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ELRCPartially AllowedMemorandum of Claim filed 7th November 2019· [2020] KEELRC 252 (KLR)

Kollengode Venkatachala Laksminarayan v Intex Construction Limited [2020] KEELRC 252 (KLR)

Employment and Labour Relations Court
6 November 2020
MOMAUREEN ONYANGO
2,920 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 a 'consultant' was actually an employee, but because his contract controlled termination, he won only partial compensation.

What this practically means

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Executive summary

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The Claimant, engaged under a Consultancy Agreement dated 20th January 2017 as Group Financial Controller/Consultant, sued the Respondent alleging unlawful and mischievous termination calculated to deny him full dues. He sought a declaration of unfair dismissal, a KRA withholding certificate, evidence of NHIF and NSSF remittances, three months' salary for the balance of the consultancy period, holiday pay for the 12th month, medical expense reimbursement, transport and airtime expenses, a certificate of service, and costs. The Respondent maintained the relationship was a consultancy, that Clause 7 allowed termination on two months' notice, that all dues were acknowledged as settled in a signed voucher, and that withholding tax was properly applied since the Claimant was not an employee. The court framed three issues: the nature of the relationship, unfair termination, and entitlement to reliefs. Applying the multi-factor test from Kenneth Kimani Mburu and Everret Aviation, Judge Maureen Onyango held that fixed hours, an office on the Respondent's premises, medical cover, airtime, transport and notice provisions are characteristics of employment, and found an employment contract existed. However, she held that the Claimant, having consciously signed the contract, could not disown it or cherry-pick its clauses; the termination complied with the contract, so no unfair dismissal was established. The court awarded the withholding tax certificate, prorated holiday pay of Kshs.472,500 for nine months served, and a certificate of service, dismissing the remaining claims. The Claimant received 50% of taxed costs, with interest on the decretal sum at court rates from the date of judgment.

Key legal issues

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01

Whether the Claimant was an employee or an independent contractor

Holding

The Claimant was an employee despite the consultancy label

Reasoning

Applying the multiple-factor test from Everret Aviation and Kenneth Kimani Mburu, the court found the Claimant's duties as Group Financial Controller were integral to the Respondent's business. The contract provided fixed working hours, an office on the Respondent's premises, medical cover, airtime, transport and notice of termination - all characteristics of employment rather than an independent contractor engagement.

p. 4
02

Whether the Claimant was unfairly terminated

Holding

No unfair dismissal found

Reasoning

Although the court found an employment relationship, the termination was effected in accordance with the contract the parties signed, which provided for termination on two months' notice and did not incorporate the Employment Act's termination provisions. The Claimant is bound by the contract he consciously and willingly signed and cannot plead its provisions selectively.

p. 4
03

Entitlement to specific reliefs

Holding

Only withholding tax certificate, prorated holiday pay and certificate of service awarded

Reasoning

The court granted the withholding certificate since withholding tax was deducted; awarded prorated holiday pay of Kshs.472,500 for the 9 months served; and ordered a certificate of service. Claims outside the contract (salary balance, transport, airtime, medical expenses, NHIF/NSSF) failed for want of contractual basis or proof.

p. 4

Legal principles established

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  • There is no single test for determining whether a person is an employee; the control test is only one factor and courts must balance all relevant factors
  • Payment of withholding tax instead of PAYE, and an 'independent contractor' clause in a contract, do not automatically make a worker an independent contractor; the substance of the arrangement governs
  • A party cannot approbate and reprobate - one cannot disown a contract consciously and willingly entered into nor cherry-pick its favourable clauses

Court orders

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  1. 1.The Respondent to issue the Claimant a valid Kenya Revenue Authority withholding tax certificate for the consultancy period January 2017 to December 2017.
  2. 2.The Claimant awarded Kshs.472,500/- as prorated holiday pay for the 9 months served.
  3. 3.The Respondent to issue the Claimant a certificate of service.
  4. 4.Claims for NHIF/NSSF remittance evidence, three months' balance of consultancy fees, medical expenses reimbursement, transport expenses and airtime expenses dismissed.
  5. 5.The Claimant awarded 50% of taxed costs; interest on decretal sum at court rates from date of judgment.

Authorities

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Legislation

  • Employment Actsection 2
  • Employment Actsections 35, 36, 41, 43, 45
  • Constitution of KenyaArticles 28, 36, 39, 41, 47, 50, 159(2)(d), 48
  • Civil Procedure RulesOrder 21 Rule 1
  • Civil Procedure ActSection 1B

Cases cited (7)

  • Cannock Chae District Council v Kelly
    [1978] 1 ALL ER 152
  • Kiti Soso v Insight Management Consultants
    [2016] eKLR
  • Kenneth Kimani Mburu & another v Kibe Muigai Holdings Limited
    [2014] eKLR
  • Everret Aviation Limited v Kenya Revenue Authority (Through The Commissioner of Domestic Taxes)
    [2013] eKLR
  • Beloff vs Preddram Limited
    [1973] ALL ER 241
  • Simmons Vs Heath Laudry Company
    [1910] 1 KB 543
  • O' Kelly Vs Trusthouse Forte
    [1983] 3 ALL ER 456
Jurisdiction invoked
Employment and labour relations jurisdiction; claim for unfair termination under the Employment Act

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (8)

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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, "Kollengode Venkatachala Laksminarayan v Intex Construction Limited [2020] KEELRC 252 (KLR)", Case Analysis (2020). Memorandum of Claim filed 7th November 2019. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2020/252/eng@2020-11-06

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