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ELRCOtherNotice of Motion dated 18th May 2016, filed 23rd May 2016 (part of the Claimant's claim before the ELRC)· [2016] KEELRC 521 (KLR)

Starsky Limited v Five Forty Africa Limited & another [2016] KEELRC 521 (KLR)

Employment and Labour Relations Court
30 September 2016
LNLINNET NDOLO
591 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~2 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court ruled that a company cannot be an 'employee', transferring a consultancy dispute to the High Court instead of striking it out.

What this practically means

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Executive summary

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The Respondent brought a Notice of Motion dated 18th May 2016 seeking striking out of the Claimant's claim on the grounds that a general consultancy agreement dated 1st October 2007 between two limited liability companies fell outside the ELRC's jurisdiction, not being a contract of employment under the Employment Act, 2007, and that the Claimant, being a limited liability company, was an independent contractor incapable of being an employee. The Claimant, in a replying affidavit sworn by its Managing Director Erick Murilla, maintained that the agreement was a contract of employment and that a limited liability company could be an employee under the Act. The court framed the question as whether an employment relationship existed capable of enforcement before the ELRC. Reading the definition of 'employee' in Section 2 together with the contractual particulars in Section 10, the court held that the definition is limited to natural persons and that employee responsibilities cannot be shared among corporate stakeholders. The contract between the two companies therefore created no employment relationship, and the ELRC lacked jurisdiction. Although the court would have struck out the claim as a nullity for want of jurisdiction (per Rob De Jong), it followed the Court of Appeal's decision in Mugendi v Kenyatta University that a suit filed in the wrong court should be transferred rather than struck out. The court directed transfer of the case to the Commercial Division of the High Court for disposal and ordered each party to bear their own costs.

Key legal issues

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01

Whether a limited liability company can be an employee under the Employment Act

Holding

No - the definition of employee under Section 2 is limited to natural persons, and employee responsibilities cannot be shared among stakeholders in a corporate entity

Reasoning

The court examined the definition of 'employee' in Section 2 of the Employment Act together with the mandatory particulars of an employment contract under Section 10. Reading these provisions in their totality, it concluded that the statutory scheme contemplates natural persons, and that the responsibilities of an employee cannot be shared among different stakeholders of a corporate entity. A contract between two limited liability companies therefore cannot found an employment relationship enforceable before the ELRC.

p. 2
02

Whether the claim should be struck out or transferred for want of jurisdiction

Holding

Although the court would have struck out the claim for want of jurisdiction, it followed the Mugendi decision that a suit filed in the wrong court should be transferred

Reasoning

Counsel's application sought striking out on the basis that a consultancy agreement between two companies is not a contract of employment. Having found the ELRC lacked jurisdiction, the court acknowledged that a suit filed in a court without jurisdiction is a nullity, but applied the Court of Appeal's guidance in Mugendi v Kenyatta University that a suit filed in the wrong court ought to be transferred to the right court for determination on merit, and accordingly transferred the claim.

p. 2

Legal principles established

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  • A limited liability company cannot be an 'employee' within the meaning of Section 2 of the Employment Act; the definition is limited to natural persons
  • A suit filed in a court without jurisdiction is a nullity that cannot be salvaged

Court orders

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  1. 1.The case shall be transferred to the Commercial Division of the High Court for disposal
  2. 2.Each party will bear their own costs

Authorities

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Legislation

  • Employment ActSection 2 (definition of employee)
  • Employment ActSection 10 (mandatory particulars of an employment contract)

Cases cited (2)

  • Rob De Jong & 4 Another v Charles Mureithi Wachira
    [2012] eKLR
  • Professor Daniel N. Mugendi v Kenyatta University & 3 Others
    Civil Appeal No 6 of 2012
Jurisdiction invoked
Employment Act, 2007 and the Court's employment jurisdiction under Section 2 and Section 10

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Starsky Limited v Five Forty Africa Limited & another [2016] KEELRC 521 (KLR)", Case Analysis (2016). Notice of Motion dated 18th May 2016, filed 23rd May 2016 (part of the Claimant's claim before the ELRC). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2016/521/eng@2016-09-30

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