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ELRCPartially AllowedIndustrial Cause (Nairobi Cause No. 447N of 2009 referenced only as cited authority; memorandum of claim filed 04.08.2011 - number not stated in judgment)· [2012] KEELRC 141 (KLR)

Catherine Waithera Rukorio & another v Mediamax Network Limited [2012] KEELRC 141 (KLR)

Industrial Court of Kenya (Employment and Labour Relations Court)
21 December 2012
8,199 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~33 min to read original · ~4 min brief

The bottom line

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Kenya's Industrial Court ruled employers cannot change agreed pay terms without consulting employees in writing, and must hear staff before firing them.

What this practically means

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Executive summary

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Two former sales employees of Mediamax Network Limited claimed unfair and unlawful termination, unpaid commissions, severance pay, notice pay and certificates of service. The 1st claimant was a direct sales representative on a one-year fixed contract; the 2nd claimant rose to head of agency sales. Both were terminated in January 2011 for failure to attend sales planning meetings, shortly after complaining in writing about unpaid commissions. The court held that an employer cannot unilaterally vary contractual terms of payment, invoking sections 10(2)(h) and 10(5) of the Employment Act, 2007, and found the purported October/November 2010 commission structures invalid for want of consultation. Applying the multiple test (as set out in Stanley Mungai Muchai v National Oil Corporation of Kenya, which it followed), the court found the 1st claimant was an employee despite commission-based remuneration. Both terminations were held unfair for want of a hearing contrary to section 41 and for lack of valid reasons under section 43. Awards: the 1st claimant received Ksh. 739,248 (commissions of Ksh. 636,748 plus two months' compensation of Ksh. 102,500); the 2nd claimant received Ksh. 1,579,040 (commissions of Ksh. 373,356, three months' notice pay of Ksh. 210,000, and eight months' gross salary compensation of Ksh. 995,648), with interest at court rates. Claims for severance pay and commissions on unproved sales failed. The respondent was also ordered to issue certificates of service and to pay the claimants' costs. Judgment delivered at Nairobi on 21 December 2012.

Key legal issues

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01

Unilateral variation of contractual terms of payment

Holding

The respondent could not unilaterally impose new commission structures; the applicable structures were those dated 31.05.2010 (and, for the 1st claimant, the one dated 31.12.2010 which she signed)

Reasoning

Section 10(5) of the Employment Act, 2007 requires an employer, in consultation with the employee, to revise the contract and notify the employee in writing before changing matters stated in the contract. The court held consultation cannot be served by mere inference; no evidence of consultation accompanied the alleged October/November 2010 structures, which were therefore unilateral impositions.

p. 11
02

Whether the 1st claimant was an employee of the respondent

Holding

Yes; a contract of employment existed notwithstanding her commission-based pay, based on control, exclusivity and use of the respondent's facilities

Reasoning

Applying the multiple test from Stanley Mungai Muchai v National Oil Corporation of Kenya, the court upheld that contracts of service and contracts for service are both amenable to the court's jurisdiction. The claimant was subject to the respondent's control of working hours, answerable to its officers, restrained from working for others, and used its office space and facilities.

p. 14
03

Unfair termination of both claimants

Holding

Both terminations were unfair - no hearing was accorded (section 41) and the reasons were not valid and genuine (section 43); compensation awarded at eight months' gross salary for the 2nd claimant (Ksh. 995,648) and two months for the 1st claimant (Ksh. 102,500)

Reasoning

The 2nd claimant's evidence that she attended the CEO's meeting rather than the weekly sales planning meeting was undisputed, making the stated reason invalid. The 1st claimant had a well-founded complaint about unpaid commissions and was terminated on shorter notice than agreed. Neither was given a hearing, contrary to section 41.

04

Proved unpaid commissions

Holding

The 1st claimant was awarded Ksh. 636,748 in commissions and the 2nd claimant Ksh. 373,356, on the balance of probability

Reasoning

The court applied the 31.05.2010 structures, accepted the claimants' summaries supported by purchase orders, and noted the respondent's non-compliance with section 20(1) requiring written statements at the time of wage payment. Some heads (Kenafric Bakery at Ksh. 220,000, November and December claims for the 2nd claimant) were conceded or unopposed in submissions.

p. 11

Legal principles established

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  • An employer cannot unilaterally vary agreed terms of payment in a contract of employment; changes require consultation with the employee and written notification under section 10(5) of the Employment Act, 2007
  • Whether a relationship is a contract of service or contract for service is largely one of fact, resolved by the multiple test considering control, integration, economic reality and mutuality of obligation
  • Termination without a hearing contravenes section 41 of the Employment Act, 2007 and is procedurally unfair

Court orders

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  1. 1.A declaration that the respondent unfairly terminated the claimants' respective contracts of service
  2. 2.The respondent to pay the 1st claimant Ksh. 739,248 and the 2nd claimant Ksh. 1,579,040 plus interest at court rates from the date of judgment till full payment
  3. 3.The respondent to issue and deliver to the claimants their respective certificates of service
  4. 4.The respondent to pay costs of the case
Jurisdiction invoked
Jurisdiction of the Industrial Court under the Industrial Court Act, 2011 (constitutional and statutory jurisdiction over employment and labour relations, including contracts of service and contracts for service)

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, "Catherine Waithera Rukorio & another v Mediamax Network Limited [2012] KEELRC 141 (KLR)", Case Analysis (2012). Industrial Cause (Nairobi Cause No. 447N of 2009 referenced only as cited authority; memorandum of claim filed 04.08.2011 - number not stated in judgment). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2012/141/eng@2012-12-21

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