Citi Bus Limited v Nene (Employment and Labour Relations Appeal E003 of 2025) [2026] KEELRC 51 (KLR) (23 January 2026) (Judgment)

REPUBLIC OF KENYA IN THE EMPLOYMENT AND LABOUR RELATIONS COURT AT NAIROBI ELRCA NO. E003 OF 2025 CITI BUS LIMITED……………………………………………APPELLANT -VERSUS- MARTIN MBUGUA NENE……………………..…………… RESPONDENT (Being an appeal from the Judgment and Decree of Principal Magistrate D.O Mbenja delivered on the 16th December, 2024 in MCELRC 919 of 2019) JUDGMENT 1. Through the Amended Memorandum of Appeal dated 22nd September, 2025 the Appellant appeals against the Judgment of Principal Magistrate D.O Mbenja. 2. The Appeal was based on the grounds that: i. The Presiding Trial Magistrate erred in fact and in law in awarding inordinately excessive damages for unfair termination and other terminal benefits such as statutory under payments (minimum wage balance), house allowance, notice and leave arbitrarily and without any legal basis in total disregard of the evidence tendered and well-established legal principles guiding the same and law. ii. The Learned Magistrate erred in law and in facts and misdirected himself in disregarding the evidence, the submissions and the authorities which were tendered by the Appellant’s Advocates in support of the Appellant’s case. iii. The Learned Magistrate erred in law and in facts by failing to appreciate that the Respondent herein had not discharged the burden of proof placed upon him and did not prove his case on a balance of probability. JUDGMENT APPEAL NO. E003 OF 2025 1 iv. The Learned Magistrate erred in law and in facts in failing to consider the Appellants case and in failing to consider the Appellant’s counterclaim which was not opposed by the Respondent. v. The decision rendered against the Appellant on the 16th day of December 2024 is against the law and the weight of Evidences adduced by the Appellant and has resulted into a total miscarriage of Justice. vi. The Learned Magistrate erred in law and in fact by awarding the Respondent twelve (12) months maximum compensation for unfair termination when it was proved that he was dismissed on fair and valid reasons. 3. The Appellant prayed that the judgment rendered against the Appellant on the 16th December 2024 by Hon. D.O Mbeja (P.M) be set aside, the appeal be allowed and judgment be entered for the Appellant as was sought in its Counterclaim and that the costs of this Appeal and of the Proceedings in Milimani ELRC Case No.919 of 2019 be awarded to the Appellant. 4. The Appeal was disposed of by written submissions. APPELLANT’S SUBMISSIONS 5. The Appellant’s Advocates Maosa & Co. Advocates filed written submissions dated 22nd September, 2025. 6. Counsel on grounds 2,3 and 4 submitted that the Respondent was an employee of the Appellant from the period commencing 1st January 2016 to 1st August 2018 and thus served for a total of 32 months herein earning a monthly salary of Kshs, JUDGMENT APPEAL NO. E003 OF 2025 2 20,000/= all inclusive. Counsel submitted that the Learned Trial Magistrate erred in law and in fact by awarding the Respondent Kshs. 340,064.00/- as minimum wage balance without any justification. That the Respondent placed reliance on the Regulation of Wage Order 2018 to prove that he was underpaid. 7. Counsel submitted that the trial Magistrate failed to appreciate that the said Regulation Order 2018 came into operation on 19th December 2018 and by the said date, the Respondent had ceased employment with the Appellant. That it was a cardinal principle of law that the law does not operate retrospectively. 8. Counsel relied on the case of Nairobi ELRC Civil Appeal No. E036 of 2022 Citi Bus Limited v James Gachanja Muriuki (unreported) to submit that the Respondent did not produce Wages Orders for the years before 2018 to prove that he was underpaid by the Appellant during those years. The award of Kshs 340,064/= as underpayments should therefore be set aside. 9. On the issue of whether the trial magistrate erred by awarding the Respondent notice pay of Kshs. 30,627.00/-, counsel JUDGMENT APPEAL NO. E003 OF 2025 3 submitted that the notice pay awarded was the monthly salary of a driver of heavy commercial motor vehicle as per the Regulation of Wages Order 2018 relied upon by the Respondent yet this Order could not be relied upon since it came into operation after the Respondent had ceased employment with the Appellant. 10. Counsel submitted that the Respondent admitted to driving a medium sized motor light van to ferry hotel staff and that since he failed to prove that he was underpaid by the Appellant, the Respondent ought to have been awarded Kshs. 20,000/- which was his monthly salary in lieu of Notice. 