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ELRCPartially AllowedCause No. 574 of 2016 (Statement of Claim filed 21st September 2016)· [2019] KEELRC 1304 (KLR)

Time Abdalla, Hassan Said & 21 others v Mombasa Maize Millers Limited & another [2019] KEELRC 1304 (KLR)

Employment and Labour Relations Court
21 June 2019
3,915 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 a labour outsourcing company, not the miller, was the sole employer and must pay 22 locked-out workers Kshs. 3.4 million for unfair termination.

What this practically means

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Executive summary

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Twenty-two former employees of a maize milling operation in Mombasa claimed they were summarily dismissed on 16th January 2016 when they found police at the workplace gate and were locked out. They sought notice pay, annual leave, service pay, public holiday pay and compensation for unfair termination, totalling Kshs. 8,600,550. The 1st Respondent (the miller) denied employing them, asserting an outsourcing agreement with the 2nd Respondent, a labour outsourcing company; the 2nd Respondent likewise denied employment, asserting the Claimants were casuals of the 1st Respondent paid through it. The 2nd Respondent did not appear at trial. The court found the Claimants were initially employed by the 1st Respondent but, under successive outsourcing agreements dated 4th January 2012 and 7th January 2013, the 2nd Respondent assumed employment responsibility and total control of the labour force. Its sole execution of the 28th January 2016 Labour Office return-to-work agreement, to the exclusion of the 1st Respondent, showed it remained the employer on 16th January 2016. The 2nd Respondent, having adduced no evidence, failed to justify the termination; the return-to-work formula was never implemented. Termination was declared unfair. The Claimants, having worked continuously in aggregate over years in roles central to the business, were regular employees entitled to annual leave and service pay. Public holiday pay failed for want of proof. The court awarded each Claimant notice, annual leave, service pay and compensation (grand total Kshs. 3,433,200) against the 2nd Respondent, with costs to the Claimants paid by the 2nd Respondent; the claim against the 1st Respondent was rejected with no order as to costs. Judgment delivered at Mombasa on 21st June 2019 by James Rika, Judge.

Key legal issues

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01

Identify of the employer under successive outsourcing agreements

Holding

The 2nd Respondent was the sole employer from 1st January 2012 to 16th January 2016; the 1st Respondent is liable only for any pre-2012 periods of individual employment.

Reasoning

Two outsourcing contracts (2012 and 2013-2015) required the 2nd Respondent to be responsible for 'all the legal requirements' of the employees, i.e. it assumed employment responsibility. Though the last contract expired on 31st December 2015, the 2nd Respondent alone executed the 28th January 2016 return-to-work agreement at the Labour Office, excluding the 1st Respondent, showing it still managed the labour force and the contract had been extended by mutual agreement.

02

Whether termination was unfair

Holding

Termination was unfair: there was no notice, no valid reason, no disciplinary hearing, and the return-to-work agreement was not implemented.

Reasoning

The 2nd Respondent gave no evidence and thus failed to prove any justification for termination. Following the lockout on 16th January 2016, the Labour Office brokered a return-to-work formula signed by the 2nd Respondent and the Claimants, which the 2nd Respondent never implemented and never explained. The Claimants were locked out, not assigned duties, given no notice and never heard at any disciplinary forum.

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03

Entitlement to terminal dues: annual leave, service pay, public holiday pay

Holding

Claimants merit annual leave and service pay from the 2nd Respondent for 2012-2016; public holiday pay failed for want of proof.

Reasoning

The 2nd Respondent produced no leave records to displace the assertion that no leave was taken, having treated the Claimants as casuals. The outsourcing agreements placed the burden of deducting and remitting statutory dues on the 2nd Respondent, which produced no evidence of N.S.S.F remittance, so service pay lies under Section 35(5) of the Employment Act. No evidence showed work on public holidays, and no such claims were made at changeover.

p. 4

Legal principles established

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  • Under a labour outsourcing agreement, the contractor which assumes employment responsibility and control of the labour force is the sole employer for the duration of the contract.
  • A respondent who does not adduce evidence forfeits the opportunity to prove the reason justifying termination, which will then be found unfair.
  • Where the employer keeps no annual leave records, the employee's assertion that leave was never taken stands.
  • Employees who work continuously in aggregate over years, in roles central to the employer's business, cease to be casuals and qualify as regular employees entitled to leave and service pay.

Court orders

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  1. 1.Declaration that termination was unfair.
  2. 2.The 2nd Respondent to pay each of the 22 named Claimants notice pay, annual leave pay, service pay and compensation for unfair termination for the period 1st January 2012 to 16th January 2016, per the itemised schedule, grand total Kshs. 3,433,200.
  3. 3.Costs to the Claimants to be paid by the 2nd Respondent.
  4. 4.The Claim against the 1st Respondent is rejected with no order on the costs.

Authorities

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Legislation

  • Employment ActSection 90 (raised by 1st Respondent on limitation)
  • Employment ActSection 35(5)
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over employment disputes (Employment Act and the employment relationship pleaded in the Statement of Claim)

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 Abdalla, Hassan Said & 21 others v Mombasa Maize Millers Limited & another [2019] KEELRC 1304 (KLR)", Case Analysis (2019). Cause No. 574 of 2016 (Statement of Claim filed 21st September 2016). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2019/1304/eng@2019-06-21

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