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ELRCAllowedCause Number 666 [N] of 2009· [2014] KEELRC 694 (KLR)

Kenya Building, Construction, Timber, Furniture And Allied Industries Employees Union v Chirag Builders Ltd & another [2014] KEELRC 694 (KLR)

Industrial Court at Nairobi
16 January 2014
JRJames Rika
1,488 words in judgment
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The bottom line

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A Kenyan court ruled that both a main contractor and its 'subcontractor' were employers, ordering them to jointly pay three workers Kshs. 233,978.

What this practically means

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Executive summary

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The Claimant Union brought this claim on behalf of three of its members - Kennedy Akidiva Ghona, Charles Makau Maingi and Peter Nyangau - labourers and a steel fixer engaged on a building project, whose contracts were terminated in 2008 upon completion of the project. The Union contended the terminations were redundancy effected without regard to Section 40 of the Employment Act 2007, and that the Grievants were paid below the rates fixed by the Regulation of Wages, Building and Construction Industry Order, Legal Notice 94 of 2004. It sought notice pay, pro-rata and annual leave, underpayment arrears, public holiday pay, service pay and compensation for unfair termination, totaling Kshs. 233,978. The dispute was reported to the Minister in June 2008; a Conciliator was appointed but the 1st Respondent refused to attend conciliation meetings, and the matter was referred to the Court. At hearing, Fredrick Munyua Njoroge, joined during proceedings, testified that he was an independent subcontractor who employed and paid the Grievants and that Chirag Builders had no role in their employment. Rika J rejected this evidence as unconvincing and lacking in employment records, and held that both Njoroge and Chirag Builders fit the statutory definition of 'employer' under Section 2 of the Employment Act 2007, describing the arrangement as a counterfeit triangular relationship designed to obstruct the workers' pursuit of industrial justice. All claims were allowed as prayed, Njoroge was added as Co-Respondent, and the Respondents were jointly ordered to pay the three Grievants Kshs. 233,978 within 30 days, with execution to issue against both in default.

Key legal issues

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01

Identity of the employer and the alleged triangular relationship

Holding

The Court found both Njoroge and Chirag Builders to be co-employers under Section 2 of the Employment Act 2007, treating the claimed subcontractor arrangement as a counterfeit device to defeat the workers' claims

Reasoning

Njoroge claimed to be an independent subcontractor who recruited and paid the Grievants, but he was unconvincing under cross-examination, lacked employment records, and did not appear qualified. Chirag Builders did not send its own officers to testify or attend conciliation. The Court concluded the subcontractor arrangement was manufactured to obstruct the Grievants' pursuit of industrial justice, and that both fell within the statutory definition of 'employer'.

p. 3
02

Unfair and unlawful termination and underpayment

Holding

The Grievants' terminations on completion of the project without regard to Section 40 of the Employment Act 2007 were unfair, and the wage Order applied; all heads of claim were allowed as prayed

Reasoning

The Grievants' contracts were terminated on account of completion of the project without compliance with Section 40 of the Employment Act 2007. The relevant Building Industry Wage Order (Legal Notice 94 of 2004) was availed by the Claimant, showing the daily rates paid fell below the regulated rates. The Court found all claims well grounded in law and fact.

p. 2

Legal principles established

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  • A person contracted as a subcontractor who employs and pays workers may fall within the statutory definition of 'employer', and a main contractor and subcontractor may be joint or co-employers of the same workers

Court orders

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  1. 1.Fredrick Munyua Njoroge is added to the Claim as a Co-Respondent
  2. 2.Award entered in favour of the Claimant: Kennedy Akidivia Ghona to be paid Kshs. 57,400 by the two Respondents
  3. 3.Charles Makau Maingi to be paid Kshs. 52,263
  4. 4.Peter Nyangau to be paid Kshs. 124,315
  5. 5.The total sum of Kshs. 233,978 to be paid by the Respondents to the Grievants through the Claimant within 30 days of delivery of the Award
  6. 6.In default, execution to proceed against both Respondents

Authorities

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Legislation

  • Employment ActSection 2
  • Employment ActSection 40
  • Regulation of Wages, Building and Construction Industry OrderLegal Notice Number 94 of 2004, Section 15
Jurisdiction invoked
Reference of a labour dispute under the Industrial Court's adjudication jurisdiction (dispute reported to the Minister on 4th June 2008 and referred to the Court after failed conciliation)

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 Building, Construction, Timber, Furniture And Allied Industries Employees Union v Chirag Builders Ltd & another [2014] KEELRC 694 (KLR)", Case Analysis (2014). Cause Number 666 [N] of 2009. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2014/694/eng@2014-01-16

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