11. On the issue of whether the trial court used an erroneous formula in the award for leave days, counsel relied on Section 28 of the Employment Act 2007 and the case of Nairobi ELRC Civil Appeal No. E036 of 2022 Citi Bus Limited v James Gachanja Muriuki (unreported), to submit that annual leave is at the rate of 21 days per year or 1.75 days per month hence the Respondent was entitled to an award of Kshs.43,076/- and not Kshs.79,630/- JUDGMENT APPEAL NO. E003 OF 2025 4 12. On the issue of whether the trial magistrate erred in the award of house allowance, counsel submitted that the magistrate failed to appreciate that no evidence was presented by the Respondent to justify the award for house allowance. That the Respondent earned a monthly salary of Kshs 20,000/= all inclusive. 13. On grounds 7 and 8 on the issue of whether the trial Magistrate failed to consider the Appellants case and counterclaim, counsel submitted that the Appellant produced the Regulation of Wages Order 2015, which had set the salary of such driver of the calibre of the Respondent at Kshs.18,598/= to prove that the Respondent was overpaid by the Appellant from January 2016 to May 2017. 14. Counsel submitted that the Appellant had to cater for the cost of hiring an alternative driver after the Respondent absconded duty. That the trial court erred by not considering the Appellant’s counterclaim yet it was not controverted. That the court should allow the counterclaim. 15. On ground 9 on the issue of whether the learned magistrate erred by awarding the Respondent 12 months maximum JUDGMENT APPEAL NO. E003 OF 2025 5 compensation for unfair termination, counsel submitted that the termination of the Respondent’s employment was based on fair and valid grounds in that evidence was adduced on him being liable for reckless driving, insubordination and desertion of duty. 16. Counsel submitted that the Appellant produced before the trial court an email dated 19th December, 2017 which was a complaint against the Respondent for reckless driving from the client he was designated to serve. 17. Counsel submitted that the trial Magistrate also failed to appreciate the evidence of RW2 Duncan Macharia who was the Respondent’s supervisor and who testified that the Respondent was also arrested for reckless driving during this incident that prompted the client to notify his employer of his misconduct through the said email and further that the Respondent was also insubordinate to him in that he could not take lawful commands from RW2 within his scope of duty. 18. Counsel submitted that from the above evidence the trial court failed to appreciate that the character of the Respondent had been impeached and the Appellant had formed fair and JUDGMENT APPEAL NO. E003 OF 2025 6 valid grounds to dismiss the Respondent from employment. Counsel relied on among other cases, the case of Kenya Commercial Bank Limited vs Thomas Nyangi Mwita (2019) KLR to submit that it was trite law that where an employee had contributed by his conduct to his dismissal, the said employee was not entitled to maximum compensation for unfair termination but a token sum. RESPONDENT’S SUBMISSIONS 19. The Respondent’s Advocates, Lemmy Regau & Co. Advocates filed written submissions dated 24th October, 2025. Counsel relied on the case of Abok James Odera t/a AJ Odera & Associates v John Patrick Machira t/a Machira eKLR on the role of the first appellate court. 20. On the issue of whether the trial court erred by awarding the prayers as were sought by the Respondent which the Appellant deemed as inordinately too high, counsel submitted on the minimum wage balance that the Respondent had tabulated his claim as a heavy commercial driver but during the hearing it JUDGMENT APPEAL NO. E003 OF 2025 7 came out clearly that he was driving a medium sized vehicle. That he was paid a monthly salary of Kshs 20,000/= yet the Regulation of Wages(General) (Amendment) Order 2017 set a monthly minimum wage for a medium sized vehicle at Kshs 21,942/= which took effect from May 2017 to April 2018 when the same was revised to Kshs 23,039/= per month until cessation of employment in August 2018.That the Respondent acknowledges that the trial court erred in law to some extent and prayed that award for the minimum wage balance be substituted with Kshs.35,460/=. 