A. INTRODUCTION AND BACKGROUND
1. This is a first appeal from the Judgment of Hon. Lewis K. Gatheru, Principal Magistrate, delivered on 9th June, 2025 in Mombasa Chief Magistrate's Court ELRC Cause No. E795 of 2023, in which the trial court dismissed in its entirety claims filed by the three Claimants (now the Appellants) against the Respondent, Kensalt Limited, and ordered that each party bear its own costs.
2. The Appellants had sought, before the trial court, a declaration that their dismissal from employment was unfair and wrongful, together with terminal dues computed at Kshs. 3,530,518.38, Kshs. 2,599,683.28 and Kshs. 2,168,286.47 in favour of the 1st, 2nd and 3rd Appellants respectively, comprising one month's pay in lieu of notice, house allowance, unpaid leave days, compensation for unlawful termination, unpaid overtime, unpaid NHIF contributions and service pay, together with costs and interest.
3. The trial court framed the issue for determination as being whether the Appellants were employed as piece-rated workers or as permanent employees. The learned trial magistrate held that no contract of service had been produced in evidence, that the primary burden of proving the existence of an employment relationship lay on the Appellants, and that they had failed to discharge that burden. He accordingly found that there was no employer-employee relationship between the parties, that the question of unfair termination could therefore not arise, and dismissed the suit in its entirety together with all reliefs sought.
4. Aggrieved, the Appellants filed a Memorandum of Appeal dated 19th June, 2025, and prosecuted the appeal by way of written submissions dated 19th January, 2026. The Respondent opposed the appeal by written submissions dated 4th February, 2026, and additionally adopted, in their entirety, its submissions filed before the trial court on 5th March, 2025.
B. THE GROUNDS OF APPEAL
5. The appeal, as set out in the Memorandum of Appeal and elaborated in the Appellants' written submissions, is premised on the following grounds, namely that the learned trial magistrate erred in law and in fact:
(a) in finding that the Appellants failed to establish an employer-employee relationship with the Respondent, despite what the Appellants describe as overwhelming evidence, including the undisputed fact that they were engaged and paid by the Respondent and were arrested while working at its premises;
(b) in failing to scrutinize the documentary evidence filed by both parties and in relying solely on the oral testimony of the Respondent's witness, which the Appellants contend was false ab initio;
(c) in wholly disregarding the Appellants' submissions on fact and law;
(d) in failing to appreciate that even if the Appellants were piece-rated employees, they remained entitled to their terminal dues as a matter of law;
(e) in disregarding the evidence tendered by the Appellants to prove their entitlement to terminal dues upon what they contend was an unlawful dismissal from work; and
(f) in denying the Appellants their terminal dues despite what they contend was an unlawful dismissal from employment.
C. THE RESPONDENT'S GROUNDS OF OPPOSITION
6. The Respondent's opposition to the appeal, as set out in its written submissions, may conveniently be summarised as follows:
(a) that being a first appeal, the duty of this Court is to re-evaluate and re-analyse the pleadings and evidence on record and to arrive at its own independent conclusions, bearing in mind that it is the trial court, and not this Court, which had the singular advantage of seeing and hearing the witnesses testify;
(b) that the learned trial magistrate correctly evaluated the evidence on record together with the parties' respective submissions, correctly applied the law, and arrived at the correct conclusion in dismissing the suit;
(c) that it is a serious matter for an appellate court to disturb a trial court's findings of fact, that such interference is warranted only where it is shown that the trial court applied wrong principles, considered irrelevant matters, or failed to consider relevant matters resulting in a plainly wrong decision, and that the burden of so demonstrating lies on the Appellants, who, save for merely restating the facts and the law already canvassed before the trial court, have not shown this Court exactly how the trial court fell into error;
(d) that the onus of proving the existence of an employer-employee relationship lay, both before the trial court and on this appeal, on the Appellants, who never produced any documents to prove that they were permanent employees of the Respondent, and that the trial court was correct in declining to require the Respondent to prove a negative; and
(e) that the appeal ought accordingly to be dismissed with costs.
D. THE DUTY OF THE FIRST APPELLATE COURT
7. It is trite, and this Court reminds itself, that as a first appellate court it is under a duty to re-evaluate, re-analyse and re-consider the evidence adduced before the trial court afresh, and to arrive at its own independent conclusions of both fact and law, while making due allowance for the fact that it neither saw nor heard the witnesses testify (see Selle & Another v Associated Motor Boat Company Ltd & Others [1968] EA 123). It is only where the trial court's findings are shown to be based on no evidence, or on a misapprehension of the evidence, or where the trial court is demonstrated to have applied wrong principles in arriving at those findings, that this Court will be justified in disturbing the same. It is with this principle firmly in mind that this Court has proceeded to re-evaluate the record of appeal, the rival submissions, and the applicable law.
E. ISSUES FOR DETERMINATION
8. Arising from the grounds of appeal, the rival submissions and the record before this Court, the following issues fall for determination:
(i) Whether the learned trial magistrate erred in holding that no employer-employee relationship existed between the parties;
(ii) Whether, upon a proper application of section 47(5) of the Employment Act, 2007, the Appellants discharged the burden placed upon them;
(iii) Whether the Appellants worked continuously for the Respondent, and the effect of the Respondent's failure to lead evidence displacing that assertion;
(iv) The effect of the Respondent's failure to controvert the Appellants' assertion that the Respondent's operations were not dependent on a single production source;
(v) Whether the termination of the Appellants' employment was fair, both substantively and procedurally;
(vi) Whether, and to what extent, the Appellants are entitled to the reliefs sought; and
(vii) Who should bear the costs of the suit and of this appeal.
F. ANALYSIS AND DETERMINATION
(a) Whether an employer-employee relationship existed
9. The starting point of the trial court's reasoning was that "there is no contract of service that has been produced in court" and that the primary duty to prove the existence of an employment relationship lay on the claimant. With the greatest respect to the learned trial magistrate, while that general proposition of law is unassailable, the trial court fell into error in the manner in which it applied the proposition to the peculiar facts of this case, for it overlooked a critical and repeated admission running through the entirety of the Respondent's own pleadings and evidence: that the Respondent engaged the Appellants, and paid them, on a piece-rate basis.
