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ELRCOtherMemorandum of Claim dated 25th August 2020, filed 28th August 2020· [2020] KEELRC 180 (KLR)

Manpower Networks Limited v Wrigley Company (East Africa) Limited & 2 others; Richard Mutisya Maithya & 28 others (Interested Parties) [2020] KEELRC 180 (KLR)

Employment and Labour Relations Court
19 November 2020
MOMAUREEN ONYANGO
4,227 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 disputes between companies over a labour outsourcing contract belong in the High Court, not the Employment Court, and transferred rather than dismissed the case.

What this practically means

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Executive summary

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The claimant, a labour outsourcing company, sued the Respondents under a labour supply contract under which it provided services at the Respondents' Industrial Area factory from January 2015 (with the last addendum dated 19th July 2020) and at the Mavoko factory from January 2018. It alleged the Respondents terminated the contract on 31st August 2020 without the three months' notice required by clause 10.3, and sought an injunction, damages for breach and unlawful termination, terminal dues for 29 outsourced personnel (joined as Interested Parties), and payment of Kshs.7,010,860.63 said to be outstanding, alternatively attachment of funds held at Citi Bank. The Respondents raised a preliminary objection dated 31st August 2020 arguing the court lacked jurisdiction because the dispute was commercial, not employment-related, and sought striking out of the suit. After written submissions, the court, per Maureen Onyango J, held that the contract was one for provision of services, not a contract of service; the claimant was an independent contractor and employer of the Interested Parties, none of whom was named in the contract, so no employment relationship with the Respondents could be presumed. The dispute fell outside Article 162(2) of the Constitution and Section 12(1) of the ELRC Act. Distinguishing Bernard Barongo Amwoma, the court found the preliminary objection succeeded. However, exercising its inherent power under Article 159 to prefer substance over form, the court declined to dismiss the suit and instead transferred it to the High Court, Civil Division, for hearing. No costs order was made.

Key legal issues

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01

Whether the dispute between the claimant and the Respondents falls within Section 12(1) of the Employment and Labour Relations Court Act

Holding

It does not. The contract was one for provision of services; the claimant was an independent contractor, not an employee, so the dispute is commercial in nature and outside the ELRC's jurisdiction.

Reasoning

The court examined the written contract and found it provided for outsourced labour services and payment of fees, not wages. None of the Interested Parties was named in the contract, and the claimant was expressly the employer of its personnel. The dispute between two companies over fees under a services contract is commercial, not employment-related, so neither Article 162(2) nor Section 12(1) confers jurisdiction.

p. 6
02

Whether an implied employment relationship existed between the Respondent and the Interested Parties by virtue of the outsourcing contract

Holding

No implied employment relationship exists; the written contract governs and names the claimant as employer.

Reasoning

The claimant argued that the Interested Parties had a legitimate expectation of employment secured by the contract. The court rejected this, holding that the written contract defines the relationship, names no Interested Party, and Schedule 2 identifies the claimant as employer and the 1st Respondent merely as 'client'. The claimant's own evidence established it was the employer.

p. 7
03

Whether the suit should be dismissed for lack of jurisdiction or transferred

Holding

The suit is transferred to the High Court rather than dismissed, applying Article 159's substantive justice mandate.

Reasoning

Citing the Supreme Court in Samuel Kamau Macharia, the court acknowledged it must down its tools once jurisdiction is absent. However, under Article 159 the court must prefer substance over form, and a suit filed in the wrong court should be referred to the correct court rather than dismissed.

p. 7

Legal principles established

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  • A labour outsourcing/services contract between two companies is a contract for services, not a contract of service, and disputes arising under it are not employment disputes within the ELRC's jurisdiction under Article 162(2) and Section 12(1) of the ELRC Act
  • An employment contract cannot be presumed between an employer and an unnamed and undefined employee
  • Where a suit is filed in a court without jurisdiction, the court should transfer it to the correct court rather than dismiss it, in the interest of substantive justice under Article 159

Court orders

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  1. 1.The preliminary objection succeeds to the extent that the court has no jurisdiction to hear and determine the suit
  2. 2.The suit is transferred to the High Court for hearing in the Civil Division

Authorities

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Legislation

  • Constitution of Kenya, 2010Article 162(2)
  • Constitution of Kenya, 2010Article 159
  • Constitution of Kenya, 2010Article 159(2)(d)
  • Constitution of Kenya, 2010Article 48
  • Employment and Labour Relations Court Act No. 20 of 2011Section 12(1) and (2)
  • Employment and Labour Relations Court Act No. 20 of 2011Section 2
  • Employment Act 2007Section 2 (definitions of employee, employer, contract of service)
  • Civil Procedure RulesOrder 21 Rule 1
  • Civil Procedure Act (Chapter 21, Laws of Kenya)Section 1B

Cases cited (6)

  • Mukisa Biscuits Co. v West End Distributors
    (1969) EA 696
  • Elijah Moranga v John Leinsly Irene Onderi
    (2014) eKLR
  • Bernard Barongo Amwoma & 116 others v Orbit Chemicals Limited & another
    (2019) eKLR
  • Owners of the Motor Vessel "Lillian S" v Caltex Oil (Kenya) Ltd
    (1989) KLR
  • Samuel Kamau Macharia & Another v KCB & 2 Others
    S.C. Civil Application No. 2 of 2011
  • Kenya Plantation & Agricultural Workers Union v Kenya Tea Growers Association [KTGA]
    (2016) eKLR
Jurisdiction invoked
Article 162(2) of the Constitution and Section 12(1) of the Employment and Labour Relations Court Act No. 20 of 2011

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (4)

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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, "Manpower Networks Limited v Wrigley Company (East Africa) Limited & 2 others; Richard Mutisya Maithya & 28 others (Interested Parties) [2020] KEELRC 180 (KLR)", Case Analysis (2020). Memorandum of Claim dated 25th August 2020, filed 28th August 2020. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2020/180/eng@2020-11-19

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