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ELRCPartially AllowedELRC Appeal arising from Mariakani MCELRC No. E022 of 2022 (consolidated with E023, E024, E025, E026, E027, E029, E030, E031, E032 of 2022)

Corrugated Sheets Limited v Kalama & 10 others (Appeal E021 of 2024) [2025] KEELRC 1091 (KLR)

Employment and Labour Relations Court
3 April 2025
3,320 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~13 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court ruled that an employer who notifies the union, labour officer and affected employees a month before redundancy acts lawfully, so the workers' awards were cancelled.

What this practically means

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Executive summary

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This is a first appeal to the Employment and Labour Relations Court at Malindi from a magistrate's judgment of 9 August 2024 in Mariakani MCELRC No. E022 of 2022, consolidated with eight other causes, in which former employees of the appellant won awards for notice pay and 10 months' compensation on findings of unfair termination through redundancy. The appellant, a manufacturer of galvanized roofing products affected by COVID-19, argued that it had complied with Section 40 of the Employment Act: it notified the Labour Officer and the Kenya Engineering Workers Union on 2 June 2021 with a list of affected employees, held meetings on 30 July and 30 August 2021, and issued termination notices offering dues and one month's pay in lieu of notice. The second category of employees (MCELRC E027, E028, E029 of 2022) were on fixed-term contracts that lapsed on 31 July 2021. The court, applying its first appellate duty to re-evaluate evidence, held that the redundancy was procedurally lawful since the union and labour officer were notified at least a month in advance with the affected employees listed; faulting the employer on selection criteria was unjustified. Fixed-term contracts lapse on their own terms without any obligation to justify termination. Gratuity claims from the casual era had abated under Section 89, and gratuity is only due under a CBA or agreement. The court set aside the trial court's judgment in its entirety and awarded the appellant 50% of the costs of the appeal, considering under Section 45(5) that the respondents had been paid immediately and had accepted the payments.

Questions the Court framed

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

  1. 1.Whether the redundancy declared by the appellant complied with the procedure under Section 40 of the Employment Act
  2. 2.Whether the trial court erred in finding unfair termination and awarding notice pay and 10 months' compensation
  3. 3.Whether the second category of respondents (MCELRC 27, 28, 29 of 2022) on fixed-term contracts could claim unfair termination upon expiry of their contracts
  4. 4.Whether the claims for gratuity and leave allowance were justified and/or had abated under Section 89 of the Employment Act
  5. 5.What orders as to costs are appropriate

Key legal issues

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01

Compliance with Section 40 redundancy procedure

Holding

The appellant complied with Section 40: it notified the labour officer and union by letter dated 2 June 2021 with a list of affected employees, held meetings on 30 July and 30 August 2021 with union involvement, and issued termination notices offering one month's pay in lieu of notice. The selection criteria objection was unjustified since the list of affected employees accompanied the notice.

Reasoning

The court found that notices dated 2 June 2021 to the Labour Officer Mombasa and the Kenya Engineering Workers Union went unchallenged. The list of affected employees was attached to the notices, and no issue was raised at the meetings held before termination. Early sharing of information facilitated consultation, so faulting the employer on selection criteria was unjustified. The trial court therefore erred in finding procedural unfairness.

02

Fixed-term contracts and non-renewal (second category)

Holding

Employees under fixed-term contracts expiring 31 July 2021 could not claim unfair termination; the contracts lapsed on their terms under Section 10(3) of the Employment Act, and the appellant's notice and consultation was going beyond obligation.

Reasoning

Relying on Kenya Red Cross Society v Omar and Registered Trustees of PCEA v Ngotho-Kariuki, the court held that once a fixed-term contract ends, the employer need not justify termination beyond the lapse of the fixed period. The appellant had in fact issued notice and consulted the union and labour officer, so the claims by the second category of respondents were without merit.

p. 6
03

Gratuity and limitation under Section 89

Holding

Gratuity for the casual employment period (2013–2018) claims abated as of 1 March 2021 under Section 89; the gratuity actually paid was gratuitous under the CBA, which was not produced and whose union was not a party.

Reasoning

The respondents worked as casuals until 1 March 2018, when written terms commenced. Any claim arising from the casual term had to be filed within three years under Section 89, hence abated by 1 March 2021. The gratuity paid for the written term period was gratuitous under the CBA, and since the CBA was not produced and the union was not a party, no enforceable entitlement beyond what was paid existed. Severance pay was also never pleaded.

p. 7
04

Costs under Section 45(5)

Holding

Although the appeal succeeded, the respondents were awarded no notice pay but were to pay only 50% of the appeal costs because the appellant had paid them immediately and they acknowledged receipt.