10. It is important to appreciate what "piece work" means in law. Section 2 of the Employment Act, 2007 defines piece work as "any work the pay of which is ascertained by the amount of work performed irrespective of the time occupied in its performance," while section 18(1) of the Act expressly regulates "a contract of service entered into under which a task or piece-work is to be performed by an employee" and prescribes when such an employee is entitled to be paid. The very language of section 18 presupposes, and affirms, that a piece-rate worker is an employee engaged under a contract of service; piece rate is merely a mode of computing remuneration and is not a status that exists outside, or in the absence of, a contract of service. This distinction was correctly appreciated by the Court of Appeal in Krystalline Salt Limited v Kwekwe Mwakele & 67 Others [2017] eKLR — a case, coincidentally, concerning another salt manufacturer — where the Court observed that "in a piece work or, as it is sometimes called, piece rate arrangement, the emphasis is on the amount of work and not the time expended in doing it... An employee under piece work arrangement, though not entitled to all or some of the benefits of the other forms of employment, is at least entitled to minimum wage." That authority proceeds on the settled premise that a piece-rate worker is, first and foremost, an employee, entitled at the very minimum to statutory protection, albeit with modified entitlements appropriate to the piece-rate mode of engagement.
11. In the present case, the Respondent's own witnesses — Caleb M. Kamote in his witness statement, and Rodgers Birai in his testimony — both stated in terms that "the respondent is a salt manufacturer... during the seasonal production and manufacturing season, it employs conveyor packers and stackers... their payments are piece-rated." The Respondent went further and exhibited numerous cash payment vouchers and wage lists bearing the Appellants' own names, reflecting sums paid to them individually, described in the narration as payment "to Main Conveyor stackers" or "conveyor packers," together with cash advances deducted against their future wages. This is not, with respect, the posture of a stranger denying any dealing whatsoever with the Appellants; it is an unambiguous admission that the Respondent engaged the Appellants to perform work for it, under its direction, at its premises, within its production teams, and remunerated them for that work. That is the very essence of a contract of service, whatever mode the parties may have adopted for computing the wage payable under it.
12. The various tests developed at common law, and adopted by our courts, for determining whether a relationship is one of employer and employee — the control test, the integration test, the test of economic reality, and the test of mutuality of obligation, helpfully summarised by Ongaya J. in Stanley Mungai Muchai v National Oil Corporation of Kenya [2012] eKLR, drawing on Deakin and Morris, Labour Law — exist to assist a court in cases where the existence of the relationship is genuinely in controversy. Where, as here, a party has admitted engaging another to perform work for reward, resort to those tests to conclude that no relationship at all existed is an inversion of their true purpose. The only question that remained genuinely open on the pleadings and the evidence was the category of employment — casual, piece-rated, or permanent — and, correspondingly, which statutory entitlements followed from that category; it was never seriously in issue whether an employment relationship existed at all. I find that the learned trial magistrate conflated these two distinct questions, and in so doing arrived at a conclusion that is not supported by, and indeed runs contrary to, the Respondent's own pleaded case and evidence. This ground of appeal succeeds.
(b) The burden of proof under section 47(5) of the Employment Act
13. Section 47(5) of the Employment Act provides that in any claim arising out of termination of a contract, the burden of proving that the termination was unfair rests on the employee, while the burden of justifying the grounds of termination rests on the employer. The proper interpretation of this provision, now well settled, is that the employee's evidential burden is a modest one: he need only place before the court prima facie evidence that a termination occurred and that it did not fall within the four corners of section 45 of the Act (Galgalo Jarso Jillo v Agricultural Finance Corporation [2021] eKLR; Josephine M. Ndungu & Others v Plan International Inc [2019] eKLR). Once that threshold is met, the persuasive burden shifts to the employer to justify both the substantive reason for the termination and the procedure by which it was effected (Muthaiga Country Club v Kudheiha Workers [2017] eKLR).
14. Having found that an employer-employee relationship existed, it follows that the Appellants' account of the events of 30th September, 2023 — that they reported for work as usual, were accused by the Respondent's Human Resource Manager and his assistant of stealing unspecified property, were told there was no work for them and that they should consider their employment terminated, and were thereafter taken into police custody for two nights without ever being charged or arraigned in court — amply discharged the modest evidential burden placed upon them by section 47(5). The Respondent did not seriously dispute that this sequence of events occurred; its case, rather, was that the Appellants ceased reporting to work of their own accord in order to attend to a pending criminal investigation, and not that the Respondent terminated them, a contention addressed further below. It suffices for present purposes to hold that the burden shifted to the Respondent to justify the termination, both substantively and procedurally, and that, as demonstrated in the following section, it failed to do so.
(c) Continuous employment and the Respondent's failure of proof
15. The Appellants maintained throughout — in their pleadings, their witness statements and their oral testimony — that they worked continuously for the Respondent from specific, particularised dates: 3rd July, 2007 for the 1st Appellant; 3rd January, 2009 for the 2nd Appellant; and 3rd November, 2011 for the 3rd Appellant, until 30th September, 2023, a terminal date which the Respondent does not dispute, it being the Respondent's own case that the Appellants' engagement, however characterised, came to an end on that day upon their arrest.
16. Confronted with this specific and consistent pleaded case, the Respondent's evidentiary response was markedly sketchy. Its witness, under cross-examination, conceded that he "joined the organisation in September 2024," well after the material events, that he could not confirm when any of the three Appellants were first engaged, that "we didn't bring the sample for 2020 and 2021 and 2022 — it is only 2023 September," and that he was "not aware [of] the number of days they worked" even in the very month of the alleged theft and arrest. He further admitted the existence of an attendance register signed daily by all workers — the very document that would conclusively have settled the question of the length and continuity of the Appellants' engagement — yet the Respondent, who alone was in possession and control of that register, elected not to produce it.
