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ELRCOtherNot stated in judgment (Cause commenced 29 September 2014)· [2014] KEELRC 39 (KLR)

Gilbert Sule Otieno v Seventh Day Adventist Church (East Africa) Ltd (sued on behalf of S.D.A. Church, Kiamunyi East) [2014] KEELRC 39 (KLR)

Industrial Court of Kenya
18 December 2014
RSRadido Stephen
1,196 words in judgment
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The bottom line

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A Kenyan court ruled a church construction dispute was commercial, not employment, and transferred it out of the Industrial Court.

What this practically means

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Executive summary

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The Claimant sued the Respondent on 29 September 2014 claiming Kshs 4,725,000/- plus compensation under section 49(1)(c) of the Employment Act, arising from a construction contract dated 24 July 2011 for the Respondent's church at Kiamunyi East, which the Respondent terminated by letter of 22 October 2013. The Respondent filed a preliminary objection on 4 November 2014 contending that the Court lacked jurisdiction because the contract was one for services, not of service, and alternatively that the dispute should be referred to arbitration under paragraph 9 of the contract. When the objection was heard, the Claimant and his advocate were absent without explanation. The Court examined the contract's terms and held that, notwithstanding the use of the words 'employer' and 'foreman', the relationship was not one of employment: the contract contained none of the essentials of employment such as wages, hours of work, leave, housing, pensions or protection against unfair dismissal. The Claimant was an independent contractor engaged under a contract for services or works. Although the Industrial Court draws jurisdiction from statutes beyond the Employment Act, none of them clothes it with jurisdiction over commercial disputes arising from contracts for services or works. The arbitration question was left unresolved as unnecessary. Applying the Court of Appeal's decision in Daniel N. Mugendi v Kenyatta University, the Court, rather than striking out the Cause, ordered its transfer to the Chief Magistrate's Court in Nakuru for adjudication, with no order as to costs. Delivered at Nakuru on 18 December 2014 by Radido Stephen, Judge.

Key legal issues

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01

Whether the contract was one of service or for services

Holding

It was a contract for services/works; the Claimant was an independent contractor

Reasoning

The contract's obligations lacked the essentials of employment such as wage/salary, hours of work, leave, housing, pensions and protection against dismissal. The Claimant dictated how work was done, employed his own labour, and was guided by architects' and engineer's specifications. The label 'employer' and 'foreman' in the contract was not determinative of the true relationship.

p. 2
02

Whether the Industrial Court has jurisdiction over the dispute

Holding

No; the dispute is commercial in nature arising from breach of a contract for works and belongs to the High Court or Magistrate's Court

Reasoning

While the Industrial Court draws jurisdiction from several statutes beyond the Employment Act, none of them confers jurisdiction over commercial disputes arising from contracts for services or works. The relationship fell outside the scope of the Employment Act, 2007, so the forum should be the civil courts.

p. 3
03

Whether the dispute should be referred to arbitration under paragraph 9 of the contract

Holding

Not determined; left to the appropriate forum

Reasoning

Having concluded that the Court lacks jurisdiction, the Court found it unnecessary to address the arbitration question, observing that the parties may raise it before the forum seized of the dispute.

p. 3

Legal principles established

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  • The Industrial Court's jurisdiction is not confined to contracts of service under the Employment Act; it also flows from other written laws, but does not extend to commercial disputes arising from contracts for services or works
  • The legal character of a relationship must be determined from its substance, not the labels used in the contract
  • Where a court lacks jurisdiction, the appropriate course may be transfer to a competent forum rather than striking out

Court orders

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  1. 1.The Cause is transferred to the Chief Magistrate's Court in Nakuru for adjudication
  2. 2.No order as to costs
Jurisdiction invoked
Industrial Court Act, Labour Relations Act, Labour Institutions Act and Employment Act, 2007 (jurisdiction of the Industrial Court)

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, "Gilbert Sule Otieno v Seventh Day Adventist Church (East Africa) Ltd (sued on behalf of S.D.A. Church, Kiamunyi East) [2014] KEELRC 39 (KLR)", Case Analysis (2014). Not stated in judgment (Cause commenced 29 September 2014). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2014/39/eng@2014-12-18

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