21. Counsel submitted that the Appellant did not dispute the issue of the leave days being awarded but only disputed the calculations the trial court used. That the trial court’s award for leave days should be substituted with Kshs. 45,463/= as per minimum wage regulations above. 22. On the claim for house allowance counsel relied on Section 31 of the Employment Act to submit that House Allowance was a statutory requirement and did not require an employee’s proof that he/she was entitled to it. That an employer must either provide accommodation directly or offer a fair and JUDGMENT APPEAL NO. E003 OF 2025 8 adequate sum to the employee as rent. This was designed to ensure that employees are able to live in reasonable conditions without incurring undue financial strain. 23. Counsel relied on Section 10(7) of the Employment Act to submit that the Appellant should have provided a copy of the Respondent’s employment contract to demonstrate that the salary paid included a housing allowance. The Appellant failed to meet this burden and as a result, the trial court correctly determined that the Respondent was entitled to the claim for housing allowance. 24.Counsel submitted that the award for House Allowance be substituted with Kshs. 101,319/= as per minimum wages since the minimum wage was exclusive of housing allowance. 25.Counsel submitted that the claim for Notice pay should be substituted with Kshs. 23,039/= which was the applicable minimum wage at the time of the Respondent’s termination in August 2018. 26.On the award for compensation for unfair termination counsel relied on the case of Kimathi v Ericsson Kenya Limited (Civil Appeal 601 of 2019) [2023] KECA 106 (KLR) and JUDGMENT APPEAL NO. E003 OF 2025 9 Section 49(1)(c) of the Employment Act to submit that the award of 12 months’ salary as compensation was well within the discretion of the trial court. The Appellant had not demonstrated any misdirection in law, misapprehension of fact, or any improper exercise of discretion to warrant interference by this Honourable Court. 27. On the issue of whether the trial court considered the Appellant’s case and counterclaim, counsel submitted that it was true as stated in the counterclaim that the Claimant was receiving a wage above the minimum prescribed amount. 28. Counsel submitted that the law only establishes a minimum wage and did not mandate a fixed or specific wage. The Appellant could not therefore claim the excess amount paid to the Respondent, as it was the employer’s decision to set the salary above the minimum wage and further there was no legal provision that allowed for the recovery of any excess payment made voluntarily by the employer. 29. Counsel submitted that the Appellant’s counterclaim also raised the issue of a sum of Kshs.20,000/- that the Appellant alleges was incurred as an expense for hiring an alternative JUDGMENT APPEAL NO. E003 OF 2025 10 driver. That the Appellant despite making this allegation, failed to provide any substantial evidence in support of the claim during the trial. The Appellant did not present any documentation, such as a payslip or proof of payment to the alternative driver, to substantiate the alleged expense. 30. Counsel submitted that the court should uphold the trial court’s decision to reject the counterclaim as the claim remained unproven, as no verifiable evidence was offered at the trial. DETERMINATION 31. The court has considered the pleadings and submissions filed by the both parties herein and proceeds to state as follows: It is now settled law that the duty of the first appellate court is to re-evaluate the evidence in the subordinate court both on points of law and facts and come up with its own findings and conclusions as was held in Court of Appeal for East Africa in Peters –vs- Sunday Post Limited [1958] EA 424. The appropriate standard of review JUDGMENT APPEAL NO. E003 OF 2025 11 established in cases of appeal can be stated in three complementary principles: i. First, on first appeal, the Court is under a duty to reconsider and re-evaluate the evidence on record and draw its own conclusions; ii. In reconsidering and re-evaluating the evidence, the first appellate court must bear in mind and give due allowance to the fact that the trial court had the advantage of seeing and hearing the witnesses testify before her; and iii. It is not open to the first appellate court to review the findings of a trial court simply because it would have reached different results if it were hearing the matter for the first time. 13. In this case, the Judgment of the trial court was that judgment was entered in favour of the Claimant against the