Koinange Investment & Development Limited v Wainaina & another (Civil Appeal E154 of 2023) [2026] KEELRC 184 (KLR) (28 January 2026) (Judgment)

Koinange Investment & Development Limited v Wainaina & another (Civil Appeal E154 of 2023) [2026] KEELRC 184 (KLR) (28 January 2026) (Judgment) Neutral citation: [2026] KEELRC 184 (KLR) Republic of Kenya In the Employment and Labour Relations Court at Nairobi Civil Appeal E154 of 2023 DKN Marete, J January 28, 2026 Between Koinange Investment & Development Limited Appellant and Joseph Wainaina 1st Respondent Charles Charagu Mwangi 2nd Respondent Judgment 1.This matter originated by way of Memorandum of Appeal dated 21st August, 2023. It comes out as follows;1.That the Learned Magistrate erred in law and in fact by ignoring the fact that the appelants business was affected by the closure occasioned by the COVID 19 pandemic.2.That the Learned Magistrate erred in law and in fact by ignoring that the respondents were paid for twelve (12) months which they did not work.3.That the Learned Magistrate erred in law and in fact by awarding the respondents house allowance whereas there was no contract signed by the parties and their remuneration was ail inclusive.4.The Learned Magistrate erred in law and fact by ignoring the evidence of the appellant on the reasons the claimants were sent on compulsory leave for 1? months.5.The Learned magistrate erred in law and in fact by ignoring the evidence that the appellant was not in continuous occupation of the business premises.6.The learned Magistrate erred in law and in fact by awarding the respondents already paid the respondents their salary for 12 months without any work.7.The Judgement amount is excessive and against the weight of the evidence.8.The learned Magistrate erred in law and in fact by ignoring the counter-claim by the appellant.9.It is proposed to ask the court that the entire Judgement be set-aside. 2.The Appellant prays for orders:1.That this appeal be allowed with costs.2.That the judgement and decree made on 4th August 2023 be set-aside.3.That the respondent do pay the costs of this appeal and costs of the suit in the subordinate court. 3.The Appellant case and submission is that its business was significantly affected by the COVID-19 pandemic, leading to the closure of its premises and discontinuation of operations in compliance with government directives and health considerations. During this period, the Appellant was unable to sustain its operations due to low business, which necessitated the termination of 90% of its employees, including the Respondents. The Appellant further submitted that prior to the Respondents’ termination, they had been involved in acts of gross misconduct, resulting in a one-year suspension with full pay, the conclusion of which coincided with the COVID-19 pandemic. 4.The Appellant argued that the trial court’s award of compensation to the Respondents for periods when the business was closed and generating no income imposed an unfair financial burden and amounted to penalizing the Appellant for circumstances beyond its control. It further submitted that the Respondents had been suspended for a full year due to gross misconduct and received full salaries during that period without rendering services. Consequently, the trial court’s award of ten months salary in damages resulted in double compensation and amounted to unjust enrichment. 5.On the matter of housing allowance, the Appellant referred to section 31(1) of the [Employment Act](/akn/ke/act/2007/11) 2007, which provides that an employer shall at all times, at his own expense, provide reasonable housing accommodation for each employee either at or near the place of employment, or pay a sufficient sum as rent in addition to wages or salary. The Appellant submitted that this provision does not preclude employers from providing a consolidated salary that includes a housing allowance, provided that it is fair. The Respondents, it was submitted, were consistently paid fixed monthly salaries without any express separation of house allowance and never requested a breakdown of salary to separate housing allowance. This, the Appellant argued, indicated that both parties operated under the understanding that housing allowance was included in the salary. 6.The Appellant further contended that the trial court erred in awarding house allowance without evidence that the salaries were not inclusive of it. The Respondents failed to discharge the burden of proving that house allowance was excluded from their pay. In the absence of written terms, the consistent monthly payments without dispute supported the conclusion that the salary was consolidated. 7.The Appellant relied on section 49 of the [Employment Act](/akn/ke/act/2007/11), 2007 which obligates courts to consider the extent to which an employee caused or contributed to the termination of their contract when determining the kind and quantum of relief to award. In the instant case, the Respondents’ gross misconduct leading to suspension played a significant role in the breakdown of the employment relationship, a factor the trial court disregarded. 8.The Appellant also referred to its counterclaim against the 2nd Respondent for Kshs.1,800,000, arising from unlawful collection of funds from a client and the costs incurred in hiring guards to ward off the 2nd Respondent’s vigilante group in 2019. The counterclaim was premised on acts of gross misconduct, including repeated theft and threats to Appellant’s employees. The Appellant submitted that the trial court failed to evaluate or acknowledge this counterclaim, thereby infringing its right to a fair hearing. 9.In response, the Respondents submitted that the Appellant failed to follow due procedure in effecting their dismissal, which amounted to an infringement of their labour rights. They further contended that the Appellant did not prove financial difficulties during the COVID-19 pandemic, merely asserting that operations were stopped due to lockdown which they claimed was an after the fact justification for termination. 10.The Respondents submitted that they had been sent on leave for close to one year and subsequently dismissed on account of redundancy, yet the Appellant failed to provide evidence of economic challenges necessitating such redundancy, or to follow the mandatory procedures under section 40 of the [Employment Act](/akn/ke/act/2007/11), 2007. They contended that the Appellant did not meet statutory requirements for termination due to redundancy, despite their having served faithfully for over ten years. Consequently, the award of ten months’ salary as compensation was justified due to the sudden termination without notice or due process. 