Republic v Industrial Court (as established under the Labour Institutions Act No.12 of 2007) & another ; James Machuka (Interested Party) ; Ex - parte Industrial and Commercial Development Corporation [2018] KEELRC 481 (KLR)
The bottom line
#Kenya's Employment Court ruled that a Receiver and Manager appointed by a lender is not an employee, so the KShs 4.57 million award against ICDC was quashed.
What this practically means
#Executive summary
#Key legal issues
#Whether a Receiver and Manager appointed by a debenture holder is an employee of the debenture holder
No - the Receiver and Manager is an agent of the debtor company, and the relationship is governed by the Companies Act, not labour laws; there was no contract of service.
The Court reasoned that at common law and under the then Companies Act, a receiver appointed under powers in an instrument acts for the debtor company, realising the secured creditor's security. Although the agreements used salary-like remuneration, the terms were complete in the annual appointment agreements and did not create an employer-employee relationship under the Employment Act, 2007 or other labour laws. Disputes arising from such appointment vested in the High Court under the Companies Act.
Whether the Industrial Court as Tribunal had jurisdiction to make the award of 11.07.2012
It lacked jurisdiction; lacking jurisdiction, the award was liable to be quashed by certiorari.
Jurisdiction of the Tribunal under sections 11(1) and 12(1) of the Labour Institutions Act extended only to employer-employee disputes; the relationship here was purely commercial between a debenture holder and a Receiver and Manager, governed by the then Companies Act (Cap. 486), which did not extend the Tribunal's jurisdiction. If jurisdiction was lacking, whatever was done by the Tribunal was a nullity.
Whether the Court could revisit the employer-employee issue without sitting on appeal over its own earlier decision
Yes - the remittal by the Court of Appeal set the boundaries of the proceedings, and the earlier findings were not viewed as a merits decision.
The interested party argued the Court had already determined jurisdiction in the judgment of 05.12.2014 and could not sit on appeal over its own decision. The Court held that the express terms of remittal by the Court of Appeal overcame that objection and required determination of the question on its merits.
Legal principles established
#- The appointment of a Receiver and Manager by a debenture holder or by a court does not amount to employment; the Receiver and Manager is an agent of the company in receivership, not of the appointing debenture holder or court.
- Remuneration payable to a Receiver and Manager under the debenture or instrument of appointment does not convert the appointment into a contract of employment.
- Matters expressly preserved for the jurisdiction of the High Court under the then Companies Act fall outside the jurisdiction of the Industrial Court established under the Labour Institutions Act, 2007.
- A question of whether the tribunal below had jurisdiction is a proper ground for judicial review on ultra vires grounds, notwithstanding that merits are generally not reviewable.
- Separate corporate personality means a sole shareholder is not by that fact the employer of an officer appointed by it in another capacity.
Court orders
#- 1.Order of certiorari directed at the 1st respondent to remove to the Industrial Court of Kenya as established under Article 162(2) of the Constitution and quashing the award and decree issued in Cause No. 514 (N) of 2009 dated 11 July 2012 and any subsequent orders or proceedings arising therefrom
- 2.The 2nd respondent to pay the applicant's costs of the proceedings
- On appeal from
- Court of Appeal
- Civil Appeal No. 66 of 2017
- Jurisdiction invoked
- Judicial review jurisdiction of the ELRC; remittal by the Court of Appeal following Article 162(2) of the Constitution of Kenya and the Labour Institutions Act No. 12 of 2007
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Republic v Industrial Court (as established under the Labour Institutions Act No.12 of 2007) & another ; James Machuka (Interested Party) ; Ex - parte Industrial and Commercial Development Corporation [2018] KEELRC 481 (KLR)", Case Analysis (2018). Judicial Review (Notice of Motion filed 30.08.2012) arising from Cause No. 514 (N) of 2009. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2018/481/eng@2018-11-30
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.