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ELRCStruck OutCause (not specified in judgment)· [2023] KEELRC 1133 (KLR)

Obonyo v Britam Life Assurance Co (K) Ltd (Cause E035 of 2022) [2023] KEELRC 1133 (KLR)

Employment and Labour Relations Court
11 May 2023
RSRadido Stephen
1,672 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 threw out an insurance agent's unfair termination case, ruling he was an independent contractor, not an employee.

What this practically means

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Executive summary

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The claimant sued Britam Life Assurance Co (K) Ltd alleging unfair termination of employment and breach of contract, having been engaged over the years under successive agency agreements described as independent contractor arrangements, most recently as Branch Manager for Narok and later Kisumu, compensated by commissions and overrides. In March 2022, following investigations into allegations that he solicited bribes from unit managers, the respondent issued a show-cause notice, held a disciplinary hearing and terminated his contract by letter dated 22 March 2022. The respondent filed a preliminary objection on jurisdiction, contending the claimant was an independent contractor earning commissions, paying withholding tax rather than PAYE, and making no statutory contributions. The court framed the jurisdictional question of whether an employment relationship existed. Applying the definition of employee under the Employment Act, 2007 and the multi-factor test from Poon Chau Nam v Yim Siu Cheung, the court examined the agreements and found they expressly stated the claimant was an independent contractor, provided no salary, leave, housing or statutory deductions, and that withholding tax applied to commissions. Section 69(1) of the Insurance Act forbids an insurer from engaging an agent as an employee. The court held the claimant was not an employee, and that under section 12 of the Employment and Labour Relations Court Act it had no jurisdiction. It declined to delve into the merits and struck out the Cause with costs. Judgment delivered on 11 May 2023 by Radido Stephen, Judge.

Key legal issues

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01

Whether the claimant was in an employment relationship with the respondent

Holding

The claimant was an independent contractor, not an employee

Reasoning

The court applied the Employment Act's basic rights and conditions framework and the multi-factor test from Poon Chau Nam v Yim Siu Cheung. The agreements stated the claimant was an independent contractor; compensation was by commission, not salary; withholding tax applied instead of PAYE; there were no NSSF/NHIF contributions, leave or housing entitlements; the claimant was licensed annually as an Insurance Agent; and section 69(1) of the Insurance Act forbids engaging agents as salaried employees.

p. 4
02

Jurisdiction of the Employment and Labour Relations Court

Holding

The court had no jurisdiction over a dispute with an independent contractor

Reasoning

Article 162 of the Constitution and section 12 of the Employment and Labour Relations Court Act confine the court's jurisdiction to employment and labour disputes. Since the claimant was not an employee, the dispute fell outside the court's jurisdiction and the court declined to consider the merits.

p. 4

Legal principles established

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  • Whether a person is an employee requires consideration of control over performance of work, remuneration structure, integration into the business, obligation to provide work and facilities, tax treatment and trade structure
  • Under section 69(1) of the Insurance Act an insurance company cannot engage an agent as an employee, and insurance agents paid on commission with withholding tax are independent contractors

Court orders

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  1. 1.The Cause is struck out for lack of jurisdiction
  2. 2.Costs of the Cause awarded to the respondent

Authorities

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Legislation

  • Employment ActPreamble; section 9; section 20; section 27; section 28; section 29; section 30; section 31
  • Income Tax ActPay As You Earn provisions
  • Insurance ActSection 69(1)
  • Employment and Labour Relations Court ActSection 12
  • National Social Security Fundmonthly contributions
  • National Hospital Insurance Fund Actmonthly contributions
  • Constitution of KenyaArticle 162

Cases cited (4)

  • Vitalis Oliewo K'omudho v AAR Health Services Ltd
    (2016) eKLR
  • Frederick Byakika v Mutiso Menezes International Ltd
    (2016) eKLR
  • Omusamia v Upperhill Springs Restaurant
    (2021) KEELRC 3 (KLR)
  • Poon Chau Nam v Yim Siu Cheung
    (2007) 10 HKCFAR 156
Jurisdiction invoked
Article 162 of the Constitution as read with section 12 of the Employment and Labour Relations Court Act

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (4)

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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, "Obonyo v Britam Life Assurance Co (K) Ltd (Cause E035 of 2022) [2023] KEELRC 1133 (KLR)", Case Analysis (2023). Cause (not specified in judgment). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/1133/eng@2023-05-11

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