Bundu Cafe v Murithi

the intended termination nor served with a notice to show cause, and that no disciplinary hearing was conducted before his employment was terminated. He further asserted that the Appellant failed to adhere to the requirements of due process. Consequently, he sought Kshs. 576,960.00 comprising one (1) month's salary in lieu of notice, unpaid salary, compensation for unfair termination, accrued leave pay, house allowance and payment for public holidays worked, together with costs of the suit and interest. 3. In its Response to the Claim, the Appellant denied that the Respondent had been its employee. Without prejudice to that position, the Appellant averred that the termination of the Respondent was lawful as it arose from redundancy occasioned by the closure of its business due to prevailing economic challenges. To this end, the Appellant prayed that the claim be dismissed with costs. 4. The matter proceeded for hearing before the Trial Court during which the Respondent testified in support of his case, while the Appellant did not call any witness. Thereafter, the parties filed written submissions. 5. Upon considering the pleadings, the evidence and the parties' submissions, the learned Trial Magistrate found that redundancy constituted a valid reason for the termination of the Respondent's employment. However, the Court held that 2

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the Appellant had failed to comply with the mandatory requirements of Section 40 of the Employment Act governing redundancy, and consequently declared the termination unfair and unlawful. 6. Accordingly, the Trial Court entered judgment in favour of the Respondent and awarded him Kshs. 292,000.00, comprising one (1) month's salary in lieu of notice, compensation for unfair termination of employment, accrued leave pay and house allowance. The Respondent was also awarded the costs of the suit together with interest at court rates. The Appeal 7. Aggrieved by the judgment of the Trial Court, the Appellant lodged the present appeal, setting out the following four (4) grounds of appeal: 1) THAT the Honourable Learned Trial Magistrate erred in law and fact in arriving at the conclusion that the Respondent’s termination was unfair. 2) THAT the Honourable Learned Trial Magistrate erred in law and fact in arriving at the conclusion that the Respondent should be compensated for unpaid leave days, public holidays and housing allowance. 3

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3) THAT the Honourable Learned Trial Magistrate erred in law and fact for considering irrelevant matters and against the weight of the evidence on record in arriving at the said decision in favour of the Respondent as against the Appellant. 4) THAT the Honourable Learned Trial Magistrate erred in law and fact for completely disregarding the Appellant’s submissions. 8. Consequently, the Appellant prays that this Appeal be allowed, and that it be awarded the costs of the Appeal. The Submissions 9. The appeal was canvassed by way of written submissions. On its part, the Appellant contended that the Respondent failed to establish any nexus between it and one Teresa Allmendinger. In the same vein, the Appellant argued that there was no evidence demonstrating that either Teresa Allmendinger or Petra Allmendinger were directors, owners, or agents of the Appellant café. 10.The Appellant further submitted that Sections 40 and 43 of the Employment Act were inapplicable in the circumstances, as the Respondent alleged that he had been verbally dismissed by Petra Allmendinger, whom the Appellant described as a stranger to it. According to the Appellant, the absence of a 4

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dismissal letter meant that there was no action upon which the Respondent's claim could be founded. 11.On the other hand, the Respondent submitted that the learned Trial Magistrate correctly found that the Appellant, together with Teresa Allmendinger and Petra Allmendinger, were the persons best placed to produce employment records and rebut his claim. He argued that, in the absence of any such rebuttal, his oral testimony, coupled with the M-Pesa transaction records, was sufficient to establish the existence of an employment relationship on a balance of probabilities. 12.The Respondent further submitted that the Appellant failed to demonstrate compliance with the mandatory requirements governing redundancy under the Employment Act. In particular, that there was no evidence that the requisite statutory notices were issued either to him or to the Labour Officer, nor was there evidence of the application of any selection criteria, payment of notice pay or severance pay, settlement of accrued leave, or the conduct of any consultation process. The Respondent further contended that the Appellant neither called any witnesses nor produced employment records to demonstrate compliance with the law. Consequently, he maintained that the Trial Court correctly found that his termination was unfair and unlawful. 5