17. It is well established, both under section 112 of the Evidence Act (Cap. 80), which places the burden of proving a fact especially within a party's own knowledge on that party, and under the settled jurisprudence of our superior courts, that where a party fails, without explanation, to produce evidence peculiarly within its possession which would elucidate a matter in controversy, an adverse inference may properly be drawn against that party. In the specific context of employment records, the Court of Appeal in Kenfreight (E.A) Limited v Benson K. Nguti [2016] eKLR held that section 10(7) of the Employment Act casts upon an employer, in the absence of a written contract, the burden of proving the terms of the employment, and that an employer who fails to keep, or having kept fails to produce, the records it is statutorily obliged to maintain under section 74 of the Act must bear the consequences of that failure. Here, the Respondent did not merely fail to keep records; it acknowledged their existence and elected not to place them before the trial court. This is a paradigm case for the drawing of an adverse inference against the Respondent on the question of the length and continuity of the Appellants' service.
18. Section 37(1) of the Employment Act further provides that where a casual employee works for a period amounting in the aggregate to not less than one month, or performs work that cannot reasonably be completed within an aggregate of three months, the contract is deemed to be one where wages are paid monthly, with the ordinary incidents of a monthly contract of service following accordingly. On the unrebutted evidence of continuous engagement over many years, and in the absence of credible evidence from the Respondent displacing that account, I find that the Appellants worked continuously for the Respondent as pleaded, and that their engagement is properly to be treated, by operation of section 37(1), as a deemed contract of service on a monthly basis, notwithstanding the piece-rate mode of computing wages. The learned trial magistrate's finding to the contrary was against the weight of the evidence and cannot stand.
(d) The effect of the unrebutted assertion regarding the Respondent's operations
19. Central to the Respondent's defence, both at trial and on appeal, was the proposition that its salt production was necessarily seasonal, being dependent on the harvesting of raw salt from its farms, a process interrupted during the rainy season, and that this seasonality explains and justifies the sporadic, piece-rated engagement of workers such as the Appellants. In answer, the Appellants asserted, in cross-examination, that the Respondent's operations were not dependent on a single production source, testifying in particular that "salt was in supply all year around, some from Malindi." This assertion strikes directly at the foundational premise of the Respondent's entire defence, yet at no point was it specifically controverted by the Respondent, whether by cross-examination directed at discrediting it, by documentary evidence of production gaps corresponding to the wet seasons, or otherwise.
20. An assertion of fact that is not challenged, either by cross-examination or by contrary evidence, is ordinarily taken as admitted, or at the very least as not seriously in dispute. The effect of the Respondent's failure to discount this assertion is significant: it removes the evidential foundation for the very premise upon which the Respondent's characterisation of the Appellants' engagement as sporadic and seasonal piece-rate work rested. If the Respondent's production was not, in truth, confined to a single weather-dependent field but drew on multiple sources ensuring year-round supply, then the Respondent's own justification for treating the Appellants as merely intermittent workers — paid only for the isolated week reflected in the cash payment vouchers exhibited, covering 21st to 27th September, 2023 collapses. This finding reinforces, rather than displaces, the finding already made that the Appellants worked continuously for the Respondent.
(e) Conclusion on liability: the termination was unfair
21. On the totality of the foregoing, I find, with the greatest respect to the learned trial magistrate, that he erred in holding that no employer-employee relationship existed between the parties, and in treating that erroneous finding as dispositive of the entire suit. The correct position on the evidence on record is that the Appellants were continuously employed by the Respondent — the 1st Appellant for approximately sixteen years, the 2nd Appellant for approximately fourteen years, and the 3rd Appellant for approximately eleven years — on a piece-rate basis, until their employment was brought to an end at the Respondent's own initiative on 30th September, 2023.
22. Turning to the fairness of that termination, section 45 of the Employment Act requires an employer to prove both a valid and fair reason for termination and that the termination was effected in accordance with fair procedure under section 41. In Mary Chemweno Kiptui v Kenya Pipeline Company Limited [2014] eKLR, it was held that an employer must, before exercising the right to terminate, establish a valid reason touching on misconduct, poor performance or incapacity, issue the employee with notice of the allegation, accord the employee an opportunity to be heard, and only thereafter impose a sanction; and in Walter Ogal Anuro v Teachers Service Commission [2013] eKLR, it was held that a termination must satisfy both substantive and procedural fairness to withstand scrutiny.
23. The Respondent adduced no evidence of any disciplinary process preceding the Appellants' removal from work: there was no notice to show cause, no invitation to a disciplinary hearing, no representation taken from the Appellants, and no reasoned decision communicated to them. What occurred, on the Respondent's own witnesses' account, was an accusation of theft levelled by the Human Resource Manager and his assistant, an immediate pronouncement that the Appellants should consider their employment terminated, and a report to the police that led to their arrest and two nights in custody without charge. Even taking the Respondent's suspicion of theft at its highest, an allegation of criminal conduct against an employee does not entitle an employer to dispense with the statutory disciplinary process; if anything, it heightens the need for one, precisely because livelihood and reputation are at stake. The Respondent's suggestion that the Appellants effectively terminated themselves by failing to return to work to attend to the criminal investigation is not borne out by the record: it was the Respondent's own witnesses who informed the Appellants, before any arrest occurred, that there was no work for them and that they should consider themselves dismissed. I find, therefore, that the termination was effected at the initiative of the Respondent, was both substantively and procedurally unfair, and that the Appellants are entitled to a declaration to that effect.
G. THE RELIEFS
24. I now turn to consider each of the reliefs sought, mindful that a finding of unfair termination does not automatically entitle a claimant to every relief pleaded; each relief must find its own proper foundation in the pleadings, the evidence and the applicable law.
