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Court of AppealPartially AllowedCivil Appeal Number 298 of 2015

Punchlines Limited v Joseph Mugo Kibaria,Boniface Kilonzo Kisilu,Moses Muinde John,Henry Muoki Kitila,Jackson Muteti Mwongo,Benson Wabwile Onyisio,Linus Omenta Gesicha,George Antony Kabue,Moses Kikwau David,Henry Muhanji Lugano & Jamen Ichuliza Chadaka (Civil Appeal 298 of 2015) (Civ) [2018] KECA 217 (KLR)

Court of Appeal of Kenya
26 October 2018
2,847 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~11 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal ruled that when a job ends normally, employers owe only one month's notice pay and service pay per year worked—not six months' salary.

What this practically means

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Executive summary

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This appeal arose from the judgment of the Employment and Labour Relations Court at Nairobi (Hellen Wasilwa, J) dated 30th July 2015, which allowed the claims of eleven former employees of Punchlines Limited, finding a normal termination of employment and awarding one month's salary in lieu of notice and six months' salary as terminal dues, with costs. The appellant raised four substantive grounds: the inclusion of the 5th and 11th respondents who had allegedly resumed work; the absence of a conclusive finding on whether the respondents absconded or were dismissed; failure to apply section 35 of the Employment Act; and erroneous reliance on section 49 in awarding six months' salary. The respondents filed a Notice seeking affirmation but in substance a disguised cross-appeal for a finding of unfair termination. The Court of Appeal, as a first appellate court, re-evaluated the evidence. It held the 5th and 11th respondents were properly included, no amendment or consent order having withdrawn their claims. It affirmed the finding of normal termination, there being no proof of abscondment or dismissal. However, it held the award of six months' salary as terminal dues was erroneous, since remedies for normal termination are confined to sections 35(5) and 36 of the Employment Act: one month's salary in lieu of notice and service pay for each year worked. The court set aside item four of the award, substituted service pay, and remitted the matter to the trial court to assess it. The costs order of the trial court was affirmed, the respondents having substantially succeeded, and the respondents also received costs of the appeal. The appeal partially succeeded.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether there was a basis for the trial Judge to include Jamen Ichuliza Chadaka and Jackson Muteti Mwonga, the 5th and 11th respondents, in the award made for normal termination
  2. 2.Whether the reliefs awarded by the trial Judge to the respondents are well founded in law
  3. 3.Whether the trial court's order on costs should be disturbed

Key legal issues

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01

Whether the 5th and 11th respondents should have been included in the award for normal termination

Holding

The trial Judge was right to include them because there was no amendment to pleadings or consent order withdrawing their claims.

Reasoning

The appellant contended the 5th and 11th respondents had resumed work after the downing of tools and should not have been compensated. The court examined the record and found no amendment of pleadings and no consent order withdrawing those claims, so they remained parties to the litigation at the conclusion of the trial and the Judge could not be faulted for including them in the award.

p. 3
02

Whether the reliefs awarded by the trial Judge were well founded in law

Holding

The finding of normal termination was sound, but the award of six months' salary as terminal dues exceeded the statutory remedies for normal termination and was substituted with service pay for each year worked.

Reasoning

There was no evidentiary proof that the respondents absconded duty or were dismissed, so normal termination was correctly found. Remedies for normal termination are those in sections 35(5) and 36 of the Employment Act: one month's salary in lieu of notice and service pay for each year worked. The trial Judge gave no indication that the six months' salary represented service pay, so the Court of Appeal set it aside and substituted the correct remedy, remitting quantification to the trial court.

p. 3
03

Whether the trial court's order on costs should be disturbed

Holding

The costs order was affirmed because the respondents substantially succeeded and the discretion was properly exercised.

