaustively evaluate the evidence on record. 9. That the Learned Magistrate erred in law and fact in arriving at conclusions and inference which are not supported by evidence and/or based on any documentation. The Appellant prays for orders thus; 1. The appeal be allowed in whole. 2. The judgment by Hon. Principal Magistrate E.K. Suter delivered on 1st December, 2023 in Mavoko CMELRC No. E027 of 2022 and subsequent decree thereof be varied or set aside. 3. The Appellant be awarded costs of the appeal and costs in the subordinate court. ELRC-NAIROBI APPEAL E015 OF 2023 Page 2 of 12

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It is the Appellant's case and submission that the Respondent was not its employee but a casual worker within the meaning of Section 2 of the Employment Act, 2007. Their engagement was contingent upon client orders for gas cylinders and remuneration was solely based on the work completed. It further submits that the bank statements produced by the Respondent indicate that payments were made on an irregular basis, with some instances of remuneration occurring twice within a single month and that the Respondent conceded in cross-examination that his payments were dependent on the volume of work done. The Appellant further impugns the confirmation letter dated 8th January, 2018 produced by the Respondent. It submits that the letter merely acknowledges an offer allegedly extended to the Respondent, that the Respondent failed to produce the offer letter referenced therein and that this omission raises serious doubt as to the authenticity of the Respondent's claim of employment. The Appellant relies on the authorities of Peter Wambugu Kariuki & 16 Others v Kenya Agricultural Research Institute [2013] eKLR and Josphat Njuguna v High Rise Self Group [2014] eKLR for the proposition that failure to pay wages at the end of the day does not by itself remove one from the ambit of a casual worker. This couples with those of Zarika Adoyo Obondo v Tai Shunjun & Xiehe Group (K) Company Limited [2020] KEELRC 772 (KLR) and Transport Workers Union v Euro Petroleum Products & Another [2019] eKLR for the proposition that the party asserting an employment relationship bears the burden of proving it as a preliminary point, failing which the entire claim is anchored on quicksand. On termination, the Appellant submits that the Respondent was never dismissed. Its case is that in the course of a meeting convened in September, 2021 to discuss a proposed salary reduction of Kshs 2,000.00 occasioned by financial constraints arising from the Corona Virus ELRC-NAIROBI APPEAL E015 OF 2023 Page 3 of 12

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pandemic, the Respondent voluntarily chose to discontinue offering his services, walked out of the meeting, and never returned. The Appellant submits that no termination letter was issued, no affirmative steps were taken to sever the relationship and the Respondent made no effort to return to work or seek clarification of his status before filing this claim, approximately nine months later. The Appellant further seeks to buttress their case by relying on the Court of Appeal’s decision in Pius Machafu Isindu v Lavington Security Guards Limited [2017] eKLR on the burden of proof under Section 47(5) of the Employment Act, 2007 and Kenya Union of Commercial, Food & Allied Workers v Meru North Farmers Sacco Ltd [2013] eKLR for the proposition that an employee must show that they were dismissed rather than having left of their own accord. On the awards, the Appellant submits that notice pay under Section 35(1)(c) of the Act applies only where the employer terminates the contract and that compensation under Section 49(1)(c) is available only upon proof of unfair termination and that the obligation to house under Section 31(1) does not extend to task-based engagements and that the Respondent produced no payslips to prove that house allowance was not consolidated in his pay; and that the claim for leave fails for want of proof under Section 74(1)(f) of the Act. This is in reliance to the authority of Bernard Wanjohi Muriuki v Kirinyaga Water and Sanitation Company Limited & Another [2012] eKLR and Nicholas Kipkemoi Korir v Hatari Security Guards Ltd [2016] eKLR. The Appellant prays that the appeal be allowed, the awards set aside in their entirety and costs awarded to it in both courts. ELRC-NAIROBI APPEAL E015 OF 2023 Page 4 of 12