(i) One month's pay in lieu of notice
25. It is not disputed that the Appellants were removed from work summarily, on the spot, without notice of any kind. Having found the termination unfair and that no valid process preceded it, each Appellant is entitled to one month's pay in lieu of notice, computed on the salary as pleaded and unrebutted by the Respondent: Kshs. 40,000.00 for the 1st Appellant, and Kshs. 32,000.00 each for the 2nd and 3rd Appellants.
(ii) Unpaid leave days
26. Unlike house allowance and overtime considered below, the claim for unpaid leave was expressly pleaded in the body of the Appellants' claim, namely that "the Appellants were never allowed to take leave days for the entire period that they worked with the Respondent." This averment was not specifically controverted, and no leave records were produced by the Respondent notwithstanding its statutory duty under section 74 of the Employment Act to maintain such records. This claim is accordingly allowed as pleaded and computed: Kshs. 447,998.88 for the 1st Appellant, Kshs. 313,600.98 for the 2nd Appellant, and Kshs. 246,400.77 for the 3rd Appellant.
(iii) House allowance
27. This relief stands on an entirely different footing. A perusal of the Memorandum of Claim and the witness statements filed by the Appellants discloses not a single averment that the Respondent owed them, provided for, or ever discussed house allowance as an incident of their engagement; the claim, computed at fifteen per cent (15%) of basic salary over the entire period of service, appears for the first time in the schedule of reliefs annexed to the pleadings. It is a cardinal principle of pleading, applicable with equal force before this Court and the trial court, that parties are bound by their pleadings and that a court cannot grant a relief that has no foundation whatsoever in the facts pleaded. A claim for house allowance necessarily presupposes an averment that accommodation, or an allowance in lieu thereof, formed part of the remuneration package, or was wrongly withheld; no such averment appears anywhere in the body of the pleadings in this matter. This relief is accordingly speculative and unsustainable, and is declined in respect of each Appellant.
(iv) Unpaid overtime
28. The claim for overtime suffers from an identical defect, compounded further by a complete absence of evidential support. Nowhere in the pleadings do the Appellants aver that they worked specific hours beyond the ordinary working day, on which days, or under whose instruction; the figure pleaded — an hourly rate multiplied by an assumed additional hour for thirty days over the entire span of the engagement — is a bare mathematical formula unsupported by any averment of fact or evidence of hours actually worked. A claim of this character, being in the nature of a liquidated but unproven sum, must be strictly proved both as to the fact of extra hours worked and as to their number. Having simply been placed before the Court without particularisation or proof, this relief cannot be sustained and is declined in respect of each Appellant.
(v) Unpaid NHIF contributions
29. The claim for unpaid NHIF contributions, though founded on a properly pleaded averment that the Respondent failed to remit statutory deductions, is misconceived in its formulation as a personal terminal due payable to the employee. Contributions to the National Hospital Insurance Fund are not the personal property of the employee to be paid over to him upon termination; they are statutory contributions payable to the Fund itself, a body corporate established under the National Hospital Insurance Fund Act (Cap. 255 of the Laws of Kenya), which Act creates its own enforcement mechanism against a defaulting employer, including recovery of unremitted contributions as a civil debt due to the Fund and the imposition of penalties for default under, among others, sections 10 and 24 thereof. It is the Fund, and not the individual employee suing for terminal dues, that is the proper party to enforce recovery of unremitted contributions from a defaulting employer. This Court, sitting in an employment dispute between the Appellants and the Respondent, is not the proper forum in which to award an employee, as personal compensation, a sum representing statutory contributions belonging to a fund that is not before it. This relief is accordingly declined in respect of each Appellant, without prejudice to the right of the National Hospital Insurance Fund, or its successor in law, to pursue the Respondent directly for any unremitted contributions in the manner provided by law.
(vi) Service pay
30. Section 35(5) of the Employment Act entitles an employee, on specified modes of termination, to service pay for every year worked, save that this entitlement is expressly excluded where, at the time of termination, the employee is a member of the National Social Security Fund or another registered retirement benefits scheme, the underlying rationale being that service pay is a substitute retirement cushion for employees who would otherwise enjoy no such statutory protection. In the present case, the Appellants' own pleadings and evidence proceed on the footing that they were subject to the standard statutory deduction regime and give the clear impression, both in the Memorandum of Claim and in their evidence, that they were registered members of the National Social Security Fund in the ordinary course of their engagement. Having pleaded their case on that footing, the Appellants cannot simultaneously claim the benefit of service pay, which the statute expressly withholds from employees in their position. This relief is accordingly declined in respect of each Appellant.
(vii) Compensation for unfair termination under section 49(1)(c)
31. Section 49(1)(c) of the Employment Act empowers this Court, upon a finding of unfair termination, to order payment of compensation not exceeding twelve months' gross salary, having regard to the factors set out in section 49(4), including the length of service, the circumstances of the termination, the extent to which the employer or the employee caused or contributed to the termination, and the practicability of reinstatement.
32. A significant complication in assessing this relief arises from the Respondent's own conduct: having led no evidence to displace or discount the salary figures pleaded by the Appellants, and having failed, in breach of its obligations under sections 10(7) and 74 of the Employment Act, to maintain and produce wage records capable of establishing a different, lesser figure, the Respondent must be taken to have accepted the salaries as pleaded. An employer who elects not to keep, or having kept elects not to produce, records that would allow the Court to verify or discount an employee's stated earnings cannot be heard to complain when the Court proceeds to compute an employee's entitlements on the only figures placed before it. I accordingly adopt the pleaded salaries — Kshs. 40,000.00 for the 1st Appellant and Kshs. 32,000.00 each for the 2nd and 3rd Appellants — as the basis for computing compensation.
