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ELRCPartially AllowedNot stated in the judgment· [2013] KEELRC 897 (KLR)

Kenya Plantation & Agricultural Workers Union v Shalimar Flowers (K) Ltd [2013] KEELRC 897 (KLR)

Industrial Court of Kenya (Employment and Labour Relations Court)
14 November 2013
BOByram Ongaya
510 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court allowed a flower farm to transfer workers, but ruled they keep their jobs and their union benefits on the new farm.

What this practically means

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Executive summary

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The Kenya Plantation & Agricultural Workers Union filed a memorandum of claim on 22 October 2013 against Shalimar Flowers (K) Limited seeking, among other reliefs, the setting aside of letters of transfer dated 11 October 2013 transferring employees to a new farm in Rumuruti within Laikipia County, and declarations that the new farm is not Shalimar Flowers (K) Limited so that the transfers breached clause 26 of the CBA. The memorandum of response was filed on 12 November 2013 and, given urgency and productivity concerns, the matter was heard on 14 November 2013. The parties agreed that the only issue was whether the respondent had a lease over the suit land known as Mwanzi farm in Rumuruti, Laikipia County, in which event the CBA would apply to the transfers. The claimant objected that the lease between Mwanzi Limited and Shalimar Flowers Kenya Limited was executed by the same persons, Mamta Mahajan and Peeush Mahajan, as directors of both companies. The court applied the principle that a company is a legal person separate from its directors and found that the respondent had established a valid lease over the new farm over Marmanet/North Rumuruti Block II (Ndurumo)/195 dated 2 September 2013. Judgment was entered declaring that transferred employees continue in the respondent's employment and that the collective and recognition agreements, particularly on housing and transport costs consequential to transfer, shall be upheld; the claim as pleaded (setting aside the transfers) did not succeed as such, and each party was ordered to bear its own costs.

Key legal issues

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Validity of the lease between Mwanzi Limited and Shalimar Flowers Kenya Limited executed by the same persons as directors of both companies

Holding

The lease is valid; the separate legal personality of the companies means the common directorship does not invalidate the lease, and the CBA therefore applies to the transfers.

Reasoning

The claimant objected that the lease was executed by the same individuals, Mamta Mahajan and Peeush Mahajan, as directors of both companies. The court applied the settled principle of separate legal personality: companies are legal persons distinct from their directors. On that basis the lease was a valid contract between the two companies, covering Marmanet/North Rumuruti Block II (Ndurumo)/195, so the transferred employees remained in the respondent's employment and the CBA provisions on housing and transport costs consequential to transfer had to be upheld.

p. 1

Legal principles established

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  • A company is a legal person separate from its directors, so contracts executed by a company through directors who are also directors of the counterparty company remain valid contracts of the companies.

Court orders

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  1. 1.A declaration that upon transfer the respondent's employees also being the claimant's members will continue in the employment of the respondent, the respondent having concluded a valid lease agreement with Mwanzi Limited for the respondent's new farm over Marmanet/North Rumuruti Block II (Ndurumo)/195 per lease dated 2.9.2013 and filed in court
  2. 2.A declaration that the collective agreement and the recognition agreement and specifically provisions on housing and transport costs consequential to the transfer shall be upheld by the respondent
  3. 3.Each party to bear own costs of the suits
Jurisdiction invoked
Employment and labour relations dispute filed by memorandum of claim under the court's first-instance employment jurisdiction (specific provision not cited in the judgment)

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, "Kenya Plantation & Agricultural Workers Union v Shalimar Flowers (K) Ltd [2013] KEELRC 897 (KLR)", Case Analysis (2013). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2013/897/eng@2013-11-14

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