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The Respondent's submission is that the appeal lacks merit. They submit that this being a first appeal, the court is enjoined to re-evaluate the evidence and draw its own conclusions, placing reliance on the authority of Selle & Another v Associated Motor Boat Co. Ltd & Others [1968] EA 123. On the employment relationship, the Respondent submits that Section 2 of the Employment Act, 2007 defines a casual employee as a person the terms of whose engagement provide for his payment at the end of each day and who is not engaged for a longer period than twentyfour hours at a time. He worked for the Appellant continuously from February, 2018 to 15th March, 2021, a period exceeding three years. He produced a confirmation letter dated 8th January, 2018, printed on the Appellant's letterhead, indicating that he was offered a permanent position as a Welder, working 45 hours per week and 8 hours per day at a salary of Kshs 22,000.00 per month payable into his bank account, together with bank statements evidencing regular salary remittances from the Appellant between 2019 and 2021. On termination, the Respondent's testimony was that on 15th March, 2021 he was sent home by his supervisor, Mr. Sylvester Khayega on the instructions of Mr. Abdullahi on account of a shortage of work, with a promise of recall. Upon being recalled in September, 2021, Mr. Abdullahi informed the assembled workers that in light of hard economic times they would be required to take a pay cut of Kshs 2,000.00. The Respondent and some colleagues protested and asked to be paid their service and pending leave dues before being engaged on new terms. Mr. Abdullahi directed that whoever did not wish to take the pay cut should leave the premises. The Respondent left and was never allowed back. ELRC-NAIROBI APPEAL E015 OF 2023 Page 5 of 12

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The Respondent submits that salary is a fundamental term of employment whose reduction should not be effected arbitrarily or unilaterally. Section 10(5) of the Employment Act, 2007 obliges an employer to revise the contract in consultation with the employee and to notify the employee of any change in writing. He relies on the authority of Ibrahim Kamasi Amoni v Kenital Solar Limited, Nairobi ELRC Cause No. 1112 of 2015 where the court held that for a reduction of salary to be valid, an employer ought to obtain the approval of the employee by communicating the reduction in a letter and causing the letter to be accepted by the employee. He further submits that the Appellant's conduct amounted to constructive dismissal, being a repudiatory breach of the contract of employment, relying on the Court of Appeal decision in Coca Cola East & Central Africa Limited v Maria Kagai Ligaga, Nairobi CACA No. 20 of 2012. He points out that in cross-examination the Appellant's witness conceded that no document was issued to the Respondent indicating that his salary would be reduced and that the Respondent never accepted the reduction. He urges the court to find the decision of the trial court sound and to dismiss the appeal with costs. After a considered look and scrutiny of the Memorandum of Appeal, the Record of Appeal and the submissions of the parties the issues for determination therefore become; 1. Whether there was an employer-employee relationship existing between the parties. 2. Whether the Respondent's employment was unlawfully and unfairly terminated by the Appellant 3. Whether the Respondent is entitled to the terminal dues awarded by the trial court 4. Who bears the cost of this cause. ELRC-NAIROBI APPEAL E015 OF 2023 Page 6 of 12

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This being a first appeal, the duty of this court is to subject the evidence on record to a fresh and exhaustive re-evaluation and arrive at its own independent conclusions, bearing in mind that it neither saw nor heard the witnesses and making due allowance in that respect. This is the principle in Selle & Another v Associated Motor Boat Co. Ltd & Others [1968] EA 123, which both parties correctly invoke. On the 1st issue for determination, that is whether an employer-employee relationship existed between the parties, the Appellant's case rises and falls on its contention that the Respondent was a casual worker. Section 2 of the Employment Act, 2007 defines a casual employee as a person the terms of whose engagement provide for his payment at the end of each day and who is not engaged for a longer period than twenty-four hours at a time. The evidence on record does not fit this definition. The Respondent produced a confirmation letter dated 8th January, 2018, printed on the Appellant's letterhead and signed by its Human Resource Manager, confirming his engagement in a permanent position as a Welder, working 45 hours per week, at a salary of Kshs 22,000.00 per month payable into his bank account on the 1st date of each month, with an entitlement of 21 leave days per year. His bank statements demonstrate regular monthly salary remittances from the Appellant between 2019 and 2021, in particulars expressly described as salary payments from Hightech Cylinders. This is the antithesis of casual engagement. The Appellant's invitation to treat the confirmation letter as a fabrication for want of the antecedent offer letter cannot be sustained. He who alleges fabrication must prove it and the Appellant tendered no evidence to that end. More fundamentally, Section 74 of the Employment Act, 2007 places upon the employer the obligation to keep employment records, and Section 10(7) thereof provides that where an employer fails to produce a written contract ELRC-NAIROBI APPEAL E015 OF 2023 Page 7 of 12