33. As to quantum, weighing the length of service of each Appellant, and exercising the discretion conferred by section 49(4) of the Employment Act, I consider an award of six (6) months' gross salary to each Appellant to be just and equitable compensation for the unfair termination, computed as follows: Kshs. 240,000.00 for the 1st Appellant (being 6 x Kshs. 40,000.00), and Kshs. 192,000.00 each for the 2nd and 3rd Appellants (being 6 x Ksh
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1. This is a first appeal from the Judgment of Hon. Lewis K. Gatheru, Principal Magistrate, delivered on 9th June, 2025 in Mombasa Chief Magistrate's Court ELRC Cause No. E795 of 2023, in which the trial court dismissed in its entirety claims filed by the three Claimants (now the Appellants) against the Respondent, Kensalt Limited, and ordered that each party bear its own costs.
2. The Appellants had sought, before the trial court, a declaration that their dismissal from employment was unfair and wrongful, together with terminal dues computed at Kshs. 3,530,518.38, Kshs. 2,599,683.28 and Kshs. 2,168,286.47 in favour of the 1st, 2nd and 3rd Appellants respectively, comprising one month's pay in lieu of notice, house allowance, unpaid leave days, compensation for unlawful termination, unpaid overtime, unpaid NHIF contributions and service pay, together with costs and interest.
3. The trial court framed the issue for determination as being whether the Appellants were employed as piece-rated workers or as permanent employees. The learned trial magistrate held that no contract of service had been produced in evidence, that the primary burden of proving the existence of an employment relationship lay on the Appellants, and that they had failed to discharge that burden. He accordingly found that there was no employer-employee relationship between the parties, that the question of unfair termination could therefore not arise, and dismissed the suit in its entirety together with all reliefs sought.
4. Aggrieved, the Appellants filed a Memorandum of Appeal dated 19th June, 2025, and prosecuted the appeal by way of written submissions dated 19th January, 2026. The Respondent opposed the appeal by written submissions dated 4th February, 2026, and additionally adopted, in their entirety, its submissions filed before the trial court on 5th March, 2025.
B. THE GROUNDS OF APPEAL
5. The appeal, as set out in the Memorandum of Appeal and elaborated in the Appellants' written submissions, is premised on the following grounds, namely that the learned trial magistrate erred in law and in fact:
(a) in finding that the Appellants failed to establish an employer-employee relationship with the Respondent, despite what the Appellants describe as overwhelming evidence, including the undisputed fact that they were engaged and paid by the Respondent and were arrested while working at its premises;
(b) in failing to scrutinize the documentary evidence filed by both parties and in relying solely on the oral testimony of the Respondent's witness, which the Appellants contend was false ab initio;
(c) in wholly disregarding the Appellants' submissions on fact and law;
(d) in failing to appreciate that even if the Appellants were piece-rated employees, they remained entitled to their terminal dues as a matter of law;
(e) in disregarding the evidence tendered by the Appellants to prove their entitlement to terminal dues upon what they contend was an unlawful dismissal from work; and
(f) in denying the Appellants their terminal dues despite what they contend was an unlawful dismissal from employment.
C. THE RESPONDENT'S GROUNDS OF OPPOSITION
6. The Respondent's opposition to the appeal, as set out in its written submissions, may conveniently be summarised as follows:
(a) that being a first appeal, the duty of this Court is to re-evaluate and re-analyse the pleadings and evidence on record and to arrive at its own independent conclusions, bearing in mind that it is the trial court, and not this Court, which had the singular advantage of seeing and hearing the witnesses testify;
(b) that the learned trial magistrate correctly evaluated the evidence on record together with the parties' respective submissions, correctly applied the law, and arrived at the correct conclusion in dismissing the suit;
(c) that it is a serious matter for an appellate court to disturb a trial court's findings of fact, that such interference is warranted only where it is shown that the trial court applied wrong principles, considered irrelevant matters, or failed to consider relevant matters resulting in a plainly wrong decision, and that the burden of so demonstrating lies on the Appellants, who, save for merely restating the facts and the law already canvassed before the trial court, have not shown this Court exactly how the trial court fell into error;
(d) that the onus of proving the existence of an employer-employee relationship lay, both before the trial court and on this appeal, on the Appellants, who never produced any documents to prove that they were permanent employees of the Respondent, and that the trial court was correct in declining to require the Respondent to prove a negative; and
(e) that the appeal ought accordingly to be dismissed with costs.
D. THE DUTY OF THE FIRST APPELLATE COURT
7. It is trite, and this Court reminds itself, that as a first appellate court it is under a duty to re-evaluate, re-analyse and re-consider the evidence adduced before the trial court afresh, and to arrive at its own independent conclusions of both fact and law, while making due allowance for the fact that it neither saw nor heard the witnesses testify (see Selle & Another v Associated Motor Boat Company Ltd & Others [1968] EA 123). It is only where the trial court's findings are shown to be based on no evidence, or on a misapprehension of the evidence, or where the trial court is demonstrated to have applied wrong principles in arriving at those findings, that this Court will be justified in disturbing the same. It is with this principle firmly in mind that this Court has proceeded to re-evaluate the record of appeal, the rival submissions, and the applicable law.
E. ISSUES FOR DETERMINATION
8. Arising from the grounds of appeal, the rival submissions and the record before this Court, the following issues fall for determination:
(i) Whether the learned trial magistrate erred in holding that no employer-employee relationship existed between the parties;
(ii) Whether, upon a proper application of section 47(5) of the Employment Act, 2007, the Appellants discharged the burden placed upon them;
(iii) Whether the Appellants worked continuously for the Respondent, and the effect of the Respondent's failure to lead evidence displacing that assertion;
(iv) The effect of the Respondent's failure to controvert the Appellants' assertion that the Respondent's operations were not dependent on a single production source;
(v) Whether the termination of the Appellants' employment was fair, both substantively and procedurally;
(vi) Whether, and to what extent, the Appellants are entitled to the reliefs sought; and
(vii) Who should bear the costs of the suit and of this appeal.
F. ANALYSIS AND DETERMINATION
(a) Whether an employer-employee relationship existed
9. The starting point of the trial court's reasoning was that "there is no contract of service that has been produced in court" and that the primary duty to prove the existence of an employment relationship lay on the claimant. With the greatest respect to the learned trial magistrate, while that general proposition of law is unassailable, the trial court fell into error in the manner in which it applied the proposition to the peculiar facts of this case, for it overlooked a critical and repeated admission running through the entirety of the Respondent's own pleadings and evidence: that the Respondent engaged the Appellants, and paid them, on a piece-rate basis.
