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ELRCPartially AllowedCause Number 405 of 2014 (Consolidated)· [2020] KEELRC 937 (KLR)

Mumbua Kisilu & 16 others v Allied Wharfage Limited & another [2020] KEELRC 937 (KLR)

Employment and Labour Relations Court
29 May 2020
JRJames Rika
2,402 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 the labour contractor, not the client company, was the workers' true employer, and refused unfair termination claims where workers declined written contracts.

What this practically means

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Executive summary

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Seventeen Claimants filed consolidated claims in the Employment and Labour Relations Court alleging they were employed and unfairly terminated, seeking 12 months' wages as compensation, terminal benefits, costs and interest. The 1st Respondent denied employing them, asserting it outsourced casual workers, first through ITA Marine Services Limited and from 1st October 2011 through the 2nd Respondent, Skate Ship Contractors Limited. The 2nd Respondent blamed the 1st Respondent. Two Claimants and one witness for each Respondent testified. The Court framed four issues: identity of employer, fairness of termination, allocation of responsibility, and remedies. It found the Claimants worked at the 1st Respondent's business from 2011 to 2014, loading and processing UN cargo, but that successive outsourcing agreements made the 2nd Respondent the sole employer, which assumed 100% liability, paid the workers directly, and bore responsibility for labour disputes. Claims against the 1st Respondent were rejected in totality. On termination, the Court held that the Claimants were offered written contracts which they declined to sign, and those who signed continued working; termination was therefore not unfair and no notice pay or compensation was due. The Court awarded annual leave pay, service pay and underpayment of wages as particularized in each Statement of Claim, refused house allowance because daily rates already included the housing element, made no order on costs or interest, and granted the 2nd Respondent stay of execution for 45 days. Judgment was released from the Trial Judge's home at Chaka, Nyeri County owing to the covid-19 pandemic.

Key legal issues

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01

Identity of the employer under a labour outsourcing arrangement

Holding

The 2nd Respondent, the labour supplier, was the sole employer under the outsourcing agreements

Reasoning

The outsourcing agreements from 2011 stipulated that the supplied workers were employed by the 2nd Respondent, paid directly by it, with work injury insurance and full responsibility for labour disputes. Nthigia did not dispute the agreements' presence or contents. The 2nd Respondent assumed 100% liability, placing the Claimants under its full control, while the 1st Respondent bore no responsibility.

p. 3
02

Fairness of termination

Holding

Termination was fair because the Claimants declined written contracts that would have continued their employment

Reasoning

The Respondents discussed placing the Claimants on formal contracts given UN policy against casualization. Contracts were offered; those who signed continued working. The Claimants never explained why they declined. The Court held it was unreasonable to demand reasons for termination from an employer ready to continue employing the workers lawfully, and the Claimants could not insist on remaining casual workers.

p. 4
03

Terminal benefits and wage entitlements

Holding

Annual leave, service pay and underpayment of wages awarded against the 2nd Respondent; house allowance refused

Reasoning

The 2nd Respondent did not subscribe the Claimants to N.S.S.F. or any social security plan, did not grant annual leave or pay leave pay, and Nthigia conceded the Claimants were paid below the minimum wage and entitled to the Government-declared increment of 13.1%. However, daily rates of Kshs. 500 already included the housing element, defeating the house allowance claim.

p. 4

Legal principles established

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  • Under a labour outsourcing agreement which stipulates that supplied workers are employed, paid and fully insured by the contractor, which assumes liability for labour disputes, the contractor is the employer and the client bears no responsibility
  • A casual worker offered a written contract who declines to sign it and is subsequently barred from the workplace cannot claim unfair termination

Court orders

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  1. 1.Declared that the 2nd Respondent was the sole Employer of the Claimants
  2. 2.Claims against the 1st Respondent rejected
  3. 3.2nd Respondent to pay each Claimant annual leave pay, service pay and underpayment of wages as particularized in each Statement of Claim
  4. 4.No order on costs and interest
  5. 5.2nd Respondent granted stay of execution for 45 days
  6. 6.Copy of the Judgment to be placed in all 17 files

Authorities

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Legislation

  • Employment and Labour Relations Court (Procedure) RulesRule 28
  • Employment and Labour Relations Court (Procedure) RulesRule 38
Jurisdiction invoked
Employment and Labour Relations Court, Employment and Labour Relations Act and E&LRC Procedure Rules

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, "Mumbua Kisilu & 16 others v Allied Wharfage Limited & another [2020] KEELRC 937 (KLR)", Case Analysis (2020). Cause Number 405 of 2014 (Consolidated). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2020/937/eng@2020-05-29

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