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ELRCPartially AllowedCause 326 of 2011· [2013] KEELRC 436 (KLR)

AGNES NGIMA KARIUKI & 7 OTHERS V JETLAK FOOD LIMITED [2013] KEELRC 436 (KLR)

Industrial Court of Kenya
8 April 2013
JRJames Rika
1,903 words in judgment
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The bottom line

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What this practically means

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Executive summary

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This second Award of the Industrial Court of Kenya in Cause 326 of 2011 followed the setting aside, on 2nd August 2012, of an earlier Award delivered ex parte in favour of the Claimants on 21st November 2011. The Respondent was allowed to file a Statement of Reply and adduce evidence upon depositing Kshs. 894,542.50 as security, and the matter was heard de novo. Eight production-department employees claimed unfair and unlawful termination by the Respondent's Managing Director without notice, reason or terminal benefits, asserting they were regular employees. The Respondent maintained they were seasonal casuals paid Kshs. 300 per day under weekly casual pay sheets containing disclaimers. The Court found the Claimants were employees who, though working irregularly owing to the seasonal nature of the business, could not be treated as casuals in 2010 given their cumulative years of service. Invoking Section 37(4) of the Employment Act 2007, the Court declared them entitled to treatment as regular employees on exit. The Respondent failed to observe the fair procedure and substantive justification required by Sections 41, 43 and 45, so termination was unfair. However, the Respondent's honest misconception of the relationship and mitigation reduced compensation to 3 months' salary per Claimant, and creditable service was limited to half the years claimed for proportionality. The Respondent was ordered to pay a corrected total of Kshs. 894,537 from the deposited sum, with Kshs. 5.50 reverting to it; no order on costs was made.

Key legal issues

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01

Status of the Claimants: casual or regular employees

Holding

Despite irregular engagement and disclaimers in weekly casual pay sheets, the cumulative years worked meant the Claimants could not be treated as casuals in 2010; they were declared regular employees on exit.

Reasoning

The Respondent's records were incomplete, covering only 2010, and did not contradict the Claimants on their start dates. The seasonal nature of the business meant they had not worked continuously, but Section 37(4) empowered the Court to vary the terms of casual employees and declare them employed on terms consistent with the Act, entitling them to the full benefits of regular employees on termination.

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02

Fairness of termination

Holding

Termination was unfair; the Respondent did not observe the procedural and substantive guarantees of Sections 41, 43 and 45 of the Employment Act 2007.

Reasoning

No notice or reason was given and no terminal benefits were paid. However, the Respondent's misconception that the engagement was casual, and its offer to settle on humanitarian grounds, showed no malice and mitigated the violation, justifying compensation at 3 months' salary per Claimant rather than a higher award.

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03

Quantum and proportionality of remedies

Holding

Creditable service limited to half the years claimed, with proportional awards of service pay, house rent allowance, annual leave and notice; total award of Kshs. 894,537.

Reasoning

Given irregular days worked, granting the entire number of years claimed would not be proportionate. Each Claimant was deemed to have worked half the years credited in the earlier Award, and half the house rent allowance, annual leave and notice period, producing itemized awards totalling Kshs. 894,537.

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Legal principles established

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  • Employees who began as casuals cannot be treated as casual employees on exit where cumulative years of service have accrued; the Court may declare them regular employees under Section 37(4) of the Employment Act 2007
  • An employer must accord employees fair procedure and substantive justification in termination under Sections 41, 43 and 45 of the Employment Act 2007
  • An employer's honest misconception of the employment relationship and offers of settlement mitigate the violation and justify reducing compensation

Court orders

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  1. 1.Declaration that termination of the Claimants' contracts of employment was unfair
  2. 2.Respondent to pay the Claimants the total sum of Kshs. 894,537 as particularized per Claimant
  3. 3.The amount of Kshs. 894,537 to be paid from the sum of Kshs. 894,542.50 deposited by the Respondent in Court as security, with the difference of Kshs. 5.50 reverting to the Respondent
  4. 4.No order on costs

Authorities

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Legislation

  • Employment Act 2007Section 37(4)
  • Employment Act 2007Sections 41, 43 and 45
Jurisdiction invoked
Section 37(4) of the Employment Act 2007 conferring power on the Industrial Court in disputes over terms and conditions of service of casual employees

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, "AGNES NGIMA KARIUKI & 7 OTHERS V JETLAK FOOD LIMITED [2013] KEELRC 436 (KLR)", Case Analysis (2013). Cause 326 of 2011. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2013/436/eng@2013-04-08

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