10. It is important to appreciate what "piece work" means in law. Section 2 of the Employment Act, 2007 defines piece work as "any work the pay of which is ascertained by the amount of work performed irrespective of the time occupied in its performance," while section 18(1) of the Act expressly regulates "a contract of service entered into under which a task or piece-work is to be performed by an employee" and prescribes when such an employee is entitled to be paid. The very language of section 18 presupposes, and affirms, that a piece-rate worker is an employee engaged under a contract of service; piece rate is merely a mode of computing remuneration and is not a status that exists outside, or in the absence of, a contract of service. This distinction was correctly appreciated by the Court of Appeal in Krystalline Salt Limited v Kwekwe Mwakele & 67 Others [2017] eKLR — a case, coincidentally, concerning another salt manufacturer — where the Court observed that "in a piece work or, as it is sometimes called, piece rate arrangement, the emphasis is on the amount of work and not the time expended in doing it... An employee under piece work arrangement, though not entitled to all or some of the benefits of the other forms of employment, is at least entitled to minimum wage." That authority proceeds on the settled premise that a piece-rate worker is, first and foremost, an employee, entitled at the very minimum to statutory protection, albeit with modified entitlements appropriate to the piece-rate mode of engagement.
11. In the present case, the Respondent's own witnesses — Caleb M. Kamote in his witness statement, and Rodgers Birai in his testimony — both stated in terms that "the respondent is a salt manufacturer... during the seasonal production and manufacturing season, it employs conveyor packers and stackers... their payments are piece-rated." The Respondent went further and exhibited numerous cash payment vouchers and wage lists bearing the Appellants' own names, reflecting sums paid to them individually, described in the narration as payment "to Main Conveyor stackers" or "conveyor packers," together with cash advances deducted against their future wages. This is not, with respect, the posture of a stranger denying any dealing whatsoever with the Appellants; it is an unambiguous admission that the Respondent engaged the Appellants to perform work for it, under its direction, at its premises, within its production teams, and remunerated them for that work. That is the very essence of a contract of service, whatever mode the parties may have adopted for computing the wage payable under it.
12. The various tests developed at common law, and adopted by our courts, for determining whether a relationship is one of employer and employee — the control test, the integration test, the test of economic reality, and the test of mutuality of obligation, helpfully summarised by Ongaya J. in Stanley Mungai Muchai v National Oil Corporation of Kenya [2012] eKLR, drawing on Deakin and Morris, Labour Law — exist to assist a court in cases where the existence of the relationship is genuinely in controversy. Where, as here, a party has admitted engaging another to perform work for reward, resort to those tests to conclude that no relationship at all existed is an inversion of their true purpose. The only question that remained genuinely open on the pleadings and the evidence was the category of employment — casual, piece-rated, or permanent — and, correspondingly, which statutory entitlements followed from that category; it was never seriously in issue whether an employment relationship existed at all. I find that the learned trial magistrate conflated these two distinct questions, and in so doing arrived at a conclusion that is not supported by, and indeed runs contrary to, the Respondent's own pleaded case and evidence. This ground of appeal succeeds.
(b) The burden of proof under section 47(5) of the Employment Act
13. Section 47(5) of the Employment Act provides that in any claim arising out of termination of a contract, the burden of proving that the termination was unfair rests on the employee, while the burden of justifying the grounds of termination rests on the employer. The proper interpretation of this provision, now well settled, is that the employee's evidential burden is a modest one: he need only place before the court prima facie evidence that a termination occurred and that it did not fall within the four corners of section 45 of the Act (Galgalo Jarso Jillo v Agricultural Finance Corporation [2021] eKLR; Josephine M. Ndungu & Others v Plan International Inc [2019] eKLR). Once that threshold is met, the persuasive burden shifts to the employer to justify both the substantive reason for the termination and the procedure by which it was effected (Muthaiga Country Club v Kudheiha Workers [2017] eKLR).
14. Having found that an employer-employee relationship existed, it follows that the Appellants' account of the events of 30th September, 2023 — that they reported for work as usual, were accused by the Respondent's Human Resource Manager and his assistant of stealing unspecified property, were told there was no work for them and that they should consider their employment terminated, and were thereafter taken into police custody for two nights without ever being charged or arraigned in court — amply discharged the modest evidential burden placed upon them by section 47(5). The Respondent did not seriously dispute that this sequence of events occurred; its case, rather, was that the Appellants ceased reporting to work of their own accord in order to attend to a pending criminal investigation, and not that the Respondent terminated them, a contention addressed further below. It suffices for present purposes to hold that the burden shifted to the Respondent to justify the termination, both substantively and procedurally, and that, as demonstrated in the following section, it failed to do so.
(c) Continuous employment and the Respondent's failure of proof
15. The Appellants maintained throughout — in their pleadings, their witness statements and their oral testimony — that they worked continuously for the Respondent from specific, particularised dates: 3rd July, 2007 for the 1st Appellant; 3rd January, 2009 for the 2nd Appellant; and 3rd November, 2011 for the 3rd Appellant, until 30th September, 2023, a terminal date which the Respondent does not dispute, it being the Respondent's own case that the Appellants' engagement, however characterised, came to an end on that day upon their arrest.
16. Confronted with this specific and consistent pleaded case, the Respondent's evidentiary response was markedly sketchy. Its witness, under cross-examination, conceded that he "joined the organisation in September 2024," well after the material events, that he could not confirm when any of the three Appellants were first engaged, that "we didn't bring the sample for 2020 and 2021 and 2022 — it is only 2023 September," and that he was "not aware [of] the number of days they worked" even in the very month of the alleged theft and arrest. He further admitted the existence of an attendance register signed daily by all workers — the very document that would conclusively have settled the question of the length and continuity of the Appellants' engagement — yet the Respondent, who alone was in possession and control of that register, elected not to produce it.