Respondent finding the termination to be unfair while allowing all the claims sought by the Claimant which was underpayments at Kshs 340,064/=, notice pay at Kshs 30,627/=, leave days at Kshs 79,630/=, house allowance Kshs 143,334/= and Compensation for unfair termination at 12 months’ salary at Kshs 961,179/=. The Appellant appeals on the whole of the Judgment fronting 6 grounds of appeal which this court will frame in to two issues. That is: i. Whether the trial court erred by finding that Respondent’s termination of employment was unfair and unlawful JUDGMENT APPEAL NO. E003 OF 2025 12 ii. Whether the trial learned Magistrate erred in awarding the Respondent his terminal dues and disallowing the Appellant’s counterclaim. Whether the trial court erred by finding that Respondent’s termination of employment was unfair and unlawful 14. The Appellant never disputed employing the Respondent but the dispute was on how he left the Employment. The Appellant alleged that there were complaints from the clients that the Respondent was driving recklessly and that the Respondent absconded duties when he was supposed to face disciplinary processes from 1st August, 2018. The Respondent alleged that he was orally terminated without notice and reason. The trial court found that the Respondent had proved his burden of proof that he was unfairly terminated and that the Appellant did not prove that the Respondent absconded duties hence unfairly terminated. 15. The court agrees with the trial court on this position that the Appellant ought to terminate the Respondent for valid reasons and a fair procedure ought to be followed in the process. JUDGMENT APPEAL NO. E003 OF 2025 13 16. The courts have always held that for termination to pass fairness test there should be both substantive and procedural fairness. This court refers to the holding in the case of Janet Nyandiko versus Kenya Commercial Bank Limited (2017) eKLR among others. 17. This court is of the view that in as much as the Respondent had a duty under section 47(5) of the Employment Act to prove that termination occurred the trial court was right to find that the Respondent illustrated that the termination had occurred and the burden shifted to the Appellant to illustrate that the reasons for the termination were fair under the said provision. 18. The Appellant alleged that the Respondent absconded duties from of 1st August,2018 when he was supposed to face the disciplinary hearing on allegations of reckless driving and insubordination. The Appellant did not prove the allegations of reckless driving and insubordination since no investigation report was tendered and relied on the defense of absconding of duties. Under Section 44(4) (a) of the Employment Act 2007, absconding duty by an employee JUDGMENT APPEAL NO. E003 OF 2025 14 constitutes gross misconduct and renders an employee liable for summary dismissal. The Appellant relied on the defence of desertion that the Respondent had no intention of returning to the place of work. 19. The Appellant had a duty under section 43 and 47(5) of the act to justify the grounds of termination and demonstrate the reasons were fair and valid which would lead to unfair termination under section 45 of the Act if there was no valid reasons and the procedure followed was unfair. 20. On the issue of desertion the court is well guided by the sentiments in the case of Stanley Omwoyo Onchweri v Board of Management Nakuru YMCA Secondary School [2015] eKLR, where the court held that:- 18. Desertion can only take place where an employee leaves employment with the intention of not returning or formulating such intention not to return after leaving. Such intention may be demonstrated by showing absence of communication from the employee, duration of absence, impact of the absence and nature of employee’s duties. 21. This court has in a number of times pronounced itself on issues of absconding of duties by an employee with recent case of Owudu v Digital Sanitation Services Limited (Appeal E109 of 2023) JUDGMENT APPEAL NO. E003 OF 2025 15 [2024] KEELRC 917 (KLR) (18 April 2024) (Judgment) holding as follows:- 17.First, an employee does not terminate his employment in a case of alleged abscondment. When faced with an employee who fails to attend work, the employer must issue notice to the employee to render an account over his misconduct. Where the employee persists and fails to abide by such directions, the employer is required to issue notice terminating employment or summary dismissal through the last known address of the employee. 