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or the written particulars of employment, the burden of proving or disproving an alleged term of employment lies on the employer. The Appellant produced no contract, no payslips, no muster rolls and no records of engagement to controvert the Respondent's documentation and case. The trial court was therefore right in finding that the burden to produce documents rests with the employer and not the employee and that the Appellant failed to discharge it. Further and in any event, the trial court correctly invoked the Court of Appeal decision in Chemelil Sugar Company v Ebrahim Ochieng Otuon & 2 Others [2015] eKLR, where employees initially engaged as casuals and who had worked for periods ranging between one year and fifteen years were held to have had their contracts converted to term contracts by operation of law under Section 37 of the Employment Act aforesaid. The Respondent worked continuously from February, 2018 to March, 2021. Even if his engagement had commenced casually, which the documentary evidence belies, the same would long have converted by operation of law. The authorities cited by the Appellant, including Zarika Adoyo Obondo v Tai Shunjun & Xiehe Group (K) Company Limited [2020] KEELRC 772 (KLR) and Transport Workers Union v Euro Petroleum Products & Another [2019] eKLR, are distinguishable as they turned on claimants who had tendered no credible evidence of an employment relationship. Here, the Respondent placed before the court a confirmation letter and bank statements that stand uncontroverted. An employer-employee relationship therefore sufficed between the parties. On the 2nd issue for determination is whether the Respondent's employment was unlawfully and unfairly terminated by the Appellant, the material facts are largely not in dispute. The Appellant's own witness, Mr. Sylvester Khayega, testified that in September, 2021, Mr. Abdullahi convened a meeting and informed the workers that the company would pay their ELRC-NAIROBI APPEAL E015 OF 2023 Page 8 of 12

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salaries less by Kshs 2,000.00 that many workers were not agreeable to the deduction and that some of them including the Respondent left the premises. The Respondent's testimony, which the trial court accepted, was that Mr. Abdullahi directed that whoever did not wish to take the pay cut should leave the premises and that he left and was never allowed back. In cross-examination, Mr. Khayega conceded that the Appellant issued no document to show that the salary would be reduced and that he had not brought any payslip to court. Salary is a fundamental term of the contract of employment. Section 10(5) of the Employment Act, 2007 obliges an employer, where any matter stipulated in subsection (1) changes, to revise the contract in consultation with the employee and to notify the employee of the change in writing. This was not the case here. The court in Ibrahim Kamasi Amoni v Kenital Solar Limited, Nairobi ELRC Cause No. 1112 of 2015 held that for a reduction of salary to be valid, an employer ought to obtain the approval of the employee by communicating the reduction in a letter and causing the letter to be accepted by the employee, salary being a fundamental term of employment whose reduction has a negative impact on an employee's livelihood and should not be done arbitrarily or unilaterally. This court stands in agreement. The Appellant did neither. It presented its workers with a unilateral fait accompli on pain of expulsion from the premises. The Appellant's submission that the Respondent left voluntarily does not survive scrutiny. An employee who is told to leave the premises if he does not accept an unlawful unilateral variation of a fundamental term of his contract, and who upon leaving is never allowed back, does not leave voluntarily. He is dismissed. The conduct of the employer in such circumstances constitutes a repudiatory breach of the contract of employment within the contractual test affirmed by the Court of Appeal in Coca Cola East & Central Africa ELRC-NAIROBI APPEAL E015 OF 2023 Page 9 of 12