17. It is well established, both under section 112 of the Evidence Act (Cap. 80), which places the burden of proving a fact especially within a party's own knowledge on that party, and under the settled jurisprudence of our superior courts, that where a party fails, without explanation, to produce evidence peculiarly within its possession which would elucidate a matter in controversy, an adverse inference may properly be drawn against that party. In the specific context of employment records, the Court of Appeal in Kenfreight (E.A) Limited v Benson K. Nguti [2016] eKLR held that section 10(7) of the Employment Act casts upon an employer, in the absence of a written contract, the burden of proving the terms of the employment, and that an employer who fails to keep, or having kept fails to produce, the records it is statutorily obliged to maintain under section 74 of the Act must bear the consequences of that failure. Here, the Respondent did not merely fail to keep records; it acknowledged their existence and elected not to place them before the trial court. This is a paradigm case for the drawing of an adverse inference against the Respondent on the question of the length and continuity of the Appellants' service.
18. Section 37(1) of the Employment Act further provides that where a casual employee works for a period amounting in the aggregate to not less than one month, or performs work that cannot reasonably be completed within an aggregate of three months, the contract is deemed to be one where wages are paid monthly, with the ordinary incidents of a monthly contract of service following accordingly. On the unrebutted evidence of continuous engagement over many years, and in the absence of credible evidence from the Respondent displacing that account, I find that the Appellants worked continuously for the Respondent as pleaded, and that their engagement is properly to be treated, by operation of section 37(1), as a deemed contract of service on a monthly basis, notwithstanding the piece-rate mode of computing wages. The learned trial magistrate's finding to the contrary was against the weight of the evidence and cannot stand.
(d) The effect of the unrebutted assertion regarding the Respondent's operations
19. Central to the Respondent's defence, both at trial and on appeal, was the proposition that its salt production was necessarily seasonal, being dependent on the harvesting of raw salt from its farms, a process interrupted during the rainy season, and that this seasonality explains and justifies the sporadic, piece-rated engagement of workers such as the Appellants. In answer, the Appellants asserted, in cross-examination, that the Respondent's operations were not dependent on a single production source, testifying in particular that "salt was in supply all year around, some from Malindi." This assertion strikes directly at the foundational premise of the Respondent's entire defence, yet at no point was it specifically controverted by the Respondent, whether by cross-examination directed at discrediting it, by documentary evidence of production gaps corresponding to the wet seasons, or otherwise.
20. An assertion of fact that is not challenged, either by cross-examination or by contrary evidence, is ordinarily taken as admitted, or at the very least as not seriously in dispute. The effect of the Respondent's failure to discount this assertion is significant: it removes the evidential foundation for the very premise upon which the Respondent's characterisation of the Appellants' engagement as sporadic and seasonal piece-rate work rested. If the Respondent's production was not, in truth, confined to a single weather-dependent field but drew on multiple sources ensuring year-round supply, then the Respondent's own justification for treating the Appellants as merely intermittent workers — paid only for the isolated week reflected in the cash payment vouchers exhibited, covering 21st to 27th September, 2023 collapses. This finding reinforces, rather than displaces, the finding already made that the Appellants worked continuously for the Respondent.
(e) Conclusion on liability: the termination was unfair
21. On the totality of the foregoing, I find, with the greatest respect to the learned trial magistrate, that he erred in holding that no employer-employee relationship existed between the parties, and in treating that erroneous finding as dispositive of the entire suit. The correct position on the evidence on record is that the Appellants were continuously employed by the Respondent — the 1st Appellant for approximately sixteen years, the 2nd Appellant for approximately fourteen years, and the 3rd Appellant for approximately eleven years — on a piece-rate basis, until their employment was brought to an end at the Respondent's own initiative on 30th September, 2023.
22. Turning to the fairness of that termination, section 45 of the Employment Act requires an employer to prove both a valid and fair reason for termination and that the termination was effected in accordance with fair procedure under section 41. In Mary Chemweno Kiptui v Kenya Pipeline Company Limited [2014] eKLR, it was held that an employer must, before exercising the right to terminate, establish a valid reason touching on misconduct, poor performance or incapacity, issue the employee with notice of the allegation, accord the employee an opportunity to be heard, and only thereafter impose a sanction; and in Walter Ogal Anuro v Teachers Service Commission [2013] eKLR, it was held that a termination must satisfy both substantive and procedural fairness to withstand scrutiny.
23. The Respondent adduced no evidence of any disciplinary process preceding the Appellants' removal from work: there was no notice to show cause, no invitation to a disciplinary hearing, no representation taken from the Appellants, and no reasoned decision communicated to them. What occurred, on the Respondent's own witnesses' account, was an accusation of theft levelled by the Human Resource Manager and his assistant, an immediate pronouncement that the Appellants should consider their employment terminated, and a report to the police that led to their arrest and two nights in custody without charge. Even taking the Respondent's suspicion of theft at its highest, an allegation of criminal conduct against an employee does not entitle an employer to dispense with the statutory disciplinary process; if anything, it heightens the need for one, precisely because livelihood and reputation are at stake. The Respondent's suggestion that the Appellants effectively terminated themselves by failing to return to work to attend to the criminal investigation is not borne out by the record: it was the Respondent's own witnesses who informed the Appellants, before any arrest occurred, that there was no work for them and that they should consider themselves dismissed. I find, therefore, that the termination was effected at the initiative of the Respondent, was both substantively and procedurally unfair, and that the Appellants are entitled to a declaration to that effect.
G. THE RELIEFS
24. I now turn to consider each of the reliefs sought, mindful that a finding of unfair termination does not automatically entitle a claimant to every relief pleaded; each relief must find its own proper foundation in the pleadings, the evidence and the applicable law.
