Mistry V. Naran Mulji & Co v Ali (Civil Appeal E055 of 2023) [2026] KECA 497 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed firing a worker by phone without written reasons or a hearing is unfair, but cut his award to about Kshs.346,000.
What this practically means
#Executive summary
#Key legal issues
#Date of commencement and conversion of the respondent's employment
While the respondent was once a casual employee, the conversion to a term contract under Section 37(1) is presumed from 8th February 2016, the date statutory remittances to NSSF were demonstrated, not from 4th April 2009.
The Court held there was no evidence the respondent worked continuously from 2009; payment vouchers for October 2015 to February 2016 showed daily-wage casual engagement. The letter to NSSF of 8th February 2016 and subsequent remittances provided the evidential anchor for the presumption of permanent employment under Section 37(1)(a) and (b).
Fairness of the termination
The termination by telephone call without written reasons or a hearing was a summary dismissal that was both substantively and procedurally unfair under Sections 44(1) and 45(2) of the Employment Act.
The Court adopted Highlands Mineral Water and Janet Nyandiko: an employer must prove a valid reason and follow fair procedure, including explaining reasons to the employee in the presence of a fellow employee or union representative and hearing representations. None of this was done, so the termination was unfair and un-procedural regardless of the redundancy assertion.
Limitation of the underpayment and unpaid leave claims
The claims were not time-barred as the cause was filed within three years of the 7th July 2019 termination under Section 90 of the Employment Act.
Relying on The German School Society and Nganga, the Court distinguished continuing wrongs from recurring wrongs but found it unnecessary to extend the analysis: the claim filed on 11th March 2020 fell squarely within the three-year statutory period measured from termination.
Quantum of awards
The Court recalibrated the awards: compensation reduced to four months' salary (Kshs.60,567.80) reflecting four years of permanent employment, unpaid leave reduced to three years (Kshs.45,425.85), and underpayment recomputed as Kshs.195,075.95, while upholding one month's pay in lieu of notice.
The Court used the Regulations of Wages (General) (Amendment) Order, 2018 monthly wage for a night watchman (Kshs.15,141.95) as the baseline, applied 21 working days per month, and substituted awards that had been based on a 10-year service span inconsistent with its conversion finding.
Legal principles established
#- A second appellate court is confined to matters of law and will not interfere with findings of fact unless the two courts below considered matters they should not have, failed to consider matters they should have, or the decision is perverse.
- A casual employee who works continuously for the equivalent of three months or more is converted by operation of law under Section 37 of the Employment Act to a term contract, but the date of conversion must be anchored on evidence; a demonstrated statutory remittance date may ground the presumption of permanent employment.
- Termination of employment must be both substantively and procedurally fair; even a summary dismissal requires that reasons be communicated in writing and the employee be heard, failing which the termination is unfair under Section 45(2) of the Employment Act.
- A claim for underpayment and unpaid leave accruing during employment is not a continuing injury under Section 90 of the Employment Act beyond the statutory period; where the claim is filed within three years of termination, it is not time-barred.
Court orders
#- 1.The award of 6 months' salary compensation for unfair termination of Ksh.90,851.70 is set aside and substituted with an award of Kshs.60,567.80
- 2.The award of one month's salary in lieu of notice of Kshs.15,141.95 is upheld
- 3.The award of unpaid leave of Kshs.105,000.00 is set aside and substituted with a sum of Kshs.45,425.85
- 4.The award of salary underpayment of Kshs.700,701.95 is set aside and substituted with a sum of Kshs.195,071.95
- 5.Total payable Kshs.346,491.45 to the respondent
- 6.The respondent is awarded half the costs of this appeal
- On appeal from
- Employment and Labour Relations Court, Mombasa
- ELRC Appeal No. E002 of 2022
- Jurisdiction invoked
- Section 72(1) of the Civil Procedure Act - second appeal on matters of law only
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Mistry V. Naran Mulji & Co v Ali (Civil Appeal E055 of 2023) [2026] KECA 497 (KLR)", Case Analysis (2026). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2026/497/eng@2026-03-13
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.