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ELRCPartially AllowedNot stated in judgment (originally filed in Nairobi on 15th June 2012, transferred to Kisumu on 18th December 2012)· [2017] KEELRC 1641 (KLR)

Kenya Building, Construction Timberland Furniture Industries Employees Union v Shiloah Investment Ltd [2017] KEELRC 1641 (KLR)

Industrial Court (Employment and Labour Relations Court)
19 January 2017
2,766 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~11 min to read original · ~4 min brief

The bottom line

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A Kenyan court ruled that employers who fail to keep employee records cannot deny workers existed, and won workers locked out for unionising got notice pay.

What this practically means

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Executive summary

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The claimant union sued on behalf of nine grievants (carpenters, steel fixers and labourers) employed between May and June 2009 at the Respondent's VIC Hotel construction site in Kisumu and terminated on 30th/31st August 2009 on grounds of no work. The union claimed notice pay, pro-rata leave, underpayment arrears under the Regulation of Wages (Building and Construction Industry) Order 2004, plus compensation of three months' salary per grievant for unfair redundancy, totalling Kshs. 226,945.74, and costs. The Respondent denied ever employing any grievant. All nine grievants testified; the Respondent's Human Resource Manager (RW1) confirmed the Respondent undertook the VIC Hotel project and admitted subcontracting, but conceded the Respondent kept no records of the labourers who worked on the project. The court framed three issues: employment, unfair termination and entitlement to the prayers. It held the grievants were employees, applying sections 10 and 74 of the Employment Act and section 53 of the Labour Institutions Act on record-keeping, section 10(7) on the burden of disproof, and section 54(1) of the Labour Institutions Act deeming the Respondent employer of subcontracted workers. The evidence that the grievants were locked out for joining the union remained uncontroverted. Under Rule 19 of the Wages Order, employees with over two months' service were entitled to one month's notice or pay in lieu, plus pro-rata leave and underpayment arrears. However, compensation was refused because the grievants had worked for barely three months. The court itemised awards to each grievant and ordered the Respondent to pay the claimant Kshs. 50,000 as reasonable expenses and disbursements. Judgment was delivered at Kisumu on 19th January 2017 by Maureen Onyango, Judge.

Key legal issues

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01

Whether the grievants were employees of the Respondent

Holding

The court found the grievants were employees of the Respondent, the Respondent having failed to disprove the claim given its failure to produce employment records

Reasoning

All nine grievants testified they worked at the Respondent's VIC Hotel construction site and were paid through the foreman Onyango Mbusi. RW1 confirmed the Respondent undertook the project and admitted subcontracting, but produced no records of labourers. Under sections 10 and 74 of the Employment Act and section 53 of the Labour Institutions Act, the employer must keep such records; failing that, section 10(7) places the burden of disproof on the employer. Section 54(1) deems the Respondent the employer of subcontracted workers.

p. 7
02

Whether the terminations were unfair

Holding

The terminations were uncontroverted and unfair; the grievants were terminated after joining the union without notice or payment in lieu

Reasoning

The Respondent did not controvert the grievants' evidence that they reported to work on 31st August 2009 and were not allowed to work because they had joined the union. Under Rule 19 of the Regulation of Wages (Building and Construction Industry) Order 2004, employees with two months but less than three years' service are terminable by one month's notice or one month's wages in lieu. All grievants had completed two months' service and were entitled to notice pay, pro-rata leave and underpayment arrears.

p. 7
03

Entitlement to compensation for unfair termination

Holding

Compensation was refused because the grievants had worked for barely three months

Reasoning

Although the claimant sought compensation equivalent to three months' salary per grievant, the court held that employees who have served only about three months are not entitled to compensation for unfair termination, and awarded only statutory notice, pro-rata leave and underpayment arrears.

p. 7

Legal principles established

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  • Where an employer fails to keep employment records as required by sections 10 and 74 of the Employment Act, it bears the burden under section 10(7) to disprove the employee's allegations
  • Under section 54(1) of the Labour Institutions Act, a person on whose premises a subcontracted employee works is deemed to be the employer of that employee jointly with the immediate employer

Court orders

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  1. 1.Payment to each grievant of one month's salary in lieu of notice, pro-rata leave and, for the two labourers, arrears of underpayment, per the itemised awards totalling Kshs. 107,277.50
  2. 2.The Respondent shall pay the claimant the sum of Kshs. 50,000 as reasonable expenses and disbursements for the case
  3. 3.No compensation awarded to the grievants for unfair termination

Authorities

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Legislation

  • Employment Actsection 10 (including 10(7))
  • Employment Actsection 74
  • Labour Institutions Actsection 53(1)
  • Labour Institutions Actsection 54(1)
  • Regulation of Wages (Building and Construction Industry) Order 2004Rule 19
Jurisdiction invoked
Original employment and labour relations jurisdiction (suit filed in the Industrial Court; claim on behalf of grievants whose employment was terminated)

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 Timberland Furniture Industries Employees Union v Shiloah Investment Ltd [2017] KEELRC 1641 (KLR)", Case Analysis (2017). Not stated in judgment (originally filed in Nairobi on 15th June 2012, transferred to Kisumu on 18th December 2012). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2017/1641/eng@2017-01-19

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