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ELRCOtherELRC Petition dated May 3, 2023 with Notice of Motion of even date· [2023] KEELRC 1969 (KLR)

Munialo v President of Kenya & 4 others; Nzoia Sugar Company Limited (Interested Party) (Employment and Labour Relations Cause E008 of 2023) [2023] KEELRC 1969 (KLR)

Employment and Labour Relations Court
27 July 2023
3,566 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~14 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court struck out a challenge to Nzoia Sugar board appointments because company directors are not employees, so this court cannot hear such disputes.

What this practically means

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Executive summary

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The petitioner, acting in person, challenged the appointment of the chairperson and board members of Nzoia Sugar Company Limited by the President and the Cabinet Secretary for Agriculture, alleging they were handpicked without a fair, open, competitive and merit-based recruitment process and without involvement of the Public Service Commission. He sought conservatory orders restraining the appointees from acting, quashing of Gazette Notices of February 2023, mandamus to commence lawful recruitment, and costs. The interested party, Nzoia Sugar Company Limited, opposed, arguing the appointments were made pursuant to section 6(1)(a) and (e) of the State Corporations Act and the company's articles of association, that the petitioner lacked locus standi and was a vexatious litigant, and that the court lacked jurisdiction since neither the petitioner nor the directors were employees. The court framed two issues: jurisdiction and merit. On jurisdiction, it examined the Employment Act definitions of employee, employer and contract of service, and held that an employer-employee relationship is primal to the ELRC's jurisdiction. Applying the Court of Appeal decision in Rift Valley Water Services Board v Asanyo, which held that directors are office holders and not employees absent a contract of service, the court found the chairman and directors were not employees, and declined to follow the earlier Wasilwa J decision on stare decisis grounds. Lacking jurisdiction, the court dismissed the notice of motion, struck out the petition, and ordered each party to bear its own costs, noting the petition was brought in public interest without impunity. Right of appeal in 30 days.

Key legal issues

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01

Whether the ELRC had jurisdiction over the appointment of the chairman and directors of Nzoia Sugar Company Limited

Holding

No jurisdiction; the chairman and directors are not employees as there is no contract of service

Reasoning

The court examined the definitions of 'employee', 'employer' and 'contract of service' in the Employment Act and found that an employee must have a contract of service. It followed the Court of Appeal decision in Rift Valley Water Services Board v Asanyo, holding directors to be office holders, not employees, and that the court's jurisdiction under section 12 of the ELRC Act requires an employer-employee relationship, which was absent here.

p. 6
02

Whether to follow the decision in Okiya Omtatah Okoiti v President of Kenya & 4 others (Wasilwa J) holding directors to be employees

Holding

Not followed; the Court of Appeal decision is superior under stare decisis

Reasoning

The court found that the Wasilwa judgment did not factor in the definition of employer requiring a contract of service. Since the Court of Appeal decision in Rift Valley Water Services Board was binding and superior, the court applied it and declined to follow the earlier ELRC decision.

p. 7

Legal principles established

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  • Directors appointed to a company board are not employees of that company absent a contract of service, so the ELRC lacks jurisdiction over disputes concerning their appointment
  • A court without jurisdiction must down tools immediately

Court orders

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  1. 1.The application dated May 3, 2023 is dismissed for lack of jurisdiction
  2. 2.The petition of even date is struck out for want of jurisdiction
  3. 3.Each party to bear own costs in the application and the petition
  4. 4.Right of appeal in 30 days

Authorities

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Legislation

  • State Corporations Act, Cap 446sections 6(1)(a), 6(1)(e), 2, 34, 7
  • Employment Actdefinitions of employee, employer, contract of service
  • Employment and Labour Relations Court Actsection 12
  • Constitution of KenyaArticles 162(2), 232
  • Companies Actnot specified

Cases cited (6)

  • Samuel Kamau Macharia & another v Kenya Commercial Bank Limited & 2 others
    [2012] eKLR
  • Okiya Omtatah Okoiti v President of Kenya & 4 others
    (2019) eKLR
  • Rift Valley Water Services Board and 3 others v Geoffrey Osanyo and 2 others
    Nakuru Civil Appeal No 60 of 2015 consolidated with No 61 of 2015 (delivered June 10, 2022 UR)
  • Mc Millan v Guest
    (1942) AC p. 561
  • Owners of the Motor Vessel "Lillian S" v Caltex Oil (Kenya) Ltd
    [1989] eKLR
  • Nairobi ELRC Petition No 19 of 2016 Omtatah v 1st and 2nd respondents
Jurisdiction invoked
Article 162(2) of the Constitution and 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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Cite this brief

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Cite this brief

Caselaw, "Munialo v President of Kenya & 4 others; Nzoia Sugar Company Limited (Interested Party) (Employment and Labour Relations Cause E008 of 2023) [2023] KEELRC 1969 (KLR)", Case Analysis (2023). ELRC Petition dated May 3, 2023 with Notice of Motion of even date. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/1969/eng@2023-07-27

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