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ELRCPartially AllowedELRC Appeal No. E357 of 2025 (from Milimani MCELRC No. E0440 of 2024)

Ashleys Kenya Ltd v Opiyo (Appeal E357 of 2025) [2026] KEELRC 2441 (KLR)

Employment and Labour Relations Court, Nairobi
31 August 2026
2,054 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Employment Court confirmed that treating a former consultant like an employee makes them one, but slashed compensation to one month's salary.

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 Nairobi against a trial magistrate's judgment in Nairobi CMELRC No. E0440 of 2024, which found that the respondent was unfairly terminated and awarded him six months' salary compensation, notice pay and a certificate of service. The appellant contended that the respondent was engaged under a three-month consultancy contract dated 1 October 2023, expiring 31 December 2023, which lapsed by effluxion of time and attracted no Employment Act rights. The respondent maintained he was employed as a product manager from 2011 and was suspended on 24 January 2024 and terminated on 2 February 2024 without notice, a show-cause letter or a disciplinary hearing. The Court held that although the parties began with a contract for services, the parties' conduct after its lapse - the employer suspending the respondent and engaging him orally under its control and direction - blurred the distinction, and under section 37 the respondent became a protected employee with rights under the Act, the employer bearing the duty under section 10(6) and (7) to define the relationship in writing. The termination without adherence to sections 35, 41 and 45 was unfair, procedural fairness being mandatory even in cases of gross misconduct. However, the six-month compensation award was unjustified given the respondent's poor work record and one month of service under the new arrangement; one month's compensation (Ksh. 25,000) was substituted. Notice pay of Ksh. 25,000 was upheld and the certificate of service order left to stand. Applying section 12(4) of the ELRC Act, and no reasons having been given for departing from the norm, each party was ordered to bear its own costs for the appeal and the trial court. The trial judgment was thereby varied.

Questions the Court framed

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

  1. 1.Whether the relationship between the parties after lapse of the consultancy agreement on 31 December 2023 was employment under the Employment Act or a contract for services
  2. 2.Whether the termination of the respondent on 2 February 2024 was substantively and procedurally fair under sections 35, 41, 43 and 45 of the Employment Act
  3. 3.Whether the compensation award of six months' salary by the trial court was justified
  4. 4.Whether costs should follow the cause

Key legal issues

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01

Contract for services versus fixed-term contract of service

Holding

Although the parties engaged under a consultancy contract for services expiring 31 December 2023, their post-lapse conduct converted the relationship into employment protected by the Act.

Reasoning

The consultancy contract lapsed on 31 December 2023. Thereafter the employer suspended the respondent, required punctuality and adherence to workplace protocols, and engaged him orally until 2 February 2024. Under section 37 and sections 10(6) and (7), the failure to issue a written contract defining the relationship left the respondent a protected employee with rights under the Act.

p. 5
02

Procedural fairness in termination

Holding

Termination without a disciplinary hearing after suspension was unfair and unprocedural, contrary to sections 35, 41, 43 and 45 of the Act.

Reasoning

The employer suspended the respondent on 24 January 2024 and issued a termination letter on 2 February 2024 without a hearing, without reasons being explained, and without giving him a chance to respond. The burden under sections 43 and 45 was not discharged. Procedural fairness is mandatory even for gross misconduct.

p. 6
03

Quantum of compensation

Holding

The trial court's six months' compensation award was not justified; one month's compensation was appropriate given the respondent's poor work record and one month of service under the new arrangement.

Reasoning

Section 45(5) requires consideration of the employee's work record. A warning letter dated 20 September 2023 evidenced a poor record, and the respondent had served only one month after the consultancy agreement. The discretion under section 49 must be applied judicially; one month's salary was found appropriate.

p. 7
04

Costs

Holding

Costs do not follow the cause under section 12(4) of the ELRC Act; absent reasons, each party to bear its own costs.

Reasoning

Under section 12(4) of the Employment and Labour Relations Court Act, costs follow the cause unless reasons are issued for a departure. No reasons were addressed, so each party was ordered to meet its own costs for both the appeal and the trial court.

p. 7

Legal principles established

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  • Where a fixed-term contract lapses and the employer continues to engage the employee under an open oral relationship subject to its control and direction, the employee acquires rights and benefits under the Employment Act under section 37.
  • The duty to issue a written contract defining the nature of the employment relationship rests on the employer under section 10(6) and (7) of the Employment Act.
  • Procedural fairness under sections 41 and 44 of the Employment Act is mandatory even where the employee has engaged in gross misconduct.
  • The discretionary award under section 49 must be applied judicially, taking into account the employee's work record under section 45(5).

Court orders

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  1. 1.Employment terminated unfairly (declaration upheld)
  2. 2.Compensation reduced to Ksh. 25,000 (one month's salary)
  3. 3.Notice pay Ksh. 25,000
  4. 4.Each party to meet its own costs for the appeal and the trial court proceedings
  5. 5.Certificate of Service order left to stand as not contested

The bench

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

majority

Wrote the judgment

On appeal from
Milimani Chief Magistrate's Court (ELRC)
Nairobi CMELRC No. E440 of 2024
Jurisdiction invoked
First appeal to the Employment and Labour Relations Court from the trial magistrate's judgment (ELRC Appeal No. E357 of 2025)

Relief refused

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Six months' salary compensation awarded by the trial magistrate

The trial court did not justify the award; the respondent's poor work record and short service post-agreement warranted only one month's compensation

p. 7

Costs

For the appeal and trial court proceedings, each party to meet its 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.

Being left under an open relationship and continuing with his duties, he acquired rights and benefits under the Act as held in Kenyatta University v Maina
p. 6Conversion of consultancy into protected employment
The due process under Sections 41 and 44 of the Act is mandatory. Even where the employee has engaged in gross misconduct, procedural fairness is imperative.
p. 6Mandatory procedural fairness
Based on his poor work record, and the fact of the appellant failing to adhere to due process under the Act, a compensation of one month is hereby found appropriate.
p. 7Quantum of compensation
Accordingly, judgment in Nairobi CMELRC E440 of 2024 is hereby reviewed in the following terms: a) Employment terminated unfairly. b) Compensation Ksh. 25,000. c) Notice pay Ksh. 25,000. d) For the appeal and trial court proceedings, each party to meet its costs.
p. 7Final orders / disposition

Issues in the judgment

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minor

The judgment states the appellant exercised a termination right 'by notice dated 2 February 2026', conflicting with the pleaded termination date of 2 February 2024.

minor

The judgment at one point reverses the parties when describing the failure to inform of reasons.

minor

The judgment is delivered on 31 August 2026 in an appeal numbered E357 of 2025 from a judgment said to be delivered 'on 30 September' (year not stated, contextually 2024), and describes the disposition as a 'review' of the trial judgment despite being a first appeal.

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, "Ashleys Kenya Ltd v Opiyo (Appeal E357 of 2025) [2026] KEELRC 2441 (KLR)", Case Analysis (2026). ELRC Appeal No. E357 of 2025 (from Milimani MCELRC No. E0440 of 2024). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/2441/eng@2026-08-31

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