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ELRCDismissedNot stated in judgment· [2022] KEELRC 510 (KLR)

Gordon Otieno Nyangao v Abbas Traders Limited [2022] KEELRC 510 (KLR)

Employment and Labour Relations Court
11 March 2022
BOByram Ongaya
2,779 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 confirmed the company was the casual worker's real employer, but dismissed all his claims because his piece-rate work arrangement fell outside statutory employment protections.

What this practically means

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Executive summary

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The claimant sued alleging he was employed by the respondent, a tea exporting company, from April 1995 as a casual loader, and was terminated on 28 December 2016 on account of redundancy in breach of sections 40 and 41 of the Employment Act, 2007. He claimed service pay, leave pay, notice pay, severance pay for 22 years, compensation of 12 months' pay for unfair termination and a certificate of service, totalling about Kshs. 1.6 million. The respondent denied the employment relationship, asserting the claimant was a casual labourer availed by a gang leader on a need basis, never on its payroll. Two issues were framed: whether a contract of service existed, and whether the claimed benefits were payable. On the evidence of the gang leader (RW2) and the memorandum of agreement of 1994 and 2000, the court found that the respondent set the wage rates, funded payments and empowered the gang leader to recruit on its behalf, making the gang leader an agent rather than an independent contractor; the respondent was therefore the principal employer. The court further held that the respondent, having paid the claimant's NSSF dues without any other justification, was estopped from denying the employment relationship. However, because the claimant was engaged on casual piece work and piece rate terms under section 18 of the Employment Act, was free to abstain or work elsewhere, and had left to take up clerical work elsewhere, all monetary claims were held inconsistent with that engagement and the section 37 conversion did not apply. The memorandum of claim was dismissed with each party bearing its own costs.

Key legal issues

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01

Whether a contract of service existed between the claimant and the respondent

Holding

Yes - the respondent was the principal employer; the gang leader was merely its agent for recruitment and payment of casual and piece rate gang members

Reasoning

The memorandum of agreement showed the respondent fixed wage rates, empowered the gang leader to recruit on its behalf, funded the payments, supplied materials and required member identification details. The gang leader bore no sole responsibility for losses or profits. The arrangement was a managerial system for casuals, not an outsourcing contract, and it was irrelevant that the gang leader was not sued.

p. 3
02

Whether NSSF payment by the respondent amounted to an admission of employment (estoppel)

Holding

Yes - the undisputed payment of NSSF established the employment relationship and estopped the respondent from denying it

Reasoning

The respondent's own witnesses confirmed the respondent paid NSSF for the claimant following an NSSF demand, and no other arrangement justified that payment. Applying estoppel principles, rights having accrued, the respondent could not assert there was no employment relationship.

p. 3
03

Whether the statutory claims (leave, service pay, notice, severance, unfair termination compensation, section 37 conversion) were payable

Holding

No - all claims failed as inconsistent with the casual, piece work and piece rate engagement under section 18 of the Act

Reasoning

The claimant was recruited per piece of work at rates set in the memorandum of agreement, was free to abstain or work elsewhere, and the piece rate wages fell outside the monthly wage base contemplated by section 49 of the Employment Act. The pleaded wage basis was ambiguous and unsupported. Section 37 conversion did not apply.

p. 3

Legal principles established

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  • Payment of statutory dues such as NSSF by a party, absent other arrangements justifying it, establishes an employment relationship and estops the party from denying it
  • A gang leader operating under a memorandum of agreement fixing wage rates, recruiting on behalf of and funded by the company, acts as the company's agent rather than an independent labour contractor
  • Parties may lawfully conclude piece work and piece rate payment arrangements under section 18 of the Employment Act, and such engagements fall outside the monthly wage base for statutory awards

Court orders

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  1. 1.The memorandum of claim is hereby dismissed.
  2. 2.Each party to bear own costs of the suit.

Authorities

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Legislation

  • Employment Act, 2007sections 2, 18, 35, 37, 40, 41, 49, 51
  • Employment and Labour Relations Court Act, 2011section 2

Cases cited (4)

  • Everret Aviation Limited –Versus- Kenya Revenue Authority
    (2013) eKLR
  • Katiwa Kanguli –Versus- Bamburi Cement Limited
    [2015] eKLR
  • Serah Njeri Mwobi –Versus- John Kimani Njoroge
    [2013] eKLR
  • Mulji Jetha Ltd –Versus- Commissioner of Income Tax
    [1967] EA 50
Jurisdiction invoked
Employment and Labour Relations Court Act, 2011 (court seized of employment dispute)

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, "Gordon Otieno Nyangao v Abbas Traders Limited [2022] KEELRC 510 (KLR)", Case Analysis (2022). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2022/510/eng@2022-03-11

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