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ELRCDismissedAppeal from MC. ELRC No. E1210 of 2020

Registered Trustees of Jesse Kay Children’s Hospital v Njagi (Appeal E237 of 2023) [2025] KEELRC 670 (KLR)

Employment and Labour Relations Court
28 February 2025
5,627 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~23 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court confirmed that employers citing lack of funds must still follow full redundancy procedures, and employees can receive both severance and unfair-termination compensation.

What this practically means

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Executive summary

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This was a first appeal and cross-appeal against the judgment of Hon. S. Aswani Opande in MC. ELRC No. E1210 of 2020 delivered on 16th October 2023, in which the Respondent (claimant below) had been awarded, among other reliefs, a declaration that her termination violated section 40 of the Employment Act, one month's pay in lieu of notice, compensation for unfair termination, deducted salary for June to October 2020, house allowance, severance pay, 8 days' salary for November 2020 and a certificate of service, while general damages were refused. The Appellant (employer) appealed on the ground that the Respondent was on a fixed term contract expiring 31st December 2020 and was lawfully terminated with one month's pay in lieu of notice; the Respondent cross-appealed on the dismissal of her claims for general damages for pregnancy discrimination and poor working conditions. The appeal and cross-appeal were disposed of by written submissions. The court, guided by the first appellate duty to re-evaluate evidence, held that termination due to unavailability of funds was redundancy under section 2 of the Employment Act; that the employer failed to prove the reason with financial records, issued a termination notice instead of a redundancy notice, and did not follow sections 40, 41 and 43, rendering the termination unfair under section 45. The unsigned 2019 and 2020 contracts were of no probative value, so the 2018 contract governed. All reliefs were upheld, including coexisting severance pay and compensation, and the COVID-19 salary cuts were unlawful for want of consultation. Discrimination and poor working conditions claims failed for want of specific pleading and proof. Both the appeal and cross-appeal were dismissed with no orders as to 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 magistrate erred in finding that the Respondent was unlawfully terminated.
  2. 2.Whether the trial court erred in finding that the Respondent was not discriminated on account of pregnancy and she was not subjected to poor working conditions hence not entitled to general damages.
  3. 3.Whether the trial court erred in awarding the reliefs awarded to the Respondent.

Key legal issues

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01

Whether the Respondent was unfairly terminated

Holding

Termination due to lack of funds was redundancy; section 40 procedure was not followed, so the termination was unfair.

Reasoning

The notice of termination cited lack of funds, which falls within the statutory definition of redundancy as loss of employment at the employer's initiative through no fault of the employee. The employer had to prove the reason by producing financial records but did not. It issued a termination notice rather than a redundancy notice, thereby avoiding sections 40 and 41 requirements, rendering the termination unfair under section 45. The unsigned 2020 contract was not binding, so the 2018 contract, automatically renewed annually, governed.

p. 9
02

Whether the Respondent was discriminated on account of pregnancy or exposed to poor working conditions

Holding

No; discrimination was not specifically pleaded and poor working conditions/injuries were not demonstrated.

Reasoning

Discrimination is a violation of a fundamental constitutional right and must be pleaded with precision. The Respondent did not plead specifically how pregnancy-based discrimination occurred. On protective gear, face masks were readily available in the market and the Respondent did not show the employer failed to provide them. The cross-appeal grounds therefore failed.

p. 10
03

Whether the reliefs awarded were properly granted

Holding

All the reliefs were upheld, including coexisting severance pay and compensation for unfair termination.

Reasoning

One month's pay in lieu of notice is due under section 40; five months' compensation is discretionary under section 49 and the appellate court will not interfere absent a mistake in principle. House allowance was payable as the governing 2018 contract did not include it, and the claim was filed within the 12-month continuing-injury window under section 90. Deducted wages required consultation. Severance pay under section 40(1)(g) and compensation under section 49 can coexist, and a certificate of service is due under section 51.

p. 10
04

Internal inconsistency in the trial court's compensation award

Holding

The court adopted the five months' compensation in the final order despite contradictory figures in the body of the judgment.

