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ELRCPartially AllowedCause No 2154 of 2017· [2023] KEELRC 583 (KLR)

Ikuti v Tuangaze Limited (Cause 2154 of 2017) [2023] KEELRC 583 (KLR)

Employment and Labour Relations Court
10 March 2023
2,907 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 that outsourcing a worker is not unfair dismissal, but awarded him unpaid wages and leave because the employer had no records to prove payment.

What this practically means

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Executive summary

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The claimant, employed as a night security guard by the respondent from July 5, 2013, sued for Kshs 264,788.10 comprising notice pay, leave pay, salary underpayments and compensatory damages for alleged unfair termination on January 27, 2017. The respondent denied terminating him, contending that he ceased employment on December 31, 2016 when the security function was outsourced to Chonjo Security Services, following a meeting of November 30, 2016, and that he received severance pay. The court framed three issues: whether the claimant was terminated, whether any termination was unfair, and entitlement to reliefs. Applying section 47(5) of the Employment Act and the Court of Appeal decision in Pius Machafu Isindu v Lavington Security Guards Limited, the court held the claimant failed to prove termination; the minutes, transition notice and deployment schedule established lawful outsourcing under the same terms, consistent with Abyssinia Iron & Steel Limited v Kenya Engineering Workers Union. The unfair termination claims for notice pay and compensatory damages collapsed. However, the court awarded unpaid leave of Kshs 6,517.86 for 16 admitted days, and found the claimant was underpaid: the respondent's allegation of cash payments of Kshs 4,000 monthly lacked any documentary proof, so wages were held at Kshs 8,500 against statutory minimum wages under Legal Notices 197 of 2013 and 116 of 2015. Underpaid salary of Kshs 132,302.80 was awarded, totaling Kshs 138,819.86 with interest at court rates, plus costs and a certificate of service within 30 days. Judgment delivered by Stella Rutto, J, at Nairobi on March 10, 2023.

Key legal issues

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01

Whether the claimant was terminated from employment

Holding

The claimant was not terminated; his employment ended lawfully through outsourcing to Chonjo Security Services

Reasoning

The claimant bore the burden under section 47(5) of proving termination. He produced no evidence of termination and his own evidence aligned with the respondent's case of transfer. Minutes of the November 30, 2016 meeting, a notice of transition and a deployment schedule showed he was absorbed by Chonjo Security Services and paid severance of Kshs 10,625. The outsourcing was on the same terms and not aimed at redundancy.

p. 5
02

Whether the claimant was underpaid

Holding

The claimant was paid Kshs 8,500 monthly against prescribed minimum wages of Kshs 10,911.70 and later Kshs 12,221.10, entitling him to the balance

Reasoning

The respondent alleged the claimant collected Kshs 4,000 monthly in cash from a shop but produced no acknowledgment or paper trail. The court found the claimant earned Kshs 8,500 and, applying Legal Notice No. 197 of 2013 and Legal Notice No. 116 of 2015, confirmed underpayment for the respective periods.

p. 6
03

Entitlement to unpaid leave

Holding

The claimant is entitled to pay for 16 accrued leave days admitted by the respondent

Reasoning

The respondent admitted in its witness statement that the claimant had 16 leave days due, corroborated by the leave record dated December 8, 2016. The court accordingly awarded Kshs 6,517.86 for unpaid leave despite dismissal of the unfair termination claim.

p. 5

Legal principles established

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  • The burden of proving that an unfair termination occurred rests on the employee, while the burden of justifying the grounds rests on the employer
  • Outsourcing of employees is not illegal provided it accords with fair labour practices and is not aimed at rendering an employee redundant
  • Where an employer alleges part of wages was paid in cash without any record or acknowledgment, the court will find on the documented record that the employee was underpaid

Court orders

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  1. 1.Award of underpaid salary of Kshs 57,880.80 (July 5, 2013 to April 30, 2015) and Kshs 74,422.00 (May 1, 2015 to December 31, 2016)
  2. 2.Award of unpaid leave days being Kshs 6,517.86
  3. 3.Total award of Kshs 138,819.86 with interest at court rates from date of judgment until payment in full
  4. 4.Claimant awarded costs of the suit
  5. 5.Respondent to issue claimant with a certificate of service within 30 days of the judgment

Authorities

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Legislation

  • Employment ActSection 47(5)
  • Employment ActSection 41
  • Employment ActSection 43(1)
  • Legal Notice No. 197 of 2013minimum wage order
  • Legal Notice No. 116 of 2015minimum wage order
  • Civil Procedure RulesOrder 21 Rule 1
  • Civil Procedure ActSection 1B
  • Constitution of KenyaArticle 159(2)(d)
  • Constitution of KenyaArticle 48

Cases cited (7)

  • Caleb Ochieng Gogo v Oil Seals and Bearing Centre Limited
    (2021) eKLR
  • Philemon Oseni Kidavi v Brinks Security Ltd
    (2018) eKLR
  • Moi Teaching and Referral Hospital v James Kipkonga
    (2019) eKLR
  • Kenafric Industries v John Gitonga Njeru
    (2016) eKLR
  • Pius Machafu Isindu v Lavington Security Guards Limited
    [2017] eKLR
  • Abyssinia Iron & Steel Limited v Kenya Engineering Workers Union
    [2016] eKLR
  • Kenya Union of Commercial Food and Allied Workers v Jamii Distributors E.A Limited
    [2021] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act (claim for unfair termination, underpayment and leave pay)

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, "Ikuti v Tuangaze Limited (Cause 2154 of 2017) [2023] KEELRC 583 (KLR)", Case Analysis (2023). Cause No 2154 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/583/eng@2023-03-10

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