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ELRCOtherCause No 694 of 2016· [2017] KEELRC 1725 (KLR)

Time Abdallah & 21 others v Mombasa Maize Millers Limited & another [2017] KEELRC 1725 (KLR)

Employment and Labour Relations Court
20 February 2017
693 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 that outsourcing agreements don't automatically shift employees or start limitation clocks, so workers' claims against their original employer can proceed to full trial.

What this practically means

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Executive summary

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The 1st Respondent filed a preliminary objection dated 27th October 2016 contending that the Claimants' Memorandum of Claim, filed on 14th July 2016 seeking Kshs. 8,600,550 for notice pay, service pay, leave pay, public holidays pay, compensation and a declaration of unfair termination, was defective, filed contrary to Section 90 of the Employment Act 2007, and an abuse of process. The 1st Respondent argued that the Claimants became employees of the 2nd Respondent upon execution of an Outsourcing Agreement on 1st January 2012, and any claims against it were extinguished by the three-year limitation period. The Court, per James Rika, Judge, declined the objection. Relying on its earlier decision in Nyamavi Gambo v. Mombasa Maize Millers Limited and Another [2016] e-KLR, the Court characterized the arrangement as a triangular relationship involving two employers and an employee, whose rights and obligations must be disentangled through evidence. Contested and unresolved questions - whether the employees were privy to the Outsourcing Agreement, signed new contracts with the 2nd Respondent, had prior contracts formally terminated with terminal benefits paid, and whether supervisory control changed - could not be determined preliminarily. The 2nd Respondent also disputed the 1st Respondent's position on the Outsourcing Agreement. The Court held that removing the 1st Respondent would shut the Claimants out of a full and effective remedy. The objection was declined, parties were directed to schedule pre-trial directions under Rule 15, and costs were awarded in the cause. Judgment dated and delivered at Mombasa on 20th February 2017.

Key legal issues

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01

Whether the claims against the 1st Respondent were extinguished by the 3-year limitation period under Section 90 of the Employment Act 2007

Holding

The objection was declined because the date of accrual of any cause of action depends on contested facts, including who the employer was and when the employment relationship ended.

Reasoning

The Court held that the Outsourcing Agreement's date is contested and cannot serve as a definitive time indicator under Section 90. Fundamental questions - whether the employees were privy to the agreement, signed new contracts, or had prior contracts formally terminated - cannot be resolved preliminarily. The parties must marshal evidence, and removing the 1st Respondent would risk denying the Claimants a full and effective remedy.

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02

The nature of the relationship between the two Respondents and the Claimants

Holding

The relationship is potentially triangular, involving two employers and an employee, following the Court's approach in Nyamavi Gambo v. Mombasa Maize Millers Limited and Another.

Reasoning

Following its earlier decision, the Court stated it apportioned liability between employers based on when each was in active control of the employees, without finding a principal-agent relationship. The same disentangling of rights and obligations is required here, which cannot be done merely by affidavit evidence on a preliminary objection.

p. 3

Legal principles established

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  • Where a triangular relationship involving two employers and an employee arises from a labour outsourcing arrangement, contested questions of who the employer was and when cannot be determined on a preliminary objection without evidence.
  • Removing the purported principal employer from litigation at a preliminary stage may deny claimants a full and effective remedy.

Court orders

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  1. 1.The preliminary objection is declined
  2. 2.Parties to schedule the dispute for pre-trial directions under Rule 15 of the Court's Rules
  3. 3.Costs in the cause

Authorities

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Legislation

  • Employment ActSection 90
  • The Court's Rules (Employment and Labour Relations Court (Procedure) Rules)Rule 15

Cases cited (1)

  • Nyamavi Gambo v. Mombasa Maize Millers Limited and Another
    [2016] e-KLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over employment claims; Rule 15 of the Court's Rules referenced for pre-trial directions

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, "Time Abdallah & 21 others v Mombasa Maize Millers Limited & another [2017] KEELRC 1725 (KLR)", Case Analysis (2017). Cause No 694 of 2016. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2017/1725/eng@2017-02-20

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