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ELRCPartially AllowedCause No. 305 of 2017· [2022] KEELRC 951 (KLR)

Lydia Limbe v Akili Dada [2022] KEELRC 951 (KLR)

Employment and Labour Relations Court
31 January 2022
6,029 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 a 'consultant' was really an employee, awarding her Kshs.600,000 after her employer failed to prove fair, lawful termination.

What this practically means

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Executive summary

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The Claimant sued the Respondent alleging unlawful and unfair termination of her employment as Communications Manager, seeking a declaration, twelve months' salary as compensation, one month's notice pay, house allowance, a certificate of service, interest and costs. The Respondent denied an employer-employee relationship, contending the Claimant was a consultant under a consultancy agreement dated 8th February 2016, paid a fee of Kshs.150,000/- subject to 5% withholding tax, and argued that declaring the contract one of employment would uphold an illegality. The court framed three issues: the nature of the relationship, the fairness of the termination, and entitlement to reliefs. Applying the control and integration tests, the court found the Claimant reported daily to the office, used the Respondent's equipment and email, attended staff activities, was supervised by the Executive Director and occupied a role integral to the Respondent's business, and therefore was an employee notwithstanding the consultancy label. Withholding tax treatment was not determinative. On substance, the Respondent led no evidence of performance appraisals or of the alleged complaints of incompatibility, failing the burden under Section 43(1) of the Employment Act. On procedure, there was no notice to show cause, hearing or opportunity to be heard, contrary to Section 41. The illegality argument was rejected as unpleaded and undemonstrated. Judgment was entered for the Claimant for three months' salary as compensation (Kshs.450,000/-) plus one month's notice pay (Kshs.150,000/-), a total of Kshs.600,000/- with costs and interest. The declaration sought and the house allowance claim were disallowed; the Respondent was directed to issue a certificate of service within 30 days.

Key legal issues

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01

Whether the Claimant was an employee or a consultant

Holding

She was an employee despite the contract being styled a consultancy agreement

Reasoning

Applying the control and integration tests, the court noted the Claimant reported daily to the office, used the Respondent's equipment and email system, attended staff meetings and activities, was introduced as 'our newest staff member', worked specified hours under the Executive Director's supervision and was issued a staff exit questionnaire. Her communications role was integral and critical to the Respondent's business. Withholding tax treatment was not determinative.

p. 6
02

Whether the termination was substantively fair

Holding

It was not; the Respondent failed to prove poor performance or incompatibility

Reasoning

The employer led no evidence of any performance appraisal system or evaluation against deliverables, and the complaints about interpersonal skills were not evidenced, quantified or shown to have been raised with the Claimant for remedial action. Incompatibility requires persistent and irrational inability to work with workmates, which was not established. The burden under Section 43(1) was not discharged.

p. 8
03

Whether the termination was procedurally fair

Holding

It was not; no hearing was accorded

Reasoning

There was no notice to show cause, no prior evaluation shared with the Claimant, no minutes of any hearing, and no opportunity to be accompanied or to make representations. The Claimant's uncontroverted evidence was that she was simply handed a termination letter at a meeting without prior notice of its agenda.

p. 8
04

Whether declaring the contract one of employment would uphold an illegality

Holding

No; the Respondent did not plead or demonstrate that the contract was illegal as formed or performed

Reasoning

The illegality argument based on 5% withholding tax and non-remittance of statutory deductions was not elucidated. The Kenya Airways v Satwant Singh Flora principles were distinguished because the Respondent never pleaded illegality of the contract nor demonstrated under what law it was illegal.

p. 7

Legal principles established

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  • In determining whether an employment relationship exists, the court is not bound by the parties' labels or the title of the contract but by the totality of the evidence, including control and integration tests
  • Payment of withholding tax rather than PAYE does not by itself make a worker an independent contractor
  • The employer bears the burden of proving valid and fair reasons for termination under Section 43(1) and fair procedure under Sections 41 and 45(2) of the Employment Act

Court orders

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  1. 1.The declaration that the Respondent's conduct, acts and/or omissions are unlawful, illegal and/or unfair is disallowed
  2. 2.Compensation for unfair termination equivalent of three months' salary, Kshs.450,000/-
  3. 3.One month's salary in lieu of notice, Kshs.150,000/-
  4. 4.Claim for house allowance of Kshs.270,000/- disallowed
  5. 5.Respondent to issue certificate of service to the Claimant within 30 days of the judgment
  6. 6.Judgment entered in favour of the Claimant for the sum of Kshs.600,000/- with costs and interest at Court rates from the date of judgment till payment in full

Authorities

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Legislation

  • Employment ActSection 2
  • Employment ActSection 10
  • Employment ActSections 31(1), 35, 36, 40, 41, 43, 45, 49(1)
  • Civil Procedure RulesOrder 21 Rule 1
  • Civil Procedure ActSection 1B
  • Constitution of KenyaArticles 159(2)(d) and 48

Cases cited (21)

  • Edward Ngarega Gacheru v Nation Media Group Limited
    [2019] eKLR
  • Ziporah Gathuya v Registered Trustee of Getrudes Garden t/a Getrudes Children Hospital
    (2019) eKLR
  • Maurice Odour Oketch v Chequered Flag Limited
    [2013] eKLR
  • Kollengode Venkatachala Laksminarayan v Intex Construction Limited
    [2020] eKLR
  • Kenneth Kimani Mburu v Kibe Muigai Holdings Limited
    [2014] eKLR
  • Five Forty Aviation Limited v Erwan Lanoe
    [2019] eKLR
  • Pius Kimaiyo Langat v Co-operative Bank of Kenya Ltd
    [2017] eKLR
  • Everest Aviation Limited v Kenya Revenue Authority (Through The Commissioner of Domestic Taxes)
    2013 eKLR
  • David Odwori Namuhisa v Magnate Ventures Limited
    [2017] eKLR
  • Kenya Airways Limited v Satwant Singh Flora
    [2013] eKLR
  • Pius Machafu Isindu v Lavington Security Guards Limited
    [2017] eKLR
  • CMC Aviation Limited v Mohammed Noor
    [2013] eKLR
  • Walter Ogal Anuro v Teachers Service Commission
  • Agnes Yahuma Digo v PJ Petroleum Equipment Limited
    [2013] eKLR
  • Jane Samba Mukala v Ol Tukai Lodge Limited
    [2013] eKLR
  • Eunice Adhiambo Okumu v Pharmakem Limited
    [2016] eKLR
  • Dede Esi Annie Amanor Wilks v Action Aid International
    [2014] e-KLR
  • Loice Otieno v Kenya Commercial Bank Ltd
    [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 Court established under Article 162(2) of the Constitution; Employment Act, 2007

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (2)

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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, "Lydia Limbe v Akili Dada [2022] KEELRC 951 (KLR)", Case Analysis (2022). Cause No. 305 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2022/951/eng@2022-01-31

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