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ELRCPartially AllowedNot stated in judgment

Ofyze Holdings Limited t/a Harris Tavern v Mutisya (Appeal E191 of 2024) [2025] KEELRC 256 (KLR)

Employment and Labour Relations Court
31 January 2025
2,077 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~8 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court ruled that a Covid-19-forced business closure satisfied redundancy rules despite procedural shortcuts, but employers must still prove salaries include housing allowance.

What this practically means

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Executive summary

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This is a first appeal, disposed of by written submissions, against the judgment of Honourable Mr. Rawlings Musiega SRM delivered on 21st June 2024 in an employment claim by a former employee of the Appellant. The Appellant raised four grounds, principally that the Magistrate erred in finding that the Respondent was terminated despite evidence that the Respondent's establishment was shut down following government directives on Covid-19 and that a settlement agreement had resolved all claims. The Respondent filed no submissions. Adopting the framework in Peters vs Sunday Post Ltd [1958] EA 424, the Court re-evaluated the evidence. It held that section 40 of the Employment Act need not be observed clause by clause: an omission that does not significantly affect the character and purpose of a redundancy and occasions no prejudice cannot vitiate it as unfair termination. The closure of the business was compelled by a government directive, leaving no room or time for compliance with section 40's procedural requirements, and the employer paid leave, severance pay for 7 years of service and underpayment through settlement. The trial court's finding of unfair termination and the consequential award of compensation were set aside. However, the appeal on housing allowance failed: that is a statutory right, and the employer led no evidence that the salary was consolidated and inclusive of housing allowance, so that award stood. The appeal being partially successful, each party was ordered to bear their own costs.

Questions the Court framed

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

  1. 1.Whether the trial court erred in finding that the respondent was wrongfully/unfairly dismissed for want of compliance with section 40 of the Employment Act
  2. 2.Whether the court below was right in making the award for compensation in the manner it did
  3. 3.Whether the award of housing allowance should stand

Key legal issues

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01

Whether non-compliance with section 40 of the Employment Act rendered the termination unfair

Holding

The finding of unfair termination was set aside; the employer's actions, including payment of leave, severance pay for 7 years and underpayment pursuant to settlement negotiations, met the standard of reasonableness notwithstanding the Covid-19 compelled closure.

Reasoning

The trial court found non-compliance with section 40 without explaining the basis of that conclusion. The business closure followed a government directive on Covid-19, leaving no room or time to observe the procedural requirements of section 40. The employer entered settlement negotiations and paid leave, severance pay and underpayment, payments consistent with section 40. Substantial compliance without prejudice suffices.

p. 4
02

Whether the award of housing allowance should stand

Holding

The award of housing allowance stands; the appeal on this ground is dismissed.

Reasoning

Housing allowance is a statutory right and the burden lay on the employer to show by evidence that the salary paid was consolidated and inclusive of housing allowance. No such evidence was tendered, so the learned Magistrate was right to award it as prayed.

p. 5

Legal principles established

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  • On a first appeal, the court must re-evaluate the evidence on facts and law and draw its own conclusions, while allowing for the trial court's advantage of seeing witnesses.
  • Section 40 of the Employment Act need not be observed clause by clause; an omission that does not significantly affect the character and purpose of the redundancy and occasions no prejudice cannot vitiate the redundancy as unfair termination.

Court orders

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  1. 1.The finding that the respondent was unfairly terminated for want of compliance with section 40 of the Employment Act is set aside
  2. 2.The consequential award of compensation for unfair termination is set aside
  3. 3.The appeal on the award of housing allowance fails and is dismissed
  4. 4.Each party shall bear their own costs of the appeal

The bench

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

Wrote the judgment

On appeal from
Senior Resident Magistrate's Court
Not stated in judgment
Jurisdiction invoked
First appeal from subordinate court (magistrates' court); appellate jurisdiction not expressly cited

Relief refused

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Setting aside the award of housing allowance

It was the employer's responsibility to demonstrate by evidence that the salary was consolidated and inclusive of housing allowance; no such evidence was provided and the trial magistrate rightly awarded it as prayed.

p. 5

Costs

Each party shall bear their own costs of the 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.

First, on first appeal, the Court is under a duty to reconsider and re-evaluate the evidence on record and draw its own conclusions;
p. 3Duty of first appellate court
The provisions of section 40 need not be observed clause by clause however if the sum total of the actions by an employer in carrying out the redundancy process meets the standard of reasonableness in the legal sense of the word, an omission that does not significantly afiect the character and the purpose the redundancy and occasions no prejudice, cannot vitiate the act of redundancy as to make it qualify as an unfair termination.
p. 4Substantial compliance with section 40 of the Employment Act
In the upshot the Appeal succeeds to the extent that the finding that the respondent was unfairly terminated for want of compliance with section 40 of the Employment Act is hereby set aside. The appeal on the award of housing allowance fails and is hereby dismissed.
p. 5Final orders/disposition
The appeal being partially successful, each party shall bear their own costs of the appeal.
p. 5Costs order

Issues in the judgment

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minor

The trial court judgment quote contains an apparent typographical date error: "Internal Memo dated 22nd March, 220"

minor

Case number and neutral citation are not stated anywhere in the judgment

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, "Ofyze Holdings Limited t/a Harris Tavern v Mutisya (Appeal E191 of 2024) [2025] KEELRC 256 (KLR)", Case Analysis (2025). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/256/eng@2025-01-31

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