18.Further, under Section 18(5) (b) of the Act, where the employer cannot trace the employee, notice must be issued to the Labour Officer and any terminal dues deposited in such office. Then, the employer has undertaken its legal duty to properly end employment. 22. In this particular case no notice was issued to the Respondent upon absconding duty or to the Labour office and his terminal dues deposited therein. In addition, if the Respondent absconded duties the Appellant did not demonstrate that it commenced any disciplinary action against the Respondent under Section 41 of the Employment Act after he allegedly failed to report on duty. 23. In Joseph Nzioka v Smart Coatings Limited [2017] eKLR Nduma J. observed that “Dismissal on account of absconding must be preceded by evidence showing that reasonable attempt was made to contact the employer concerned and that a show cause letter was issued to such employee calling upon such employee to show cause why his services should not be terminated on account of absconding duties.” JUDGMENT APPEAL NO. E003 OF 2025 16 24. In this present case, the Appellant did not illustrate any efforts of contacting the Respondent to inform him that they were considering terminating his service due to absconding of duties. The court is not satisfied that the Appellant has on a balance of probabilities discharged its onus of establishing that the Respondent absconded/deserted duty. The Appellant did not issue any show cause letter to the Respondent hence it also failed on the procedural fairness under section 41. This court agrees with the trial court finding that the Appellant terminated the Respondent’s services unfairly. Whether the trial learned Magistrate erred in awarding the Respondent his terminal dues and disallowing the Appellant’s counterclaim. 25. The trial court having found the termination to be unfair it was justified in awarding damages for unfair termination. On the issue of the trial court awarding the Respondent the maximum 12 months’ the Appellant felt this was excessive in the circumstances. 26. This court as an appellate court can only interfere with such discretion if there was an error on some matters leading to JUDGMENT APPEAL NO. E003 OF 2025 17 erroneous decision as was held on the case of Kenya Revenue Authority & 2 others v Darasa Investments Limited (2018) eKLR where the court held; The court ought not to interfere with the exercise of discretion unless it is satisfied that the Judge misdirected himself in some matter and as a result arrived at a wrong decision, or that it be manifest from the case as a whole that the judge was clearly wrong in the exercise of discretion and occasioned injustice. 27. This court will therefore disturb the awards of such nature if it is proved that the trial court misdirected itself in some matter hence arriving at a wrong decision. This court notes that the award of compensation is discretionary on the court but the court should be guided by considerations set out under section 49(4) of the Employment Act in awarding the damages herein. 28. The court notes that the trial court failed to properly justify the reasons for the maximum compensation as was held in the Court of Appeal in Kenya Broad casting Corporation v Geofrey Wakio(2019) eKLR that; [22] This Court has established the rule that an award of the maximum 12 months’ pay must be based on sound judicial principles. In Ol Pejeta Ranching Limited vs. David Wanjau Muhoro [2017] eKLR this Court categorically stated that the trial Judge must justify or explain why a claimant is entitled to the maximum award; that the exercise of discretion must not be capricious or whimsical. JUDGMENT APPEAL NO. E003 OF 2025 18 29. This court while aware of the considerations under section 49(4) of the Act takes cognizance of the length of service of the Respondent which was a short duration of 32 months, the nature of the termination which was unfair and sets aside the maximum compensation and awards the respondent 4 months salary as compensation for unfair termination. 