Reasoning

The court considered as a relevant fact under Section 45(5) of the Employment Act that the appellant had paid the respondents their terminal dues immediately, with each respondent executing a letter of acceptance and collecting a cheque. This justified reducing rather than awarding full costs against the respondents.

p. 7

Legal principles established

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  • A first appellate court has a duty to re-evaluate, re-assess and re-analyse the evidence and determine whether the trial court's conclusions should stand, giving reasons either way
  • Where the employer gives reasons for, and the extent of, the intended redundancy not less than one month before the termination date to the union, labour officer and affected employees, the termination is justified
  • Once a fixed-term contract ends, the employer has no obligation to justify termination beyond the lapse of the fixed period
  • Gratuity is not a statutory entitlement under the Employment Act; it is only due under a private treaty, CBA or other agreement

Court orders

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  1. 1.Judgment in Mariakani MCELRC No. E022 of 2022 consolidating MCELRC E023, E024, E025, E026, E027, E029, E030, E031, E032 of 2022 is set aside
  2. 2.The appellant is awarded 50% of the due costs for the appeal
  3. 3.Claims for notice pay, compensation and gratuity are unjustified and are not payable

The bench

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

majority

Wrote the judgment

On appeal from
Principal Magistrate's Court at Mariakani (ELRC)
MCELRC No. E022 of 2022 (consolidated with E023, E024, E025, E026, E027, E029, E030, E031, E032 of 2022)
Jurisdiction invoked
First appellate jurisdiction of the Employment and Labour Relations Court over appeals from subordinate courts in employment matters
Consolidated with
MCELRC E023 of 2022, MCELRC E024 of 2022, MCELRC E025 of 2022, MCELRC E026 of 2022, MCELRC E027 of 2022, MCELRC E029 of 2022, MCELRC E030 of 2022, MCELRC E031 of 2022, MCELRC E032 of 2022

Relief refused

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Respondents' awards of notice pay

Notice pay was already factored into the terminal dues paid and the terminations were lawful

p. 7

Compensation for unfair termination

There was no substantive or procedural unfairness

p. 7

Gratuity for 9 years

Gratuity was paid gratuitously under the CBA; claims arising from the casual term should have been brought within 3 years under Section 89

p. 7

Leave allowance for 8 years

The claim had abated under Section 89 and the record shows each respondent took annual leave

p. 7

Costs

The appellant is awarded 50% of the due costs for the appeal, on account that the appellant had paid the respondents immediately and they each executed a letter of acceptance and collected a cheque, considered under Section 45(5) of the Employment Act.

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.

Judgment in Mariakani MCELRC No.022 for 2022 consolidating MCELRC E023, E024, E025, E026, E027, E029, E030, E031, E032 OF 2022 is hereby set aside. The appellant is awarded 50% of the due costs for the appeal.
p. 7Final orders setting aside the trial court judgment
As long as the employer can discharge the duty of giving reasons for, and the extent of, the intended redundancy not less than a month before the date of the intended date of termination on account of redundancy, to that extent, the termination of employment is justified.
p. 6Section 40 redundancy procedure
once a fixed-term contract is at an end, the employer has no obligation to justify termination on other grounds beyond the lapse of the fixed period.
p. 7Fixed-term contract expiry
gratuity is only due under a private treaty, CBA or other agreement. It is not factored under the Employment Act and remains gratuitous.
p. 7Gratuity entitlement
To severely fault the appellant because the selection criteria were not addressed while the list of affected employees was shared through notices dated 2 June 2021 is unjustified.
p. 6Selection criteria in redundancy
Compensation is only due where there is substantive and procedural unfairness, which is not the case.
p. 7Compensation under Section 49
The respondents' claims for notice pay are not justified. It was in error to award notice pay that was already factored in the payment of terminal dues.
p. 7Notice pay

Issues in the judgment

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minor

The trial court's awards as reproduced include MCELRC No.E028 of 2022 in the second category, but E028 does not appear in the list of consolidated suits stated at the opening of the judgment nor in the final setting-aside order

minor

The judgment uses both 'afiected/ofi' spellings (apparent OCR/typographical corruption of 'affected/off') throughout

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, "Corrugated Sheets Limited v Kalama & 10 others (Appeal E021 of 2024) [2025] KEELRC 1091 (KLR)", Case Analysis (2025). ELRC Appeal arising from Mariakani MCELRC No. E022 of 2022 (consolidated with E023, E024, E025, E026, E027, E029, E030, E031, E032 of 2022). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/1091/eng@2025-04-03

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