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Analysis and Determination 13.This being a first appeal, the Court is under a duty to reconsider and re-evaluate the evidence on record, together with the impugned judgment, and draw its own independent conclusions. This principle was restated by the Court of Appeal in Abok James Odera t/a A.J. Odera & Associates v John Patrick Machira t/a Machira & Co. Advocates [2013] eKLR, where the Court observed as follows: “This being a first appeal, we are reminded of our primary role as a first appellate court namely, to re-evaluate, re-assess and reanalyze the extracts on the record and then determine whether the conclusions reached by the learned trial Judge are to stand or not and give reasons either way.” 14.Having considered the grounds advanced in the Memorandum of Appeal, the record of appeal in its entirety, and the parties' respective submissions, and bearing in mind the duty of a first appellate court, the issues that arise for determination are distilled as follows: a) Whether the learned Trial Magistrate erred in finding that the termination of the Respondent's employment was unfair; and 6

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b) Whether the reliefs awarded by the Trial Court are sustainable. Unfair termination of employment? 15.Before addressing the substantive issues identified for determination, I find it necessary to first dispose of a preliminary issue raised by the Appellant in its written submissions. 16.The Appellant devoted considerable argument to the question of whether an employment relationship existed between itself and the Respondent. In this regard, it has been submitted that the Respondent failed to establish any nexus between the Appellant and one Teresa Allmendinger, who allegedly paid his salary. The Appellant has further contended that the Respondent ought to have joined Petra Allmendinger as a party to the proceedings since, according to him, she was the person who verbally terminated his employment. 17.On that basis, the Appellant has argued that Sections 40 and 43 of the Employment Act were inapplicable, as there was no evidence that the Appellant had dismissed the Respondent or issued him with a letter of termination upon which a cause of action could accrue. 7

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18.With tremendous respect to the Appellant, that argument cannot arise at this juncture. The question whether there existed an employment relationship between the Appellant and the Respondent was not raised as a ground of appeal in the Memorandum of Appeal. Instead, the issue was introduced for the first time in the Appellant's written submissions. 19.Order 42 Rule 4 of the Civil Procedure Rules expressly precludes an appellant from urging grounds of appeal other than those contained in the Memorandum of Appeal without first obtaining the leave of the Court. In this case, the Appellant neither sought nor obtained such leave. It therefore follows that it could not introduce a new ground of appeal belatedly through its written submissions and without the leave of the Court. 20.The Court of Appeal underscored this principle in Republic v Tribunal of Inquiry to Investigate the Conduct of Tom Mbaluto & Others Ex Parte Tom Mbaluto [2018] KECA 576 (KLR), where it held that submissions must be founded on the issues before the court and the evidence on record regarding the issue and that a party is not at liberty to change the nature of his case surreptitiously at the submissions stage. 21.In the premises, having neither pleaded the issue of the existence of an employment relationship in the Memorandum of Appeal nor sought the leave of 8

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the Court to raise it as an additional ground of appeal, the Appellant was not entitled to canvass the issue through its written submissions. Accordingly, this Court finds that the issue was improperly raised and does not fall for determination in this appeal. 22.Having disposed of that preliminary issue, I now turn to consider the substantive issues identified for determination. 23.The Appellant has faulted the learned Trial Magistrate for finding that the Respondent’s termination was unfair. 24.The Trial Court found that the termination of the Respondent's employment was unfair on the ground that the Appellant had failed to comply with the mandatory requirements of Section 40 of the Employment Act. 25.It is evident from the record that the Respondent's employment was terminated on account of redundancy. 26.The legal framework governing termination of employment on the ground of redundancy is prescribed under Section 40(1) of the Employment Act. The said statutory provision sets out the mandatory conditions that an employer must satisfy before effecting a redundancy, as follows: - 9