Reasoning

The trial magistrate awarded six months' compensation in one paragraph and two months in another but five months in the final orders. The appellate court adopted the figure in the final order and declined to interfere with the discretion exercised under section 49(4) of the Employment Act since reasons were given.

p. 10

Legal principles established

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  • The duty of the first appellate court is to re-evaluate the evidence on both law and facts and come to its own conclusions, while allowing for the trial court's advantage of seeing and hearing witnesses.
  • Termination due to unavailability of funds at the employer's initiative is redundancy, and the section 40 procedure including the section 41 right to be heard must be followed.
  • An employee declared redundant is entitled to severance pay under section 40(1)(g) and, where termination is found unfair, to compensation under section 49 of the Employment Act; the two awards can coexist.
  • Salary reductions during COVID-19 required consultation with and agreement of employees.
  • An unsigned contract cannot bind the employee; the executed contract governs, and an automatically renewed one-year fixed term contract applied.

Court orders

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  1. 1.The Appeal is dismissed.
  2. 2.The Cross Appeal is dismissed.
  3. 3.No orders as to costs.
  4. 4.The judgment of the trial court awarding the Respondent one month's pay in lieu of notice, five months' compensation for unfair termination, salary deducted June-October 2020, house allowance, certificate of service, severance pay and 8 days' salary for November 2020 is upheld.

The bench

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

Wrote the judgment

On appeal from
Magistrates' Court (ELRC)
MC. ELRC No. E1210 of 2020
Jurisdiction invoked
First appellate jurisdiction over the magistrate's court (ELRC) judgment; the Employment and Labour Relations Court hearing an appeal and cross-appeal by way of written submissions

Relief refused

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General damages for discrimination on account of pregnancy (cross-appeal)

Discrimination was not pleaded with precision as required.

p. 9

General damages for exposure to a bad and dangerous working environment (cross-appeal)

Injuries from poor working conditions were not demonstrated.

p. 10

Appellant's prayer to set aside the trial court judgment and dismiss the claim

The court found the Respondent was unfairly terminated on grounds of redundancy contrary to sections 40, 41, 43 and 45 of the Employment Act.

p. 11

Costs

Appeal and cross-appeal dismissed with no orders as to costs.

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.

In the upshot the Appeal and the Cross appeal are found unmerited and are hereby dismissed with no orders as to costs.
p. 11Disposition
The Respondent was given notice of termination but not redundancy notice. This was presumably done to avoid the requirements of the Act regarding termination on account of redundancy.
p. 9Redundancy procedure
The Appellant had the duty to prove the reason of unavailability of funds at that particular moment by producing financial records but it did not.
p. 9Burden of proof on reason for termination
The Appellant's allegations that the court cannot award both compensation for unfair termination and severance cannot stand since the two are provided for by the Employment Act.
p. 10Coexistence of severance pay and compensation
before salary reductions during COVID-19, employees had to be consulted and agree to the same.
p. 10COVID-19 salary reductions
since the 2020 contract was not signed by the Respondent it could not be binding upon her and the only contract in place was the 2018 contract executed by parties.
p. 9Unsigned contracts
The Appellant alleged that the Respondent was terminated on account of absconding duties but did not provide any evidence in support or justify this same ground. This defence was in the Cout's view an afterthought not backed by any evidence.
p. 9Absconding defence

Issues in the judgment

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material

The trial court's award of compensation was internally contradictory, as acknowledged by this court: six months in one paragraph, two months in another, and five months in the final orders.

minor

The amount of deducted salary is stated inconsistently as Kshs 1,010,215 in the submissions and Kshs 101,215 in the trial court's orders reproduced in this 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, "Registered Trustees of Jesse Kay Children’s Hospital v Njagi (Appeal E237 of 2023) [2025] KEELRC 670 (KLR)", Case Analysis (2025). Appeal from MC. ELRC No. E1210 of 2020. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/670/eng@2025-02-28

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