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ELRCPartially AllowedNot stated in judgment (Amended Petition dated 8th November, 2021)· [2022] KEELRC 1091 (KLR)

Marango v Kedong Ranch Limited (Petition E009 of 2020) [2022] KEELRC 1091 (KLR)

Employment and Labour Relations Court
31 May 2022
4,905 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 blocked an employer from downgrading 123 ranch workers to fixed-term contracts and ordered Kshs 3.5 million in unpaid house allowances.

What this practically means

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Executive summary

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Through an Amended Petition dated 8th November 2021, 123 Petitioners, employees of a ranching company, sought declarations that their conversion from permanent and pensionable terms to three-year fixed-term contracts without consultation violated Article 41 rights; payment of Kshs. 20,495,828 being unpaid overtime, house allowance for 24 Petitioners and salary underpayments; release of appointment letters; injunctions against conversion of terms or redundancy; and costs. The Respondent admitted the employment relationship but maintained it was merely reducing oral contracts into writing in compliance with the Employment Act after consultations, that it paid under the Agricultural Wages Order, housed many employees, and paid consolidated salaries inclusive of house allowance and overtime. Justice Hellen Wasilwa framed three issues: the existence and terms of employment; breach; and remedies. The Court found the employment terms remained permanent and pensionable and that the Respondent did not intend to alter them. No constitutional breach was established: the underpayment claim failed because the Agricultural Wages Order governed and the General Order could not apply retrospectively, and the overtime claim failed for want of proof. However, the claim for unpaid house allowance succeeded because the Respondent produced no evidence of consolidated pay or house allocation, the Petitioners' schedule being undisputed. The Court declared the attempted conversion illegal, null and void, issued a permanent injunction, awarded Kshs. 3,549,270/= in unpaid house allowance, and ordered the Respondent to pay costs with interest at court rates from the date of judgment.

Key legal issues

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01

Whether the Petitioners were employees of the Respondent and on what terms

Holding

The Petitioners were admitted employees whose terms remained permanent and pensionable; the Respondent had not altered and did not intend to alter those terms.

Reasoning

The Respondents admitted the employment relationship, evidenced by appointment letters, payslips and NSSF deductions. The Respondents characterised their November 2020 initiative as codifying existing oral terms into written contracts to comply with the Employment Act, not as a change of terms. On the responses filed, the Court found the terms remained permanent and pensionable.

p. 8
02

Whether the Respondent breached the Petitioners' constitutional rights (underpayment, overtime, house allowance, unilateral conversion)

Holding

No constitutional breach established; the only breaches found were contractual - failure to pay house allowance and the attempted (forestalled) change of contract terms.

Reasoning

The underpayment claim failed because the Agricultural Wages Order governed and the General Order could not apply retrospectively. The overtime claim failed for want of proof. On house allowance, the Respondent's assertion of consolidated pay was unsupported by documentary evidence, and the Petitioners' schedule of unpaid allowance was undisputed.

p. 10
03

What remedies are the Petitioners entitled to

Holding

A permanent injunction against conversion to term contracts, payment of Kshs. 3,549,270/= house allowance with ongoing obligation, and option for the Respondent to issue elaborate appointment letters.

Reasoning

Although the constitutional petition largely failed, the Court found contractual breaches warranting relief: nullification of the attempted conversion, a permanent injunction, and payment of undisputed unpaid house allowance per the Petitioners' schedule, plus costs and interest.

p. 10

Legal principles established

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  • An employer may reduce oral employment terms into writing, but cannot unilaterally convert permanent and pensionable employment to fixed-term contracts without consultation; such an attempt is illegal, null and void.
  • An employer who neither houses an employee nor proves payment of house allowance (including as consolidated pay) is liable for unpaid house allowance.
  • The Agricultural Wages Order, not the General Wages Order, governs employees in the agricultural industry, and unlisted job titles may be mapped to gazetted categories using the ejusdem generis rule.

Court orders

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  1. 1.A declaration that the attempt by the Respondent to alter the Petitioners' terms of employment from permanent and pensionable to short term contracts is illegal, null and void
  2. 2.A permanent injunction restraining the Respondents from changing the contract terms to term contracts
  3. 3.The Respondents may, if they so wish, issue the Petitioners with elaborate letters of appointment indicating the permanent and pensionable nature of the contracts with attendant benefits
  4. 4.The Respondents to pay unpaid house allowance per the schedule in the Petitioners' submissions totalling Kshs. 3,549,270/= for all Petitioners as at the time of filing the submissions, and thereafter continue to pay house allowance or allocate houses to the Petitioners
  5. 5.The Respondents to pay costs of the suit plus interest at Court rates with effect from the date of Judgment
Jurisdiction invoked
Articles 22, 23 and 41 of the Constitution of Kenya, 2010 (employment and labour relations petition)

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, "Marango v Kedong Ranch Limited (Petition E009 of 2020) [2022] KEELRC 1091 (KLR)", Case Analysis (2022). Not stated in judgment (Amended Petition dated 8th November, 2021). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2022/1091/eng@2022-05-31

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