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ELRCPartially AllowedNot stated in the judgment as provided· [2015] KEELRC 1166 (KLR)

Gordon Godfrey Baraza v Pedesa Stationery Services Limited [2015] KEELRC 1166 (KLR)

Industrial Court (Employment and Labour Relations Court)
23 April 2015
1,877 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~8 min to read original · ~4 min brief

The bottom line

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A Kenyan court ruled that paying a monthly salary for years made a 'freelance' salesman a full employee entitled to terminal benefits.

What this practically means

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Executive summary

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The Claimant sued for terminal benefits totalling Kshs.2,450,427.70 following his resignation on 4th February 2013 after approximately fifteen years with the Respondent, alleging underpayment, unpaid commissions, wrongful salary deductions, unpaid leave, house allowance, overtime and service pay. He asserted he was employed from 1997 (or 1992 per his resignation letter) as a Salesman/Sales & Marketing Director on a monthly salary plus 5% commission, and that he was made to sign false payrolls to deceive Government agencies. The Respondent denied an employment relationship of that nature, contending the Claimant was first a freelance salesman (2000-2005) then paid a nominal Kshs.5,000 salary to enable him join NHIF, and prayed for dismissal with costs. The Court framed two issues: the Claimant's status, and whether terminal benefits were owed. Finding that the Respondent's admission of paying a monthly salary converted the Claimant from freelance salesman to permanent employee from 2005, supported by NHIF and NSSF records and introduction letters, the Court held he was a protected employee under the Employment Act. He was awarded leave pay of Kshs.55,125.00, unpaid commissions of Kshs.97,500.00, wrongful deductions of Kshs.7,129.00, and service gratuity of Kshs.39,375.00 for want of NSSF contributions, totalling Kshs.192,000.00 with interest at court rates from the date of judgment. The claims for underpayment, overtime and house allowance failed for want of proof. The Respondent was ordered to pay the costs of the suit.

Key legal issues

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01

Whether the Claimant was an employee or a sales agent on commission

Holding

The Claimant was a permanent employee, at least from 2005, protected by the Employment Act

Reasoning

The Respondent admitted paying the Claimant a monthly salary from 2005 to February 2013, initially said to enable him join NHIF. Payment of monthly salary, plus NHIF and NSSF records, introduction letters and salary increment requests demonstrated an employment relationship. The Respondent's own admissions placed the Claimant as a protected employee under the Employment Act. Issue (i) was therefore answered in the affirmative.

p. 3
02

Whether the Claimant was owed leave pay for the years of service

Holding

The Claimant was entitled to payment in lieu of 21 days leave for each completed year of service, awarded at Kshs.55,125.00

Reasoning

Having found the Claimant was a permanent employee treated like a freelance agent for the entire period and never granted leave days, the Court held the statutory leave entitlement could not be extinguished. The Claimant demonstrated the claim, supported by a letter from 12 employees dated 8th April 2011 which went unanswered.

p. 4
03

Whether unpaid commissions, wrongful deductions and service gratuity were payable

Holding

Unpaid commissions of Kshs.97,500.00 and wrongful deductions of Kshs.7,129.00 were proved and awarded; service gratuity of Kshs.39,375.00 awarded for want of NSSF contributions

Reasoning

The Claimant had documentary proof of unpaid commissions of Kshs.97,500.00 which the Respondent merely denied generally without refuting the specifics. Wrongful deductions of Kshs.7,129.00 were demonstrated. The Respondent did not contribute to NSSF during the entire employment, entitling the Claimant to service gratuity under Section 35 as read with Section 36 of the Employment Act, 2007, calculated at fifteen days salary per year of service.

p. 4
04

Whether claims for underpayment, overtime and house allowance were proved

Holding

The claims for underpayment and overtime were dismissed for want of proof; house allowance claim also failed

Reasoning

The Claimant gave no particulars of underpayment beyond general allegations, led no evidence of specific Saturdays on which he exceeded the applicable Saturday cut-off of 1 p.m. for overtime, and gave no evidence on the basis for housing allowances. These heads of claim therefore failed for want of sufficient proof.

p. 5

Legal principles established

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  • A person who has earned a monthly salary from an employer for a period of over ten years is an employee for the purpose of the benefits provided under the Employment Act where he has no written contract of employment with enhanced terms.
  • Payment of a monthly salary admits conversion of a freelance salesman into a permanent employee.

Court orders

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  1. 1.Award of payment in lieu of twenty one (21) days leave for each completed year of service in the sum of Kshs.55,125.00
  2. 2.Award of Kshs.97,500.00 by way of unpaid commissions
  3. 3.Award of Kshs.7,129.00 for wrongful deductions from salary
  4. 4.Award of Service Gratuity under Section 35 as read with Section 36 of the Employment Act, 2007 calculated at fifteen (15) days salary for fifteen (15) years completed in employment in the sum of Kshs.39,375.00
  5. 5.Total award of Kshs.192,000.00 payable with interest at Court rates from date of judgment till payment in full
  6. 6.Respondent to pay the costs of the suit
  7. 7.Claims for underpayment and overtime dismissed

Authorities

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Legislation

  • Employment Act, 2007Section 35 as read with Section 36
  • Employment Act, No. 11 of 2007Not specified
Jurisdiction invoked
Employment and labour relations jurisdiction under the Employment Act, No. 11 of 2007 (dispute over terminal benefits of a former employee)

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, "Gordon Godfrey Baraza v Pedesa Stationery Services Limited [2015] KEELRC 1166 (KLR)", Case Analysis (2015). Not stated in the judgment as provided. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2015/1166/eng@2015-04-24

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