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ELRCDismissedCause No. 2499 of 2012

Vitalis Oliewo K’omudho v AAR Health Services Ltd [2016] KEELRC 526 (KLR)

Employment and Labour Relations Court of Kenya
3 June 2016
5,115 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~20 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court ruled a commission-earning consultant was never an employee, so it had no power to hear his dismissal claim.

What this practically means

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Executive summary

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The claimant sued AAR Health Services Ltd alleging that in May 2012 he was subjected to false accusations - including printing money at the office and improperly receiving payments from an insurance broker - and pressured into resigning, amounting to constructive, unlawful and unfair dismissal without payment of terminal dues. He sought declarations of constructive dismissal and permanent employment status, general damages, six months' notice pay, twelve months' salary in compensation, ten days' accrued leave and costs. The respondent denied an employment relationship, contending the claimant was a consultant under Maverick Agency on a 1.35% override commission, subject only to 10% withholding tax, and that he resigned voluntarily to pursue political ambitions for the Muhoroni parliamentary seat. The court framed three issues: jurisdiction, employment status, and remedies. Applying section 2 of the Employment Act and the authorities on distinguishing employment from independent contracting, the court examined the parties' intentions, control, remuneration structure, benefits and the written agreement. It found the claimant was a consultant - paid commission rather than salary, taxed by withholding, without leave or medical benefits, and terminable by mutual agreement or 30 days' notice. His resignation citing political ambitions was voluntary and invoked the contract's own exit provisions. Constructive dismissal did not arise, and without an employment relationship the ELRC lacked jurisdiction to sustain the claim. The claim was dismissed with each party bearing their own costs.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the Court has jurisdiction
  2. 2.Whether the Claimant was an employee of the Respondent
  3. 3.Whether there are remedies due

Key legal issues

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01

Whether the Claimant was an employee or an independent consultant/agent

Holding

The Claimant was a consultant, not an employee; the written agreement defined him as an agent on 1.35% override commission, he was subject to withholding tax rather than statutory deductions, and received no leave or benefits

Reasoning

Applying section 2 of the Employment Act and the authorities, the court examined the intentions of the parties and the true tenets of the relationship: control, salary, benefits, ability to hire staff and the contract document. The written Business Development Consultant Agreement defined the claimant as an agent; he earned commission rather than salary, paid withholding tax only, had no leave or medical benefits, and termination was by mutual agreement or 30 days' notice. These characteristics are those of an independent consultant.

p. 7
02

Whether the resignation amounted to constructive dismissal

Holding

No constructive dismissal; the resignation was voluntary and consistent with the contract's exit provisions, and in any event the doctrine applies only to employees

Reasoning

The claimant tendered his resignation on 10 May 2012, three days after being confronted with allegations, citing his intention to vie for a political seat in Muhoroni - a fact confirmed by his sharing of campaign materials with the audit team. The court found he had ample time to consider his circumstances and that his resignation invoked the contract's termination provisions. Since no employment relationship existed, the doctrine of constructive dismissal could not apply to him.

p. 7
03

Whether the Court has jurisdiction over the claim

Holding

The Court lacks jurisdiction because there is no employment relationship; the dispute is between a company and its consultant

Reasoning

Jurisdiction of the Employment and Labour Relations Court is tied to the existence of an employment relationship. Having found the claimant to be a consultant under an agency agreement rather than an employee within the meaning of section 2 of the Employment Act, the court held the suit could not be sustained before it, and the claim was dismissed.

p. 8

Legal principles established

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  • The Court must look beyond the labels the parties attach to their relationship to determine whether an employment relationship exists, examining the true tenets of the relationship including control, salary, benefits and the contract document
  • Where a claimant is a consultant and not an employee, the ELRC lacks jurisdiction to sustain the suit

Court orders

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  1. 1.The claim is dismissed
  2. 2.Each party shall bear their own costs

The bench

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One judgment of the whole court — no separate or dissenting opinions.

majority

Wrote the judgment

Jurisdiction invoked
Employment and Labour Relations Court jurisdiction premised on existence of an employment relationship under the Employment Act

Relief refused

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Declaration of constructive, unlawful and unfair dismissal

No employment relationship existed; the resignation was a voluntary act under the consultancy/agency agreement

p. 8

General damages, notice pay of 6 months, 12 months' salary compensation and 10 days accrued leave

Remedies under the Employment Act are unavailable to a non-employee consultant

p. 8

Costs of the suit

The court declined to award costs, commending both counsel's professional conduct

p. 8

Costs

Each party shall bear their own costs

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

The Court must go into the intentions of the parties and look at the relationship between the parties and the true tenets of it.
p. 6Determining employment relationship beyond party labels
I find the Claimant was not an employee subject to the remedies sought.
p. 8Finding on employment status and remedies
Without there being any employment relationship, the Claimant being a consultant, the suit herein cannot be sustained before this court.
p. 8Jurisdiction
The claim is dismissed. Each party shall bear their own cost.
p. 8Final orders and costs

Issues in the judgment

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minor

Internal date inconsistencies in the claimant's testimony: the narrative elsewhere fixes the resignation on 10th May 2012, but paragraphs 8 and 22 refer to events in August 2012

minor

Names of respondent witnesses and brokers are inconsistently spelled (Edwin/Edward Gakonyo; Manji/Maji Insurance brokers)

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, "Vitalis Oliewo K’omudho v AAR Health Services Ltd [2016] KEELRC 526 (KLR)", Case Analysis (2016). Cause No. 2499 of 2012. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2016/526/eng@2016-06-03

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