(i) One month's pay in lieu of notice
25. It is not disputed that the Appellants were removed from work summarily, on the spot, without notice of any kind. Having found the termination unfair and that no valid process preceded it, each Appellant is entitled to one month's pay in lieu of notice, computed on the salary as pleaded and unrebutted by the Respondent: Kshs. 40,000.00 for the 1st Appellant, and Kshs. 32,000.00 each for the 2nd and 3rd Appellants.
(ii) Unpaid leave days
26. Unlike house allowance and overtime considered below, the claim for unpaid leave was expressly pleaded in the body of the Appellants' claim, namely that "the Appellants were never allowed to take leave days for the entire period that they worked with the Respondent." This averment was not specifically controverted, and no leave records were produced by the Respondent notwithstanding its statutory duty under section 74 of the Employment Act to maintain such records. This claim is accordingly allowed as pleaded and computed: Kshs. 447,998.88 for the 1st Appellant, Kshs. 313,600.98 for the 2nd Appellant, and Kshs. 246,400.77 for the 3rd Appellant.
(iii) House allowance
27. This relief stands on an entirely different footing. A perusal of the Memorandum of Claim and the witness statements filed by the Appellants discloses not a single averment that the Respondent owed them, provided for, or ever discussed house allowance as an incident of their engagement; the claim, computed at fifteen per cent (15%) of basic salary over the entire period of service, appears for the first time in the schedule of reliefs annexed to the pleadings. It is a cardinal principle of pleading, applicable with equal force before this Court and the trial court, that parties are bound by their pleadings and that a court cannot grant a relief that has no foundation whatsoever in the facts pleaded. A claim for house allowance necessarily presupposes an averment that accommodation, or an allowance in lieu thereof, formed part of the remuneration package, or was wrongly withheld; no such averment appears anywhere in the body of the pleadings in this matter. This relief is accordingly speculative and unsustainable, and is declined in respect of each Appellant.
(iv) Unpaid overtime
28. The claim for overtime suffers from an identical defect, compounded further by a complete absence of evidential support. Nowhere in the pleadings do the Appellants aver that they worked specific hours beyond the ordinary working day, on which days, or under whose instruction; the figure pleaded — an hourly rate multiplied by an assumed additional hour for thirty days over the entire span of the engagement — is a bare mathematical formula unsupported by any averment of fact or evidence of hours actually worked. A claim of this character, being in the nature of a liquidated but unproven sum, must be strictly proved both as to the fact of extra hours worked and as to their number. Having simply been placed before the Court without particularisation or proof, this relief cannot be sustained and is declined in respect of each Appellant.
(v) Unpaid NHIF contributions
29. The claim for unpaid NHIF contributions, though founded on a properly pleaded averment that the Respondent failed to remit statutory deductions, is misconceived in its formulation as a personal terminal due payable to the employee. Contributions to the National Hospital Insurance Fund are not the personal property of the employee to be paid over to him upon termination; they are statutory contributions payable to the Fund itself, a body corporate established under the National Hospital Insurance Fund Act (Cap. 255 of the Laws of Kenya), which Act creates its own enforcement mechanism against a defaulting employer, including recovery of unremitted contributions as a civil debt due to the Fund and the imposition of penalties for default under, among others, sections 10 and 24 thereof. It is the Fund, and not the individual employee suing for terminal dues, that is the proper party to enforce recovery of unremitted contributions from a defaulting employer. This Court, sitting in an employment dispute between the Appellants and the Respondent, is not the proper forum in which to award an employee, as personal compensation, a sum representing statutory contributions belonging to a fund that is not before it. This relief is accordingly declined in respect of each Appellant, without prejudice to the right of the National Hospital Insurance Fund, or its successor in law, to pursue the Respondent directly for any unremitted contributions in the manner provided by law.
(vi) Service pay
30. Section 35(5) of the Employment Act entitles an employee, on specified modes of termination, to service pay for every year worked, save that this entitlement is expressly excluded where, at the time of termination, the employee is a member of the National Social Security Fund or another registered retirement benefits scheme, the underlying rationale being that service pay is a substitute retirement cushion for employees who would otherwise enjoy no such statutory protection. In the present case, the Appellants' own pleadings and evidence proceed on the footing that they were subject to the standard statutory deduction regime and give the clear impression, both in the Memorandum of Claim and in their evidence, that they were registered members of the National Social Security Fund in the ordinary course of their engagement. Having pleaded their case on that footing, the Appellants cannot simultaneously claim the benefit of service pay, which the statute expressly withholds from employees in their position. This relief is accordingly declined in respect of each Appellant.
(vii) Compensation for unfair termination under section 49(1)(c)
31. Section 49(1)(c) of the Employment Act empowers this Court, upon a finding of unfair termination, to order payment of compensation not exceeding twelve months' gross salary, having regard to the factors set out in section 49(4), including the length of service, the circumstances of the termination, the extent to which the employer or the employee caused or contributed to the termination, and the practicability of reinstatement.
32. A significant complication in assessing this relief arises from the Respondent's own conduct: having led no evidence to displace or discount the salary figures pleaded by the Appellants, and having failed, in breach of its obligations under sections 10(7) and 74 of the Employment Act, to maintain and produce wage records capable of establishing a different, lesser figure, the Respondent must be taken to have accepted the salaries as pleaded. An employer who elects not to keep, or having kept elects not to produce, records that would allow the Court to verify or discount an employee's stated earnings cannot be heard to complain when the Court proceeds to compute an employee's entitlements on the only figures placed before it. I accordingly adopt the pleaded salaries — Kshs. 40,000.00 for the 1st Appellant and Kshs. 32,000.00 each for the 2nd and 3rd Appellants — as the basis for computing compensation.
33. As to quantum, weighing the length of service of each Appellant, and exercising the discretion conferred by section 49(4) of the Employment Act, I consider an award of six (6) months' gross salary to each Appellant to be just and equitable compensation for the unfair termination, computed as follows: Kshs. 240,000.00 for the 1st Appellant (being 6 x Kshs. 40,000.00), and Kshs. 192,000.00 each for the 2nd and 3rd Appellants (being 6 x Ksh
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