30. This court also agrees with counsel for the Respondent that at the time of cessation of employment in August 2018 the right minimum wage was as provided by the Regulation of Wages (General)(Amendment) Order, 2018 was Kshs 23,039/= for a medium sized vehicle. This was not a disputed fact since during hearing the Respondent acknowledged this fact. 31. The award of one-month salary pay in lieu of notice was also justified after finding the Respondent was unfairly terminated without notice as provided for under section 36 of the Employment Act. However, the same should be at Kshs 23,039/= not Kshs 30,627/= awarded by the trial court as illustrated above since this was the last salary. JUDGMENT APPEAL NO. E003 OF 2025 19 32. On the claims for underpayment, leave pay and housing allowance this court appreciates that they are continuing injuries which the Claimant must file their suit within 12 months after cessation of employment as per section 90 of the Employment Act. This court notes that the employment relationship herein ended in August,2018 and the claim was filed in May, 2019 which was within 12 months as required. 33. In among other cases the court of Appeal in G4S Security Services (K) Limited v Joseph Kamau & 468 others [2018] eKLR the court held as follows:- Regarding ‘a continuing injury’, the proviso to Section 90 of the Employment Act requires that the claim be made within 12 months next after the cessation thereof. The learned Judge did not determine when the continuing injury ceased, for purposes of computing the twelve month period. In the absence of a defined period, the learned Judge erred in concluding that the claims had no limitation of time. Further, upon the claimant’s dismissal, any claim based on a continuing injury ought to have been filed within one year failing which it was time barred. 34. On the claim for underpayments although the Respondent only produced the 2018 Regulations this court will agree with counsel for the Respondent that the Regulation of Wages (General) (Amendment) Order 2017 set the minimum wage at Kshs 21,942/= which took effect in May 2017 to April 2018. The Regulation of Wages (General) (Amendment) JUDGMENT APPEAL NO. E003 OF 2025 20 Order 2018 took effect from May to August 2018. This court therefore substitutes the underpayment from Kshs 340,064/= to Kshs 35,460/=. 35. On the claim for leave pay which the Appellant was not opposed to but was opposed to the calculations this court appreciates that leave is an entitlement of an employee under section 28 of the Employment Act. The Appellant as the custodian of employment records under section 74 ought to have produced records showing the Respondent proceeded on leave. Failure to tender such evidence leads to the conclusion that the Respondent was entitled to the said leave. This court therefore agrees with the trial court on this position but substitutes Kshs 79,630/= awarded by the trial court with Kshs 45,463/= as calculated by the Respondent’s counsel as per the respective minimum wage regulations. 36. On the claim for housing allowance this court is of the view that the Appellant produced a payslip which showed the salary as gross without any housing allowance. The JUDGMENT APPEAL NO. E003 OF 2025 21 Appellant ought to have produced the employment contract showing the pay was consolidated. 37. In addition, the minimum wages were exclusive of housing allowance hence the Respondent was entitled to the same as provided for under section 31 of the Employment Act. Without any proof this court agrees with the trial court however the same should be calculated as per the minimum wages as counsel for the Respondent calculated and the trial court award of Kshs 143,334/= is set aside to Kshs 101,319/=. 38. On the Appellant’s claim for the counterclaim this court finds that after finding the Respondent was unfairly terminated the Appellant could not turn back and request for amounts paid to alternative driver which in any case was not proved with precision. On the claim for overpaid salary between January 2016 to May 2017 this court is of the view that the Respondent was paid a constant salary all along as agreed by the parties and where the factors favours the employee the employer should not turn around to claim overpayment after cessation of employment. JUDGMENT APPEAL NO. E003 OF 2025 22 39. This court therefore just like the trial court disallows the counterclaim by the Appellant. 40. In the upshot the Appeal partially succeeds as follows: - a. 4 months’ salary as compensation for unfair termination @23,039 x 4………………………..Kshs 92,156/= b.Notice pay……………………………Kshs 23,039/= c. Underpayments ……………………Kshs 35,460/= d.Leave pay…………………………….Kshs 45,463/= e. Housing allowance…………….….Kshs 101,319/= TOTAL…………………………….… KSHS 297,437/= f. Each party to bear the costs of the Appeal. 41. It is so ordered. Dated at Nairobi this 23rd day of January 2026 Delivered virtually this 23rd day of January 2026 Abuodha Nelson Jorum Presiding Judge-Appeals Division JUDGMENT APPEAL NO. E003 OF 2025 23