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ELRCPartially AllowedStatement of Claim dated 15th August, 2022· [2023] KEELRC 2023 (KLR)

Mandela v Workinsights Limited (Cause E578 of 2022) [2023] KEELRC 2023 (KLR)

Employment and Labour Relations Court
31 July 2023
SRStella Rutto
3,810 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~15 min to read original · ~4 min brief

The bottom line

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A Kenyan court ruled that calling a worker a 'consultant' doesn't make it so, and even valid firing reasons must follow fair procedure.

What this practically means

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Executive summary

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The Claimant sued the Respondent seeking Kshs 240,000 being one month's salary in lieu of notice and five months' compensation for loss of employment, plus general damages, interest and costs, contending he was summarily dismissed without notice, warning or a fair hearing. The Respondent denied an employment relationship, relying on a Consultancy Agreement dated 28th April 2022, and maintained the dismissal was justified by complaints of mishandling client accounts and refusal to provide technical support to three major clients. The court framed three issues: the nature of the engagement, the fairness of the termination, and entitlement to reliefs. Applying the Employment Act definition of 'employee' and the tests in Kenneth Kimani Mburu and Everett Aviation, the court found an employment relationship despite the 'Consultancy Agreement' label, pointing to payment of a net salary, provision of tools of work, a line manager, and a job summary document. On substance, the Claimant's discourteous WhatsApp communication with a client gave the Respondent a valid and fair reason for termination. However, no show cause letter or disciplinary hearing was conducted, breaching Section 41 of the Employment Act, rendering the termination procedurally unfair and unlawful. Balancing these findings, the court awarded the Claimant one month's net salary of Kshs 40,000 with interest at court rates from the date of judgment until payment in full, together with costs of the suit. The claim succeeded only in part, as the full compensation of five months' salary and general damages sought were not awarded.

Key legal issues

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01

Nature of the engagement - consultancy or employment

Holding

Despite the 'Consultancy Agreement' title, the parties were in an employment relationship

Reasoning

The Claimant was paid a 'net salary' of Kshs 40,000 rather than a fee; the termination letter referred to company property in his custody and a line manager, indicating supervision and control; a job summary document for Sales Support Coordinator existed; and his duties formed an integral part of the Respondent's business. Applying the tests in Kenneth Kimani Mburu and Everett Aviation, the engagement fell within the Employment Act, 2007.

p. 6
02

Substantive justification for termination

Holding

The Respondent had a valid and fair reason based on the Claimant's unprofessional conduct with clients

Reasoning

The Claimant's WhatsApp communication with a client was discourteous and unprofessional and had potential to wreck the Respondent's business, which as a startup with only three clients had a strong commercial interest in retaining them. The Claimant, who asserted the communication was edited, did not produce the complete thread or seek a Notice to Produce, so the court considered the communication as it was.

p. 7
03

Procedural fairness

Holding

The termination was procedurally unfair as the Claimant was not notified of the reasons or given an opportunity to respond

Reasoning

Having found an employment relationship, Section 41 of the Employment Act applied. The Respondent was required to notify the Claimant of the reasons for contemplated termination and invite him to explain the alleged misconduct before a disciplinary forum. No show cause letter or disciplinary hearing occurred, so the process fell short of the statutory requirements notwithstanding the valid reason.

p. 7
04

Reliefs

Holding

Claimant awarded one month's net salary as compensation for the procedurally unfair termination

Reasoning

Since the termination was procedurally unfair despite valid reasons, compensation under Section 49 principles was appropriate. The court exercised discretion to award one month's net salary of Kshs 40,000, taking into account that the contract was only six months and the Claimant had worked only one month and 13 days.

p. 7

Legal principles established

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  • The title given to a contract does not determine the nature of the relationship; courts look at conduct and the manner of engagement
  • Termination of an employee requires both substantive justification and procedural fairness under Sections 41, 43 and 45 of the Employment Act
  • A consultant is paid a fee, not a salary; payment of a net salary points to an employment relationship

Court orders

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  1. 1.The claim is allowed and the Claimant is awarded the sum of Kshs 40,000/= which is equivalent to one month of his net salary
  2. 2.The award shall be subject to interest at court rates from the date of Judgment until payment in full
  3. 3.The Claimant shall have the costs of the suit

Authorities

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Legislation

  • Employment ActSection 2
  • Employment ActSection 41
  • Employment ActSection 41(1)
  • Employment ActSection 43
  • Employment ActSection 43(1)
  • Employment ActSection 45
  • Employment ActSection 45(2)(a) and (b)
  • Employment Act, 2007generally
  • Civil Procedure RulesOrder 21 Rule 1
  • Civil Procedure ActSection 1B
  • Constitution of KenyaArticle 159(2)(d)
  • Constitution of KenyaArticle 48

Cases cited (7)

  • Mwangi Odhiambo Dancun v Xfor Security Solutions Kenya Ltd
    (2016) eKLR
  • John Kisaka Masoni v Nzoia Sugar Co. Limited
    (2016) eKLR
  • Galgalo Jarso Jillo v Agricultural Finance Corporation
    (2021) eKLR
  • Everett Aviation Limited v Kenya Revenue Authority (Through the Commissioner of Domestic taxes)
    (2013) eKLR
  • Kenneth Kimani Mburu v Kibe Muigai Holdings limited
    (2014) eKLR
  • Kenneth Kimani Mburu & another v Kibe Muigai Holdings Limited
    [2014] eKLR
  • Everret Aviation Limited v Kenya Revenue Authority (Through the Commissioner of Domestic Taxes)
    [2013] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the 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, "Mandela v Workinsights Limited (Cause E578 of 2022) [2023] KEELRC 2023 (KLR)", Case Analysis (2023). Statement of Claim dated 15th August, 2022. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/2023/eng@2023-07-31

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