Ndiritu v Silver Brook Ltd

3. The Appellant alleged that throughout his employment, the Respondent paid him wages below the prescribed minimum wage despite performing the duties of both a cashier and a waiter. He further contended that the Respondent failed to pay him his full salary even after making statutory deductions. 4. The Appellant further asserted that the Respondent summarily dismissed him without prior notice and on the basis of false and unsubstantiated allegations. He maintained that no investigations were undertaken and that he was not afforded an opportunity to explain himself before the decision to terminate his employment was made. 5. It was the Appellant's case that his dismissal was both procedurally and substantively unfair, as he was neither issued with a notice to show cause nor accorded a disciplinary hearing before the summary dismissal. Consequently, the Appellant sought the sum of Kshs. 590,768.00, comprising one (1) month's salary in lieu of notice, underpayments, compensation equivalent to 12 months' salary for unfair termination, accrued but untaken leave, and accumulated salary arrears. The Appellant further prayed for a declaration that his termination was unlawful and unfair, an order directing the issuance of a certificate of service, together with costs and interest. 2

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6. The Respondent opposed the claim through a Response dated 12 th September 2024. The Respondent maintained that the Appellant's employment was terminated for valid reasons and that the dismissal was substantively justified. 7. The Respondent further contended that the Appellant had been afforded an opportunity to be heard and that, in the circumstances, the issuance of a notice was unnecessary. The Respondent particularised the acts of gross misconduct allegedly committed by the Appellant as follows: i. Insubordination and writing abusive text messages to his fellow employees; ii. Selling food items without issuing POS receipts; iii. Suspected of stealing a jacket belonging to a customer; iv. Insulting fellow colleagues; v. Lying to a prospective employee who was seeking the position of a receptionist that the interview had been postponed and that the manager was absent. 8. On the basis of the foregoing, the Respondent urged the Trial Court to dismiss the Claimant’s suit with costs. 3

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9. Upon hearing the parties, the Trial Court delivered its judgment on 11 th April 2025. The Trial Court found that although the Respondent had a valid reason for terminating the Appellant's employment, specifically, taking a client's jacket without permission, it had failed to act promptly, having waited approximately four (4) months before effecting the dismissal. The Trial Court held that the Respondent ought to have held a “notice to show cause” meeting with the Appellant before terminating his employment. To this end, the Trial Court found that the Appellant was unfairly terminated from employment. 10.In the final analysis, the Trial Court declined most of the reliefs sought by the Appellant but awarded him one (1) month's salary in lieu of notice together with accumulated salary arrears in the sum of Kshs. 11,768.00. The Court further awarded interest at court rates, costs of the suit, and directed the Respondent to issue the Appellant with a certificate of service. 11.Dissatisfied with the decision of the Trial Magistrate, the Appellant lodged the present appeal. The Appeal 12.The Appellant lodged a Memorandum of Appeal dated 30th April 2025, advancing the following six (6) grounds of appeal: 4

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1) THAT the learned Trial Magistrate erred in law and fact by applying the wrong principles of law whereas the Respondent had made a partial admission to the Appellant’s claim on leave days and thus erroneously dismissing the Appellant’s claim, thereby occasioning a miscarriage of justice. 2) THAT the learned Trial Magistrate erred in law and fact by applying the wrong principles of law and thus erroneously dismissing the Appellant’s claim under the head of underpayment, thereby occasioning a miscarriage of justice. 3) THAT the learned Trial Magistrate erred in law and fact by applying the wrong principles of law by failing to make a finding that the Appellant was not accorded due process towards his termination of employment, thereby occasioning a miscarriage of justice. 4) THAT the learned Trial Magistrate erred in law and fact by taking into account extraneous and irrelevant considerations, thus arriving at erroneous findings in the Judgment, thereby occasioning a miscarriage of justice. 5) THAT the learned Trial Magistrate erred in law and fact by dismissing the claim for unlawful termination, thereby occasioning a gross miscarriage of justice. 5

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6) THAT the learned Trial Magistrate erred in law and fact in failing to evaluate the entire evidence as well as submissions as presented by the Appellant, thereby occasioning a gross miscarriage of justice. 13.Based on the foregoing grounds, the Appellant prays that the Appeal be allowed, and that the judgment of the Trial Court delivered on 11th April 2025 be set aside and/or varied. The Appellant further seeks the costs of the appeal. Submissions 14.The Appeal was canvassed by way of written submissions. On the Appellant’s part, it was submitted that there was no proof made by the Respondent that it had compensated him for his leave days. To this end, the Appellant urged this Court to interfere with the judgment of the Trial Magistrate, submitting that the dismissal of its prayer was erroneous. 15.Referencing the case of Nicholas Otinyu Muruka v Equity Bank Limited [2013] eKLR, the Claimant submitted that the Respondent violated Section 43(1) and 45 of the Employment Act, as there was no justification for the termination nor was due process followed. In this regard, the Appellant posited that he is entitled to full compensation by dint of Section 49 of the Employment Act for unfair and unlawful termination. 6

