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Court of AppealPartially AllowedNot stated in judgment

Adrian Company Limited v Karanja (Civil Appeal 190 of 2019) [2025] KECA 497 (KLR)

Court of Appeal
21 March 2025
2,108 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Court of Appeal ruled a project-based consultant was not an employee, wiping out a Kshs.2.8 million award for unfair termination and benefits.

What this practically means

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Executive summary

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The Court of Appeal allowed Adrian Company Limited's appeal against an Employment and Labour Relations Court judgment (O.N. Makau, J., 15th March 2019) which had found that Antony Wainaina Karanja was employed under a contract of service, was unfairly terminated, and awarded him Kshs.2,810,000/= comprising notice pay, compensation for unfair termination, salary arrears and telephone allowance, plus costs and interest. The appellant contended the respondent was an independent consultant engaged to deliver specific projects, paid piecemeal, not on the payroll, and never subjected to statutory deductions. Framing the questions as the nature of the engagement, the lawfulness of termination and the justification of the award, the Court reviewed the evidence afresh as the first appellate court, guided by the standard in Selle v Associated Motor Boat Co. It held that although the respondent had been given a job card, a company email and project responsibilities, the decisive features were that he was contracted to deliver four assignments, was paid a single Kshs.200,000/= lump sum on completion of only one, received no statutory deductions, no allowances and no payroll entry. The engagement was therefore a contract for service, not a contract of service. With that foundation gone, the Employment Act termination protections and the claims for salary and benefits fell away. The Court set aside the judgment and decree of 15th March 2019, substituted a dismissal of the respondent's claim with costs, and ordered the respondent to pay the costs of the appeal. The judgment is that of the whole court delivered at Nairobi on 21st March 2025 by Tuiyott, Muchelule and Odunga, JJ.A.

Questions the Court framed

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

  1. 1.Whether the respondent was engaged as an employee under a contract of service or as an independent contractor under a contract for service
  2. 2.On what terms the engagement was
  3. 3.Depending on the findings, whether the respondent was unlawfully terminated
  4. 4.Whether the award in the judgment of the trial court was justified

Key legal issues

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01

Nature of the engagement: contract of service or contract for service

Holding

The engagement was a contract for service; the respondent was contracted to deliver four assignments and paid Kshs.200,000/= on the single completed assignment, with no payroll entry, no statutory deductions and no payment of allowances

Reasoning

The court reviewed the respondent's own evidence: he received only one piecemeal payment of Kshs.200,000/= for a completed assignment, was never placed on the payroll, received no statutory deductions, no allowances, and no written contract materialised despite an HR department. The job card was merely facilitative for access and identification. These features aligned with an independent contractor engaged to deliver specific tasks, not an employee under supervision and control.

p. 4
02

Consequence of the finding on termination and benefits

Holding

Once the engagement was held to be a contract for service, questions of lawful termination under sections 41, 43 and 45 of the Employment Act and payment of salary and benefits did not arise

Reasoning

The trial court's award rested entirely on a finding of employment. The appellate court having overturned that foundation, the statutory protections of the Employment Act (notice, procedure, compensation for unfair termination) had no application to an independent contractor whose engagement simply lapsed when he failed to deliver the remaining assignments.

p. 4
03

Standard of interference with first-instance factual findings

Holding

The Court reaffirmed that it would not lightly differ with trial court findings but would interfere where findings were unsupported by evidence, based on misapprehension, or where the judge acted on wrong principles

Reasoning

Citing Selle v Associated Motor Boat Co and J.S.M. v E.N.B, the Court framed its appellate duty as reconsideration and re-evaluation of the evidence while giving weight to the trial judge's advantage of seeing and hearing witnesses. On the evidence as set out, the Court concluded the trial judge's finding of employment was untenable.

p. 2

Legal principles established

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  • Piece-work and oral engagements may still fall within the statutory definition of a contract of service under section 2 of the Employment Act
  • The indicia of a contract of service are subjection to the command of the master, subjection to the employer's rules and procedures, and being part of the employer's business
  • The indicia of an independent contractor include working own hours, running own business, freedom to serve multiple employers, invoicing for services, and registered taxpayer status
  • An appellate court will not lightly differ with findings of fact by the trial court but will interfere where findings were not based on the evidence, were based on misapprehension of the evidence, or where the judge acted on wrong principles

Court orders

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  1. 1.Appeal allowed
  2. 2.Judgment and decree of the ELRC issued on 15th March 2019 set aside
  3. 3.In place thereof, judgment dismissing the respondent's claim with costs
  4. 4.Costs of the appeal to be paid by the respondent

The bench

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

majority
majority
majority
On appeal from
Employment and Labour Relations Court
Not stated in judgment
Jurisdiction invoked
First appellate jurisdiction under the Employment and Labour Relations Court (designated to hear employment disputes); the Court exercised its role as the first appellate court reconsidering evidence

Relief refused

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Respondent's claim for salary arrears, notice pay, compensation for unfair termination and telephone allowance

The respondent was an independent contractor, not an employee, so the claims for employment benefits did not arise

p. 4

Costs

Judgment dismissing the respondent's claim with costs; costs of the appeal to be paid by the respondent.

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

The result is that we allow the appeal, and set aside the judgment and decree of the learned Judge issued on March 15, 2019. In its place, there shall be a judgment dismissing the respondent's claim with costs.
p. 4Final orders - disposition
The respondent was not engaged in a contract of service. This was a contract for service.
p. 4Employment status
This was not an employer/employee relationship.
p. 4Employer-employee relationship
Section 2 of the Employment Act allows for oral contracts of service, and also that a contract to carry out specific tasks, otherwise known as piece work, falls within the definition of contract of service.
p. 4Statutory definition of contract of service

Issues in the judgment

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minor

The judgment does not state the appeal number, neutral citation, or the ELRC case number of the decision appealed from; coram appears only as a certified copy signature block without formal bench heading

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Adrian Company Limited v Karanja (Civil Appeal 190 of 2019) [2025] KECA 497 (KLR)", Case Analysis (2025). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2025/497/eng@2025-03-21

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