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a) where the employee is a member of a trade union, the employer notifies the union to which the employee is a member and the labour officer in charge of the area where the employee is employed of the reasons for, and the extent of, the intended redundancy not less than a month prior to the date of the intended date of termination on account of redundancy; b) where an employee is not a member of a trade union, the employer notifies the employee personally in writing and the labour officer; c) the employer has, in the selection of employees to be declared redundant had due regard to seniority in time and to the skill, ability and reliability of each employee of the particular class of employees affected by the redundancy; d) where there is in existence a collective agreement between an employer and a trade union setting out terminal benefits payable upon redundancy; the employer has not placed the employee at a disadvantage for being or not being a member of the trade union; e) the employer has where leave is due to an employee who is declared redundant, paid off the leave in cash; f) the employer has paid an employee declared redundant not less than one month’s notice or one month’s wages in lieu of notice; 10

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and g) the employer has paid to an employee declared redundant severance pay at the rate of not less than fifteen days’ pay for each completed year of service. 27.The record before me contains a notice of redundancy dated 14th September 2023 issued by the Appellant to the Respondent, citing prevailing economic hardship as the reason for the intended redundancy. The notice indicated that the redundancy would take effect upon the expiry of one (1) month. 28.As is evident from Sections 40(1)(a) and (b) of the Employment Act, the notice contemplated under the said provision is one communicating the employer's intention to declare a redundancy and must be issued before the actual termination on account of redundancy takes effect. The purpose and nature of this notice were underscored by Maraga JA (as he then was) in Kenya Airways v Aviation & Allied Workers Union Kenya & 3 Others (supra), where he stated as follows: “My understanding of this provision is that when an employer contemplates redundancy, he should first give a general notice of that 11

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intention to the employees likely to be affected or their union. It is that notice that will elicit consultation between the parties, ….” 29.In the present case, the notice issued to the Respondent was, in substance, a notice of termination on account of redundancy rather than a notice communicating the Appellant's intention to declare a redundancy. There is no evidence on record that the Respondent was first notified of the Appellant's intention to declare him redundant, as contemplated under Section 40(1)(a) of the Employment Act. 30.Equally, there is no evidence that the Appellant served the County Labour Officer with the requisite notice of its intention to declare a redundancy, as mandated under the second limb of Section 40(1)(a) of the Employment Act. 31.It therefore follows that the Appellant failed to comply with the mandatory notice requirements prescribed under Section 40(1)(a) and (b) of the Employment Act. 32.Section 40(1)(c) of the Employment Act further requires an employer, in selecting employees for redundancy, to have due regard to seniority in time and 12

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to the skill, ability, and reliability of each employee within the affected class of employees. 33.In the instant case, the Appellant neither demonstrated that a selection exercise was undertaken nor explained the criteria applied in selecting the Respondent for redundancy. 34.In the absence of such evidence, I am unable to find that the Appellant discharged its obligation of proving substantial compliance with Section 40(1) (c) of the Employment Act. 35.With regards to compliance with the statutory payments required under Sections 40(1)(e), (f), and (g) of the Employment Ac, it is notable that the redundancy notice issued to the Respondent was silent on his terminal dues, including payment for accrued leave, one (1) month's salary in lieu of notice, and severance pay at the rate of not less than 15 days' pay for each completed year of service. 36.What’s more, the record is devoid of any evidence demonstrating that the Respondent was paid the statutory entitlements contemplated under Sections 40(1)(e), (f), and (g) of the Employment Act. In the absence of such proof, the 13

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Court can only conclude that the Appellant failed to discharge its statutory obligations in this regard. 37.In the final analysis, this Court finds that the Appellant failed to demonstrate compliance with the mandatory procedural requirements governing redundancy under Section 40(1) of the Employment Act. Consequently, the learned Trial Magistrate cannot be faulted for finding that the Respondent's termination on account of redundancy was unfair. Reliefs? 38.Having upheld the Trial Court's finding that the Respondent's termination was unfair, this Court finds no basis for interfering with the award of compensation equivalent to four (4) months' gross salary. 39.Likewise, the award of one (1) month's salary in lieu of notice is unassailable. In any event, the Appellant did not challenge that award in its Memorandum of Appeal. Indeed, a perusal of the Memorandum of Appeal reveals that no specific ground was advanced impugning the award of one (1) month's salary in lieu of notice. Consequently, there is no basis upon which this Court can interfere with it. 14

