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ELRCDismissedCause No.10 of 2015· [2019] KEELRC 1722 (KLR)

Joab Atte Okada v Bayer East Africa Limited [2019] KEELRC 1722 (KLR)

Employment and Labour Relations Court of Kenya at Nakuru
25 April 2019
MMM. Mbaru
2,423 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court ruled that an independent contractor paid on debit notes cannot claim employee benefits like leave pay or unfair termination compensation.

What this practically means

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Executive summary

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The claimant sued Bayer East Africa Limited claiming terminal dues of Ksh.806,000 for 13 years of service, leave pay of Ksh.1,612,000, twelve months' compensation of Ksh.1,488,000, notice pay of Ksh.124,000, a certificate of service, costs and interests, alleging his employment was terminated prematurely, without reason and without notice. He asserted he had been employed since 1998 as a Product Demonstrator and later BCS Promoter/Area Sales Representative, and that HR Strategic Partners, engaged by the respondent, irregularly issued the termination letter dated 28th March 2014, allegedly to help the respondent evade tax. The respondent denied any employment relationship, producing contracts for service from 1998 under which the claimant was an independent Product Demonstrator paid against debit notes as a professional service charge, an amendment of 2005 trading as Peke Farm paid commission on targets, and eventual engagement and dismissal by HR Strategic Partners following falsified mileage claims, with ex gratia payments made. The court examined the engagement letters, noted the absence of salary, statutory deductions or employment benefits, and applying the tests distinguishing a contract of service from a contract for service, held the claimant was an independent contractor throughout his engagement with the respondent. The termination letter was issued by HR Strategic Partners, not the respondent. The claims under the Employment Act, 2007 were therefore not due to an independent contractor. The entire claim was dismissed with each party bearing their own costs. The court also observed issues of non-remittance of taxes by the claimant and non-withholding of tax by the respondent.

Key legal issues

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01

Whether the claimant was an employee or an independent contractor of the respondent

Holding

The claimant was an independent contractor, not an employee

Reasoning

The engagement letter of 9th February 1998 defined the claimant as an independent Product Demonstrator paid against debit notes as professional service charge. The 2005 amendment showed Peke Farm, the claimant's business name, was paid commission upon meeting targets. No salary, PAYE, NHIF or NSSF deductions existed. Applying the multiple factor test, these features negate a contract of service.

p. 4
02

Whether the respondent terminated the claimant's employment

Holding

The respondent did not terminate; termination was by HR Strategic Partners

Reasoning

The termination letter dated 28th March 2014 was issued by HR Strategic Partners, by whom the claimant was employed as an Area Sales Representative from 1st April 2013 following labour outsourcing. The respondent's contracts were for service delivery with payment on completion of targets, not employment.

p. 4
03

Whether the claim's entitlements arise under the Employment Act, 2007

Holding

The claims are not sustainable as the claimant is not covered by the Employment Act

Reasoning

Since the claimant was an independent contractor throughout his engagement with the respondent, statutory employment benefits such as terminal dues, leave and section 49 compensation do not accrue to him, and the suit before the ELRC is not the appropriate forum for his dispute with the respondent.

p. 5

Legal principles established

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  • Terminal dues, leave pay, compensation under section 49, notice pay and a certificate of service under the Employment Act are due only to employees, not independent contractors
  • The hallmarks of an independent contractor include invoicing for services, payment on service rendered, absence of statutory deductions and freedom from employment benefits

Court orders

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  1. 1.The claims made are found without merit and dismissed in their entirety
  2. 2.Each party shall bear own costs

Authorities

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Legislation

  • Employment Actsection 2
  • Employment Actsection 49

Cases cited (8)

  • Laban Awando Kanyo versus Susan Larsen t/an Utamaduni Craft Centre
    ELRC No.259 of 2012
  • Ready Mix Concrete (South East) Ltd versus Minister of Pensions and National Insurance
    1968 2 QB
  • Kenya Hotels & Allied Workers Union versus Alfajiri Villas (Magufa) Ltd
    [2014] eKLR
  • Fredrick Byakika versus Mutiso Menezes International Limited
    [2016] eKLR
  • Cassidy v Min. of Health
    [1951] 2 KB 343
  • Ready Mixed Concrete v Min. of Pensions
    [1968] 2 QB 497
  • Gilbert Sule Otieno versus Seventh Day Adventist Church (East Africa) Ltd (sued on behalf of S.D.A. Church, Kiamunyi East)
    [2014] eKLR
  • Joseph Nyaga versus United Millers Limited
    Cause No.267 of 2015 (Nakuru)
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007; the court found the claimant an independent contractor and the suit not appropriate for the court

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Joab Atte Okada v Bayer East Africa Limited [2019] KEELRC 1722 (KLR)", Case Analysis (2019). Cause No.10 of 2015. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2019/1722/eng@2019-04-25

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