Reasoning

Costs follow the event under section 27 of the Civil Procedure Act unless the court orders otherwise for good reason. The appellant had substantially satisfied the decree by consent save for item 4, and the substitution of the service pay award was also in the respondents' favour. The respondents were deemed to have substantially succeeded, so there was no justification for interfering with the trial Judge's discretion.

p. 4

Legal principles established

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  • Remedies for normal termination of employment are confined to those stipulated under sections 35(5) and 36 of the Employment Act, 2007, namely one month's salary in lieu of notice and service pay for each year worked; a court cannot award six months' salary as terminal dues under a normal termination without indicating it is service pay
  • On a first appeal, the appellate court must re-evaluate the evidence and draw its own conclusions, making allowance for not having seen or heard the witnesses, and is not bound by the trial judge's findings of fact where the judge failed to appreciate the facts or misapplied the law
  • An appellate court will not interfere with a trial court's exercise of discretion on costs unless the discretion was exercised injudiciously or on wrong principles, or no reasons were given, or the reasons do not constitute good reason within the meaning of the rule
  • A claim by a party who remained a party to the litigation at the conclusion of the trial, and whose claim was neither withdrawn by amendment nor by consent order, cannot be excluded from the award

Court orders

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  1. 1.Item four (4) of the trial court's award of six (6) months' salary as terminal dues is set aside, and substituted with an order for payment of service pay for each year worked payable to all the respondents and as worked out and fixed by the trial court
  2. 2.The matter is remitted back to the trial court to work out an award for service pay for each year worked payable to each respondent as provided for under section 35 (5) and 36 of the Employment Act
  3. 3.The order on costs as awarded by the trial court is affirmed
  4. 4.The respondents will also have costs of this appeal

The bench

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One judgment of the whole court — no separate or dissenting opinions.

majority
majority
majority
On appeal from
Employment and Labour Relations Court at Nairobi
H.C. Cause No. 622 of 2014
Jurisdiction invoked
First appeal to the Court of Appeal under the Court of Appeal rules (Rule 31 of the rules of the court); appellate jurisdiction over a decision of the Employment and Labour Relations Court

Relief refused

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The appellant's challenge to the inclusion of the 5th and 11th respondents in the award

There was no amendment of pleadings or consent order withdrawing their claims, so they remained parties to the litigation at the conclusion of the trial

p. 3

The appellant's challenge to the trial court's costs order

The respondents substantially succeeded in their claim and the appellant had substantially satisfied the decree; no justification to interfere with the costs discretion

p. 4

The respondents' Notice seeking a finding of unfair termination

Treated as a disguised cross-appeal; the court found no error in the trial court's conclusion that this was a case of normal termination

p. 3

Costs

The order on costs as awarded by the trial court is affirmed, and the respondents will have costs of this appeal.

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

Item four (4) of the trial court’s award of six (6) months’ salary as terminal dues is set aside, and substituted with an order for payment of service pay for each year worked payable to all the respondents and as worked out and fixed by the trial court.
p. 4Final orders - substitution of terminal dues award with service pay
Relief for normal termination is stipulated under sections 35 (5) and 36 of the Act. The Judge should have confined the award to those remedies namely, one month’s salary in lieu of notice and service pay for each year worked and whose terms were to be fixed by the court.
p. 3Statutory remedies for normal termination of employment
This being a first appeal, our duty is to consider the evidence and evaluate it ourselves and draw out our own conclusions thereon, bearing in mind that we neither saw nor heard the witnesses and that we should make due allowance for that.
p. 3Duty of a first appellate court
The matter is remitted back to the trial court to work out an award for service pay for each year worked payable to each respondent as provided for under section 35 (5) and 36 of the Act.
p. 4Final orders - remittal for assessment of service pay
The order on costs as awarded by the trial court is affirmed.
p. 4Final orders - costs

Issues in the judgment

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minor

The 5th respondent is named 'Jackson Muteti Mwongo' in the cause title but appears as 'Jackson Muteti Mwonga' and 'Jakson Muteti Mwonga' elsewhere in the judgment, an internal inconsistency in spelling

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Punchlines Limited v Joseph Mugo Kibaria,Boniface Kilonzo Kisilu,Moses Muinde John,Henry Muoki Kitila,Jackson Muteti Mwongo,Benson Wabwile Onyisio,Linus Omenta Gesicha,George Antony Kabue,Moses Kikwau David,Henry Muhanji Lugano & Jamen Ichuliza Chadaka (Civil Appeal 298 of 2015)  (Civ) [2018] KECA 217 (KLR)", Case Analysis (2018). Civil Appeal Number 298 of 2015. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2018/217/eng@2018-10-26

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.