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16.On the other hand, the Respondent submitted that the Appellant was aware of the reasons for his dismissal, having been served with a Notice to Show Cause and a disciplinary warning letter. The Respondent posited that given the severity of the misconduct, it had a legitimate interest in acting swiftly to protect its business interests and maintain order within the workplace. 17.Citing the case of Timothy Mwangi Muriu v Central Kenya Coffee Mills Ltd [2019] KELRC 299 (KLR), the Respondent submitted that it was only required to prove the theft to the extent that it was more likely than not. 18.It was the Respondent’s position that the misconduct was of a serious nature that immediate dismissal was justified. 19.The Respondent further submitted that the Appellant is not entitled to a month's notice in lieu of pay as his termination was substantially justified. 20.With regards to the claim for underpayment of salary, the Respondent submitted that it is not the duty of this court to rewrite contracts for the Parties. On this score, reliance was placed on the case of Fina Bank Limited v Spares & Industries Limited (Civil Appeal No 51 of 2000). 7

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21. As to the claim for leave days, the Respondent submitted that the Appellant neither provided before the Trial Court the number of leave days that he did not take, nor did he provide evidence proving how he arrived at the claimed sum of Kshs. 24,000/-. Analysis and Determination 22.This being a first appeal, the Court is under a duty to re-examine and reevaluate the entire evidence that was presented before the Trial Court and to draw its own independent conclusions. In doing so, however, the Court must bear in mind that it neither saw nor heard the witnesses testify and should therefore accord due regard to the Trial Court on matters relating to the credibility and demeanour of witnesses. This principle was reiterated by the Court of Appeal in the case of Selle & Another vs Associated Motor Boat Company Ltd & Others, [1968] EA 123. 23.This Court is further guided by the settled principle that an appellate court will not ordinarily interfere with the findings of fact made by a trial court unless it is demonstrated that those findings were not supported by the evidence, were founded on a misapprehension of the evidence, or were arrived at through the application of wrong principles of law. This principle was articulated in Mwanasokoni v Kenya Bus Service Ltd (1982–88) 1 KAR 278. 8

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24.Being mindful of the Court's mandate on a first appeal, and upon considering the grounds set out in the Memorandum of Appeal, the Record of Appeal in its entirety, and the applicable law, the Court is of the view that the appeal turns on a single issue, namely, whether the Trial Court erred in declining to award the Appellant compensation for unfair termination, accrued leave, and salary underpayments as claimed. 25.Before addressing the issue identified for determination, I find it necessary to make one preliminary observation. Although the Appellant faults the learned Trial Magistrate for failing to find that he was denied procedural fairness and for dismissing his claim for unfair termination, the record does not support that contention. 26.A reading of the impugned judgment reveals that the Trial Court found that the Respondent ought to have held a “notice to show cause” meeting with the Appellant before terminating his employment. In effect, the Trial Court acknowledged that the Appellant was denied procedural fairness. It was on that basis that the court found the termination to have been unfair and consequently awarded the Appellant one (1) month's salary in lieu of notice. 27.Having made that observation, I now turn to the substantive issue for determination, namely, whether the Trial Court erred in declining to award the 9

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Appellant compensation for unfair termination, accrued leave, and salary underpayments as claimed. Compensation for unfair termination 28.At the Trial Court, the Appellant sought the maximum award of compensation under Section 49(1)(c) of the Employment Act for unfair termination. 29.In considering that claim, the Trial Court acknowledged that the Respondent had failed to adhere to the requirements of procedural fairness and, on that basis, awarded the Appellant one (1) month's salary in lieu of notice. However, the court also found that the allegations against the Appellant regarding the unauthorized taking of a client's jacket had been proved, thereby establishing a valid reason for the termination. 30.The Trial Court further observed that the Appellant had not demonstrated that his reputation had been tarnished so as to justify an award of the maximum compensation sought. Consequently, the Trial Court declined to award any compensation for unfair termination. 31.Section 49(4) of the Employment Act sets out the factors that a court must take into account in determining the appropriate quantum of compensation for wrongful dismissal or unfair termination. Among the relevant considerations is 10

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the extent to which the employee contributed to the circumstances that led to the termination of the employment relationship. 32.As stated herein, the Trial Court found that the Respondent had a valid reason for terminating the Appellant's employment, having established that he took a client's jacket without permission. It therefore follows that the Appellant materially contributed to the circumstances culminating in the termination of his employment. 33.It is well settled that an award of compensation under Section 49(1)(c) of the Employment Act is discretionary. Accordingly, a finding that a termination was procedurally unfair does not entitle an employee to a monetary award, as the court must weigh all the factors set out under Section 49(4) of the Act before exercising its discretion. 34.In the circumstances of this case, the Trial Court, having found that the termination of employment was substantively justified but procedurally flawed, exercised its discretion by awarding the Appellant one (1) month's salary in lieu of notice while declining to grant additional compensation for unfair termination. 11

