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ELRCOtherNot stated in judgment· [2015] KEELRC 304 (KLR)

Zachary Ndung’u Gichia v Family Bank Limited [2015] KEELRC 304 (KLR)

Industrial Court (Employment and Labour Relations Court)
30 October 2015
ANAbuodha J. N.
1,017 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Employment Court ruled it can hear disputes over staff loans tied to employment, so former employees can challenge loan interest hikes there.

What this practically means

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Executive summary

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This is a ruling on a preliminary objection within a motion by the claimant, a former Collections and Recoveries Manager whose employment was terminated on 22nd August 2014. The claimant sought orders allowing him to continue servicing his staff loan with the respondent at Kshs.72,316/= per month, contending that upon termination the respondent had reviewed the interest rate from 8% to 17.5% per annum, raising the monthly instalment by Kshs.35,339.15 to Kshs.107,665.15. The claimant argued his termination was unfair and that the interest increment would inflict double loss. The respondent raised a preliminary objection that the conversion of interest from staff to commercial rate was a commercial dispute for the High Court's Commercial and Admiralty Division, relying on sections 4(1) and 12 of the Industrial Court Act and the James Davies Njuguna case, arguing the loans were separate from the employment contract. The claimant countered that the two contracts were inseparably related, the favourable rates being premised on employment, and invoked section 87(1)(b) of the Employment Act. The court, citing Article 162(2) of the Constitution and following its earlier decision in Peter Mutisya Musembi and Australian authorities, held that a loan dispute predicated on the employment relationship is an employer-employee dispute within its jurisdiction. Adopting an inclusive approach in mixed grill cases, the court disallowed the preliminary objection and directed the application to proceed to hearing on merit. No costs order was recorded.

Key legal issues

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01

Jurisdiction over employment-predicated loan disputes in mixed grill cases

Holding

The Industrial Court has jurisdiction where the loan dispute is predicated on the employment relationship; the preliminary objection was disallowed

Reasoning

The court held that specialist courts under Article 162(2) have created jurisdictional uncertainty in mixed cases, but a court of concurrent jurisdiction properly seized of a matter can adjudicate consequential questions appearing to fall within another court's exclusive jurisdiction. Borrowing from Peter Mutisya Musembi and Australian authorities, the court adopted an inclusive approach to avoid overlap and duplicity, finding the loan contract inseparably linked to the employment relationship under section 87(1)(b) of the Employment Act.

p. 3

Legal principles established

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  • A dispute over a loan or mortgage facility predicated on the contract of employment is a dispute between an employer and an employee within the Industrial Court's jurisdiction
  • Courts must adopt an inclusive approach in mixed grill cases to avoid overlap, duplicity of evidence and costs

Court orders

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  1. 1.The preliminary objection is disallowed
  2. 2.The application shall proceed for hearing on merit

Authorities

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Legislation

  • Industrial Court Actsection 4(1)
  • Industrial Court Actsection 12
  • Employment Actsection 87(1)(b)
  • Constitution of KenyaArticle 162(2)
  • Civil Procedure RulesOrder 40 rules 1, 2, 3 and 4

Cases cited (4)

  • James Davies Njuguna v. Simon Mithano & 3 Others
    (2014) eKLR
  • Peter Mutisya Musembi & another v. National Bank of Kenya
    (2014) eKLR
  • Dean Patty v. Commonwealth Bank of Australia
    2000 FCA 1072
  • Philip Morris Inc. v. Adam P. Brown Male Fashions Ltd
    (1981) 148 CLR
Jurisdiction invoked
Article 162(2) of the Constitution; sections 4(1) and 12 of the Industrial Court Act; section 87(1)(b) of the Employment Act

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, "Zachary Ndung’u Gichia v Family Bank Limited [2015] KEELRC 304 (KLR)", Case Analysis (2015). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2015/304/eng@2015-10-30

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