11.Regarding housing allowance, the Respondents submitted that the Appellant failed to produce pay slips evidencing payment of house allowance. None of their pay slips or contracts provided for payment of house allowance or consolidated salary, contrary to section 31(1) of the [Employment Act](/akn/ke/act/2007/11), 2007. They submitted that the Appellant was required to prove that the reason for termination was valid, fair, and based on operational requirements. The failure by the Appellant to do so rendered the termination unfair under section 45(2)(b)(i). 12The Respondents further submitted that the 2nd Respondent had not received any disciplinary action prior to compulsory leave and that allegations against him were unfounded. The Appellant produced no evidence of a disciplinary hearing or formal charges. The Respondents submitted that the learned magistrate considered all issues raised, including the Appellant’s submissions and made a full and comprehensive evaluation of the case. 13.This appeal is anchored on the respective cases of the parties, the evidence and support documents in respect of the same. The court has noted the various witness statements of the parties which bring out very contrasting cases for the Appellant and the Respondent. 14.The Appellant from day one present a case of malfeasance or misconduct by the Respondent throughout their employment by the Appellant leading to lots of misunderstanding culminating in a long period of leave pending investigations into allegation of stealing monies by way of parking fees by the claimant. The close of the twelve months leave coincided with the outbreak of the Covid 19 pandemic which lead to a closure of the business and therefore release of all employees as there was nothing to do. The business had been rendered irrelevant in the circumstances. 15.The Respondent case and evidence paint a rosy picture of an employment relationship that was messed up by the Appellant’s hard handedness. This was by declaring the 1st Respondent redundant and the 2nd Respondent dismissed without following the procedure provided for under sections 40 and 41 of the [Employment Act](/akn/ke/act/2007/11), 2007 as read with section 45 thereof. Whereas this may seem the case, it is clear that the Appellant do not adduce any documentary evidence of their employment, term of employment or termination of employment whatsoever. Their list of documents numbered 1 – 9 in support of the claim are not included as documents in the Record of Appeal. Of particular notation is the absence of the payslip marked as Appendix 1 of the Statement of Claim referred to at paragraph 6 of the Reply to the Respondent’s Statement of Defence. This renders the appeal defective for being incomplete. It does not come in as material for effective determination for want of form. A sad case for the appeal. 16.Overall, the trial court found that the termination of the 1st Respondent on account of retrenchment was unlawful and procedurally irregular, as the Appellant failed to adhere to the mandatory procedure under section 40 of the [Employment Act](/akn/ke/act/2007/11), 2007 a fact not disputed by the Appellant. The Appellant failed to produce evidence showing compliance with section 40 and merely asserted financial strain without supporting proof. 17.It is well-settled law that termination must be both substantively and procedurally fair, as held in Walter Ogal Anuro v Teachers Service Commission [2013] eKLR. The trial court considered the impact of COVID-19 but correctly assessed that procedural fairness in terminating the Respondents was paramount and had not been demonstrated. 18.The trial court did not ignore or sideline the Appellant’s counterclaim. In addressing the 2nd Respondent’s termination for alleged gross misconduct, the learned magistrate noted:“…my view that these allegations amount to criminal in nature, and throughout the case of the Respondent, there is nowhere indicated that there was a complaint made either to police or elsewhere concerning the matter.” 19.Further, no evidence was produced to show that the 2nd Respondent underwent disciplinary proceedings as required under section 41 of the [Employment Act](/akn/ke/act/2007/11), 2007. This issue was therefore addressed, considered and determined. 20.On the issue of house allowance, section 31 provides that an employer must provide housing or a sum sufficient to obtain accommodation, but this does not apply where the contract consolidates wages or is covered by a collective agreement. The Appellant did not produce the Respondents’ contracts or payslips to demonstrate consolidation of salary. No credible evidence whatsoever was adduced by the Appellant to support their claim of a consolidated salary payment. 21.The Appellant averred that Respondents were unlawfully awarded salaries and benefits during their 12-month leave. However, the Respondents produced a letter dated 24th May 2019 instructing them to proceed on annual leave and that they would be contacted when to resume duties. There was no evidence that this constituted compulsory leave and the Appellant’s contention therefore fails. 22.On the issue of damages, the Court is guided by Nyamwaya v Moraa (Civil Appeal E002 of 2021) [2022] KEHC 14463 (KLR) and Bashir Ahmed Butt v Uwais Ahmed Khan [1982-88] KAR 5, which held that assessment of general damages rests in the discretion of the trial court and appellate courts may interfere only where the trial court misapplied principles or misapprehended the evidence, resulting in an inordinately high or low figure. The trial court did not err in awarding damages, and there is no evidence of misapprehension or wrong principle applied. 23.It is this court’s finding and conclusion that the trial court’s award was based on a full evaluation of the evidence and proper application of law. The Appellant has not demonstrated grounds for this court to interfere with the award. 24.I am therefore inclined to dismiss the appeal with costs to the Respondents. **DELIVERED, DATED AND SIGNED THIS 28 TH DAY OF JANUARY 2026.****D. K. NJAGI MARETE****JUDGE** Appearances:Miss Waitere instructed by Kangethe Waitere & Company Advocates for Appellant.Miss Kimani hold brief for Nyabena instructed by Nyabena Alfred & Company Advocate for the Respondent.