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35.I find no basis for interfering with the Trial Court's exercise of discretion. Having taken into account the relevant statutory considerations, including the Appellant's contribution to the termination of his employment, the Trial Court cannot be said to have exercised its discretion injudiciously. Accordingly, I decline to disturb its decision not to award compensation under Section 49(1)(c) of the Employment Act. Accrued leave 36.The Appellant has also challenged the Trial Court's decision dismissing his claim for accrued annual leave. 37.Before the Trial Court, the Appellant sought Kshs. 24,000.00 in respect of untaken annual leave allegedly accrued over a period of two (2) years. The learned Trial Magistrate declined the claim on the ground that it lacked foundation, noting that the Appellant had not explained how he arrived at the sum claimed. 38.Section 74(1)(f) of the Employment Act places a statutory obligation upon an employer to keep and maintain records relating to an employee's annual leave. Consequently, in the present case, the Respondent bore the responsibility of producing the Appellant's leave records to enable the court to ascertain the leave earned, taken, and any balance outstanding. However, the Respondent did 12

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not produce such records hence the Trial Court had no basis to dismiss the Appellant’s claim for leave days in its entirety. 39.Nevertheless, Section 28(4) of the Employment Act limits recovery of accrued annual leave to the 18 months immediately preceding the termination of employment. Accordingly, in the absence of leave records from the Respondent, the Court finds that the Appellant is entitled to payment in lieu of accrued annual leave, limited to the statutory period of 18 months preceding the termination of his employment. Underpayment 40.The Appellant has further challenged the Trial Court's dismissal of his claim for salary underpayments. 41.Before the trial court, the Appellant sought Kshs. 360,000.00 on account of alleged salary underpayments. In his Statement of Claim, he pleaded that although he had been employed as a cashier, he also performed the duties of a waiter and was remunerated below the statutory minimum wage throughout his employment. 42.In its judgment, the Trial Court dismissed the claim on the basis that the Appellant's contract of employment did not provide for any salary increment. 13

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The learned Trial Magistrate reasoned that, having entered into a contract providing for a monthly salary of Kshs. 15,000.00, the Appellant was bound by those contractual terms and could not subsequently turn around and claim underpayment. 43.With tremendous respect, that approach does not accord with the law. The principle that parties are bound by the terms of their contract cannot override statutory minimum labour standards. In this regard, Section 48(1) of the Labour Institutions Act provides as follows: [48](1) Notwithstanding anything contained in this Act or any other written law— (a) the minimum rates of remuneration or conditions of employment established in a wages order constitute a term of employment of any employee to whom the wages order applies and may not be varied by agreement; (b)if the contract of an employee to whom a wages order applies provides for the payment of less remuneration than the statutory minimum remuneration, or does not provide for the conditions of employment prescribed in a wages regulation order or provides for less favourable conditions of employment, then the remuneration and conditions of 14

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employment established by the wages order shall be inserted in the contract in substitution for those terms. 44.The effect of Section 48(1) of the Labour Institutions Act is that Wages Orders issued thereunder prescribe the minimum terms and conditions of employment applicable to employees. They establish mandatory minimum standards below which an employer cannot remunerate an employee or vary by agreement. 45.It follows, therefore, that the Respondent could not rely on contractual terms that provided remuneration below the statutory minimum prescribed by the applicable Wages Order. 46.Turning to the record, the Appellant's contract of employment, which was produced before the Trial Court, indicates that he was employed as a waiter/cashier at a monthly salary of Kshs. 15,000.00. 47.The Respondent did not dispute the Appellant's evidence that his employment commenced in August 2022. 48.Under Legal Notice No. 125 of 2022, the prescribed minimum basic wage for a cashier employed in Othaya, where the Appellant worked, was Kshs. 30,266.80 per month. Upon inclusion of house allowance at the rate of 15%, the minimum 15

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gross monthly wage the Appellant was entitled to comes to Kshs. 34,806.82. The Appellant's monthly salary of Kshs. 15,000.00 was therefore substantially below the statutory minimum, with the result that he was underpaid throughout the period of his employment. He is consequently entitled to recover the underpayments. Orders 49.In sum, the Appeal succeeds in part, as follows: a) The award of one (1) month's salary in lieu of notice is upheld but revised to Kshs. 34,806.80, being the monthly wage the Appellant was entitled to under the applicable Wages Order. b) The award of accrued salary arrears in the sum of Kshs. 11,768.00 is upheld. For the avoidance of doubt, any salary shortfalls are subsumed within the award for salary underpayments. c) The order dismissing the Appellant's claim for accrued annual leave is set aside and substituted with an award of Kshs. 37,707.40, being payment in lieu of accrued leave limited to the statutory period of 18 months. d) The order dismissing the Appellant's claim for salary underpayments is set aside and substituted with an award of Kshs. 415,942.80, calculated at a monthly underpayment of Kshs. 19,806.80 16

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for a period of 21 months, from August 2022 to April 2024 when the Appellant's employment was terminated. e) The total decretal sum is therefore Kshs. 500,224.00. f) The decretal sum shall attract interest at court rates from the date of this judgment until payment in full. 50.Costs in this Court and at the Trial Court shall be borne by the Respondent and shall be pegged 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 Ms. Muthui For the Respondent Mr. Wambugu Court Assistant Ndati ORDER 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 directions of 21st April 2020 17

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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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