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ELRCDismissedCause Number 1541 of 2010· [2012] KEELRC 4 (KLR)

Bernard Wanjohi Muriuki v Kirinyaga Water And Sanitation Company Limited & another [2012] KEELRC 4 (KLR)

Industrial Court of Kenya
17 September 2012
JRJames Rika
7,553 words in judgment
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The bottom line

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Kenya's Industrial Court ruled a hastily renewed executive contract was invalid, awarding the employee only a certificate of service and nothing else.

What this practically means

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Executive summary

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The claimant, Bernard Wanjohi Muriuki, was employed by the 1st respondent, Kirinyaga Water and Sanitation Company (KIRIWASCO), as Technical/General Manager (CEO) on a three-year fixed-term contract commencing 1st August 2007 and lapsing 31st July 2010, later varied to include gratuity, annual bonus and leave allowance. In April 2010, before expiry of the initial term, the Board Chairman wrote renewing his contract for a further three years effective 1st May 2010, simultaneously terminating the existing contract. The 2nd respondent, Tana Water Services Board, for whom KIRIWASCO acted as agent under a Service Provision Agreement, rejected the renewal following the Ministry of Water's policy requiring competitive recruitment of CEOs, sent a caretaker Managing Director, Mary Gathoni Nyaga, and had WASREB investigate KIRIWASCO's affairs. The claimant sought injunctions, a declaration of entitlement to monthly dues, tabulated payments of Ksh. 1,385,246.70 and compensation. The Court found the claimant was an employee of the 1st respondent, but applying the multi-factor test had regard to the public law structure of the water reforms. It held the renewal was invalid: it was rushed to pre-empt the Ministry's policy, created a fait accompli, and lacked any Board resolution. The respondents were justified in insisting on handover. An employer need not give reasons for non-renewal of a fixed-term contract beyond effluxion of time. All tabulated claims related to the invalid contract and were rejected. The Court ordered only supply of a certificate of service, a statutory right under section 51 of the Employment Act, and made no order as to costs. The award was delivered by Rika J on 17th September 2012, the delay being attributed to the transition of the Industrial Court under the new Constitution.

Key legal issues

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01

Validity of the premature renewal of the claimant's contract

Holding

The contract was not validly renewed; it was a rushed arrangement to pre-empt the Ministry's policy on competitive recruitment and lacked Board resolution

Reasoning

The renewal letter of 14th April 2010 purported to follow the Board meeting of 13th April 2010, but the minutes contained no item on renewal or on premature termination of the old contract. The claimant alleged the minutes were doctored but produced none of his own. The Court found the renewal was made to defeat the Ministry's policy direction communicated through the 2nd respondent and created a fait accompli, so it could not stand.

p. 8
02

Whether the respondents unjustifiably prevented the claimant performing under the renewed contract

Holding

No; the respondents, particularly the 2nd respondent, were entitled to reject the fait accompli and insist on handover

Reasoning

As agent of TANA under a Service Provision Agreement, KIRIWASCO exercised TANA's powers and functions, and the State retains control over water as an essential resource. The 2nd respondent, WASREB and the Ministry had obligations of management, regulation and policy leadership, and correctly required handover to a caretaker Managing Director rather than accept the imposed renewal.

p. 9
03

Entitlement to prayers: salaries, allowances, damages and compensation

Holding

Rejected; all benefits were claimed under the invalid renewed contract

Reasoning

The tabulated claims of salaries, allowances and damages totalling Ksh. 1,385,246.70 flowed from the renewed contract which the Court found void as contrary to public policy and unsupported by Board resolution. No benefits can flow from such a contract, and the claimant did not allege unpaid entitlements under the expired contract. Only the certificate of service, being a statutory right, was granted.

p. 10
04

Nature of the employment relationship within the water sector reforms

Holding

The claimant was an employee of the 1st respondent, but the multi-factor test required consideration of the public law structure of the water sector

Reasoning

The Court applied the statutory definitions of employer and employee under the Employment Act 2007 and the four-fold and economic reality tests, finding sufficient evidence the claimant was KIRIWASCO's employee. However, given the multi-tiered water reforms decentralizing functions while centralizing decision-making, and the role of KIRIWASCO as TANA's agent, the Court looked beyond the contract to public policy considerations.

p. 8

Legal principles established

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  • An employer is not obliged to give reasons for non-renewal of a fixed-term contract; effluxion of time is sufficient justification absent a contractual clause requiring more
  • A certificate of service is a statutory right under section 51 of the Employment Act and may not be denied to an employee regardless of the circumstances of exit
  • Determining the employment relationship of executives in state-regulated water service providers requires the multi-factor test beyond the four-fold and economic reality tests, having regard to public policy and multi-tiered statutory structures

Court orders

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  1. 1.The 1st respondent to supply the claimant with his certificate of service forthwith
  2. 2.Other prayers are rejected
  3. 3.No order as to costs

Authorities

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Legislation

  • Companies ActCap 486
  • Water ActNumber 8 of 2002, sections 4, 47
  • Employment ActCap 226
  • Employment Act2007, section 51
  • State Corporation ActCap 466
Jurisdiction invoked
Industrial Court jurisdiction over the dispute of unfair and unlawful termination of employment (cause in dispute referred under the industrial court framework); contract governed by the Employment Act Cap 226 and Employment Act 2007

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (25)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Bernard Wanjohi Muriuki v Kirinyaga Water And Sanitation Company Limited & another [2012] KEELRC 4 (KLR)", Case Analysis (2012). Cause Number 1541 of 2010. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2012/4/eng@2012-09-17

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