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40.As regards the claim for accrued leave, the Trial Court awarded the Respondent Kshs. 21,840.00 after finding that the Appellant, as the custodian of the relevant employment records, had failed to produce evidence to rebut the claim. 41.It is worth pointing out that Section 74(1)(f) of the Employment Act imposes a statutory duty upon an employer to keep and maintain records relating to an employee's annual leave. Accordingly, the Appellant bore the burden of producing the Respondent's leave records to demonstrate the leave earned, utilised, and any balance outstanding. Having failed to produce those records, the Appellant cannot fault the Trial Court for awarding the Respondent payment in respect of accrued leave as pleaded. 42.The Appellant further challenged the award relating to unpaid public holidays. However, the record clearly shows that the Trial Court declined that particular claim. It follows that there was no award in respect of unpaid public holidays capable of being challenged on appeal. 43.Turning to the award for house allowance, the Trial Court awarded the Respondent Kshs. 113,400.00 on the basis that there was no evidence that his salary was consolidated. 15

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44.Upon reviewing the record, it is apparent that the Respondent's salary was paid through M-Pesa and that neither pay slips nor any other documentary evidence were produced to show whether the monthly salary was exclusive of a housing component. In the absence of such evidence, it cannot be concluded that the salary paid excluded house allowance. On the contrary, it can be inferred that the housing element was consolidated into the Respondent's monthly wage. 45.In the circumstances, the Trial Court had no proper basis for making a separate award for house allowance, and that award cannot be sustained. Orders 46.In the final analysis, the Appeal partly succeeds, and the Court makes the following final orders: a) The finding of the trial court that the Respondent's termination was unfair is hereby upheld. b) The award of Kshs. 27,000.00, being one (1) month's salary in lieu of notice, is upheld. c) The award of Kshs. 108,000.00, being compensation for unfair termination, is upheld. d) The award of Kshs. 21,800.00, being unpaid salary for November 2023, is upheld. 16

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e) The award of Kshs. 21,800.00, being payment in respect of accrued leave, is upheld. f) The award of Kshs. 113,400.00 for house allowance is set aside. g) Consequently, the total decretal sum of Kshs. 292,000.00 is set aside and substituted with an award of Kshs. 178,600.00. h) The sum awarded in (g) shall attract interest at court rates from the date of this judgment until payment in full. 47.The costs in this Court and at the Trial Court shall be borne by the Appellant and shall be calculated based on the final award. DATED, SIGNED and DELIVERED at NYERI this 31st day of July 2026. ……………………………… STELLA RUTTO JUDGE In the presence of: For the Appellant Mr. Mwaura For the Respondent No appearance Court Assistant Ndati ORDER 17

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In view of the declaration of measures restricting Court operations due to the COVID-19 pandemic and in light of the directions issued by His Lordship, the Chief Justice on 15th March 2020 and subsequent direction of 21st April 2020 that judgments and rulings shall be delivered through video conferencing or via email. They have waived compliance with Order 21 Rule 1 of the Civil Procedure Rules, which requires that all judgments and rulings be pronounced in open Court. In permitting this course, this Court had been guided by Article 159(2)(d) of the Constitution which requires the Court to eschew undue technicalities in delivering justice, the right of access to justice guaranteed to every person under Article 48 of the Constitution and the provisions of Section 1B of the Civil Procedure Act (Chapter 21 of the Laws of Kenya) which impose on this Court the duty of the Court, inter alia, to use suitable technology to enhance the overriding objective which is to facilitate just, expeditious, proportionate and affordable resolution of civil disputes. STELLA RUTTO JUDGE 18

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