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Limited v Maria Kagai Ligaga, Nairobi CACA No. 20 of 2012. The decision in Pius Machafu Isindu v Lavington Security Guards Limited [2017] eKLR relied upon by the Appellant is distinguishable. There, the claimant declined a lawful directive to attend a refresher course required for continued engagement and opted to resign. Here, the Respondent declined an unlawful demand and was expelled. The causal link between the employer's conduct and the separation is direct and proved. If, as the Appellant asserted, it was facing genuine financial constraints, the law availed it the route of redundancy under Section 40 of the Employment Act, 2007 with its attendant notice and severance obligations. It produced no evidence, not even a bank statement, of the alleged financial constraints and followed no procedure known to law. The Respondent was given no notice, no hearing as contemplated by Section 41 of the Act, and no written reasons. The termination therefore fails both the substantive and procedural tests of fairness in Sections 43 and 45 of the Act. The Respondent discharged his burden under Section 47(5) of the Act of demonstrating that termination occurred and that it was unfair; the burden of justifying it shifted to the Appellant, which wholly failed to discharge the same. The trial court cannot be faulted on its finding that the termination was both substantively and procedurally unfair. On the 3rd issue for determination, that is whether the Respondent is entitled to the terminal dues awarded by the trial court, I take the awards in turn. On notice pay, Section 36 of the Employment Act, 2007 provides that no employer has the right to terminate a contract of service without notice or with less notice than that to which the employee is entitled, and that in lieu of such notice the employer makes a payment equivalent to one month's salary. Having found that the Appellant terminated the Respondent's employment without notice, the award of Kshs 22,000 being one month's salary in lieu of notice was proper. ELRC-NAIROBI APPEAL E015 OF 2023 Page 10 of 12

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On compensation for unfair termination, Section 49(1)(c) of the Act donates to the trial court a discretion to award up to a maximum of twelve months' gross salary. The trial court awarded five months, being Kshs 110,000.00 on account of the Respondent's service from 2018 to 2021 and the manner of his termination. An appellate court will only interfere with the exercise of judicial discretion where the discretion was exercised on wrong principle or upon matters the court ought not to have acted upon or where relevant considerations were ignored, as was held in Mbogo & Another v Shah [1968] EA 93. An award of five months out of a possible twelve, for an employee of over three years' standing summarily expelled without notice, hearing or reason, is moderate and well within the band of reasonable awards. It discloses no misdirection and I decline to interfere with it. On house allowance, Section 31(1) of the Employment Act, 2007 obliges an employer at all times, at his own expense, to provide reasonable housing accommodation for each of his employees or to pay sufficient sum as rent in addition to wages. The exclusion in Section 31(2)(a) applies only where the contract of service consolidates housing as part of the basic wage. The burden of proving such consolidation lies on the employer, who is the custodian of the contract and pay advice slips. The Appellant produced neither. Its bare assertion that the salary was all inclusive of statutory deductions cannot, without documentary proof, defeat the statutory entitlement. The award of Kshs 122,100.00 computed at 15% of the basic salary of Kshs 22,000.00 for 37 months, was arithmetically sound and legally merited. On leave, Section 28 of the Act entitles an employee to not less than twenty-one working days of leave with full pay after every twelve consecutive months of service. The only leave record the Appellant produced before the trial court was a leave application form indicating five days of medical leave. There was no record that the Respondent was granted his annual ELRC-NAIROBI APPEAL E015 OF 2023 Page 11 of 12

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leave or paid in lieu thereof. The trial court considered the Appellant's limitation argument under Section 90 of the Act and resolved it in light of the Court of Appeal decision in G4S Security Services (K) Limited v Joseph Kamau & 468 Others [2018] eKLR. The award of Kshs 46,200.00 computed at 21/30 days by Kshs 22,000.00 by 3 years, was merited. The authorities cited by the Appellant on the burden of proving leave entitlement must be read together with Sections 10(7) and 74 of the Act. Where, as here, the employer keeps and produces no records, the employee's sworn and consistent testimony that he was never accorded leave nor paid in lieu thereof suffices to tilt the balance, the means of disproof lying squarely in the hands of the employer. In the upshot, the trial court properly evaluated the evidence, correctly apprehended the law and arrived at findings amply supported by the record. The appeal fails on all grounds. I am therefore inclined to dismiss the Appeal and order as follows; (i) The judgment and the decree of the trial court delivered on 1st December, 2023 in Mavoko CMELRC No. E027 of 2022 is upheld. (ii) The costs of this appeal shall be borne by the Appellant. Delivered, dated and signed this ELRC-NAIROBI APPEAL E015 OF 2023 29th day of July 2026. Page 12 of 12

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D. K. Njagi Marete JUDGE Appearances: 1. Mr. Waliaula instructed by Murangasia & Associates Advocates for the Appellant. 2. Mr. Maina instructed by Eboso & Company Advocates for the Respondent. ELRC-NAIROBI APPEAL E015 OF 2023 Page 13 of 12

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